On Friday, Sports Illustrated owner Authentic Brands Group stated that they’ve revoked Arena Group’s license to manage SI’s media operations following a missed payment of $3.75 million. That led to Arena announcing layoffs of “those who work on the SI brand.”
There’s still a lot of uncertainty on just what that means. Senior writer Pat Forde, for example, tweeted that “The entire staff was not laid off,” and an Authentic representative told AA SI “will not go dark,” with conversations on publishing it going forward underway with both Arena and other groups. But there have definitely been some tweets of mass layoffs, either imminently or in 90 days. And SI is certainly set for major change around this missed payment and license revocation.
It’s also worth noting that Arena has its own massive change coming around the loss of this license (if they’re not able to work out a deal to get SI publication rights back), as SI was one of their key properties and the “anchor” of their sports unit. And, so far at least, the market doesn’t seem bullish on what’s ahead for them. On Friday, Arena’s New York Stock Exchange-listed stock saw a massive drop, plummeting from an opening of $1.29 a share to a close of $0.84, a 33.6 percent fall.
Of course, there are concerning signs for Arena that go beyond one day, too. As recently as Jan. 30 of last year, the stock was trading at $10.42 a share. But it was down below half of that ($4.85) early in March, fell to $3.86 in May, and then dropped to $2.93 in November, shortly after their announcement of third-quarter financials. It then dropped to $1.78 on Jan. 8, and then fell further still in the runup to Friday’s news.
There have long been reports of financial issues at Arena. Back when it was TheMaven, and shortly after it struck a June 2019 deal to publish SI, a number of concerning stories came out around their financial stability. In particular, in a 2018 SEC filing, management “expressed “substantial doubt about the Company’s ability to continue as a going concern within one year,” citing losses of more than $8 million in the first six months of 2018.
The company raised $112 million in loans and preferred stock placements over the next year. But the debt taken on there caused further problems. And their third-quarter 2023 results in November cited net losses of $11.2 million for that quarter, an improvement over $16.5 million in the previous quarter, but still a major loss.
It’s going to be interesting to see what’s ahead for Arena if they’re not able to get the SI license back. That’s not a sure thing, with Arena exec Matt Lombardi saying Friday they’re still in conversations to publish the brand. But if this does wind up to be the end of their SI relationship, there are big questions on what’s next for Arena.