The Arena Group settles Sports Illustrated lawsuit against Authentic Brands Group

Last year saw a highly publicized, ugly breakup between Sports Illustrated owner Authentic Brands Group and The Arena Group, which had held a long-term publishing license for the iconic magazine. ABG terminated that license early in 2023, then sued Arena for more than $50 million in April, accusing them of interfering with the handoff of SI publishing rights to Minute Media.

Arena launched its own lawsuit against Authentic for $200 million last June. There, they claimed “theft” of “the proprietary code technology and trade secrets comprising the valuable internet platform Arena developed at a significant expense” in a wild release.

But on Friday, AdWeek’s Mark Stenberg reported that the lawsuit has been settled. He noted that any payment involved was deemed “not material,” meaning it wasn’t significant enough to affect the Arena Group’s stock price. It remains unclear whether either side received any payment, but if money did change hands, the amount was minimal.

The confidential agreement was settled out of court, and its financial terms were not disclosed. It is unclear which party—if either—paid a fee.

In a public filing, TAG said the size of the payment was “not material.” According to Gary Kibel, a partner at the law firm Davis+Gilbert LLP, that means it is small enough that it is unlikely to affect the stock price of a company.

As a result of the settlement, TAG was able to remove around $94 million in potential liabilities from its balance sheet, a figure that reflects the projected amount of cumulative financial damages TAG anticipated would stem from the lawsuit.

A settlement for a “not material” amount –if any money did in fact go to Arena out of this — is quite something, considering the grandiose claims Arena made in a June 2024 press release announcing that lawsuit.

The lawsuit highlights how ABG conspired to steal the crown jewel of Arena’s business – the proprietary code technology and trade secrets comprising the valuable internet platform Arena developed at a significant expense.

“These guys stole our most valuable property, our digital platform code, and then left a clear trail for anyone to follow… not too bright,” said Arena’s President and largest shareholder, Manoj Bhargava. “They are like the Wet Bandits from Home Alone!”

The suit showcases that ABG enlisted business leaders from top tier investment firms – including CVC Capital Partners (“CVC”) and BlackRock – to help steal proprietary technology and business from Arena, working with ABG’s new licensee, Minute, to orchestrate a multi-step corporate heist.

“I am genuinely surprised that BlackRock and CVC would participate in such unethical behavior,” said Bhargava. “It is alarming to see organizations that claim to uphold the highest ethical standards involved in such questionable conduct.

“Given the revelations about Jamie Salter’s business practices, it is perplexing that BlackRock and CVC have not yet called for a leadership change at Authentic Brands Group (ABG).

“BlackRock and CVC’s response to this situation will speak volumes about their commitment to ethical governance,” said Bhargava.

Arena also notes that ABG has a history of monopolistic and predatory licensing behavior. The lawsuit highlights how Arena is “just the latest licensee to fall victim to ABG’s extensive and public history of strip-mining its license partners, imposing steep guaranteed royalties and termination fees that award ABG a windfall.”

It’s not every day you see a high-level executive reference the Wet Bandits in a lawsuit press release. But, bold statements and aggressive legal actions are nothing new for Bhargava, whose business history, including his time with 5-Hour Energy parent company Innovation Ventures Inc., is marked by both. Arena has a similar track record, and that flair for drama was on full display during last year’s Sports Illustrated-Arena-Minute Media saga, which marked a tumultuous end to Arena’s tenure with SI.

The key takeaway from this settlement is that Arena appears unlikely to receive a substantial litigation payout from Authentic, or to pay out a significant sum in return. The two companies now seem to be firmly moving in separate directions. Authentic retains Sports Illustrated under its new publishing partner, Minute Media, along with its broader portfolio of brands and ventures.

For Arena, their biggest remaining sports property is Athlon Sports. They also have sites including The Street, Parade, and Men’s Journal.

Arena’s stock dipped on Friday, falling to $4.19 by noon ET, down from close to $4.77 the previous day. Still, that’s well above the $1.38 they started this year at, though. We’ll see what the ultimate implications are of there being no giant financial settlement, either way, in its litigation with Arena.