While Sports Illustrated owner Authentic Brands Group has transferred the publishing rights to that title from The Arena Group to Minute Media, there are still complications involving Arena. For one, there’s the $48.75 million Arena owes Authentic, as indicated in SEC filings ($3.75 million for the January missed payment that trigged the license pull and a $45 million termination fee). But perhaps even of more note for the future of SI, there has been lots of discussion of Arena interfering with the transition to Minute.
The actual late-March handover to new publisher Minute included a website crash, as well as reports of Arena attempts to steal domain names and social accounts. It’s also included discussion of unauthorized use of SI branding on other Arena sites, and talk of Arena trying to recruit SI FanNation team site contractors for its own sites. And last week saw plenty of details revealed in court filings, with ex-Arena CEO Ross Levinsohn filing a lawsuit seeking at least $40 million for breach of contract and other claims from defendants including Arena, majority owner Manoj Bhargava, Bhargava’s Simplify Inventions, and individual members of the Arena board.
Now, there’s a new lawsuit filed, and it has implications for both company finances and the future operation of SI. This complaint comes from Authentic against Arena, and was filed in federal court (the U.S. district court for the Southern District of New York) Monday. It seeks that $48.75 million in payments, plus compensatory and other damages. But, perhaps most notably, it’s looking to compel Arena to live up to its contracts, seeking “an injunction requiring Arena to comply with its posttermination contractual obligations and prohibiting Defendants from continuing to violate ABG’s rights.”
And there are notable details of the alleged rights violations there, including discussion of Arena refusing to turn over website and other assets, copying copyrighted material (including some whole past SI issues) to their own sites, and Authentic and Minute having to go to “static” versions of the SI websites they can’t sell ads against. Here’s that filing in full, and it’s full of a lot of claims in remarkable language. Some key quotes from that, starting with discussion of Bhargava’s entrance into the Arena-Authentic relationship.
This action arises out of the destructive, willful, and unceasing efforts by Arena and its former interim CEO and current majority shareholder, Manoj Bhargava, to sabotage and hold hostage ABG’s revered Sports Illustrated (“SI”) brand and intellectual property, including SI-related content, copyrights, and trademarks, to avoid the financial consequences of Arena’s and Bhargava’s decision to renege on Arena’s clear contractual obligations under the parties’ licensing agreement in a bad faith attempt to prioritize and promote Bhargava’s other business interests and bottom line.
…The dispute has quickly grown to include claims for, among other things, unpaid commissions and earned royalties, damage to the SI brand and business, interference with ABG’s ownership rights of SI-related intellectual property, tortious interference, trademark and copyright infringement, and conversion. Arena and Bhargava incurred these additional liabilities when, rather than honor their publicly admitted contractual obligations to pay ABG tens of millions of dollars for Arena’s breaches, they instead tried to weaponize their obstinance as a means of threatening and forcing ABG to capitulate to a series of outrageous demands.
In other words, they explicitly threatened to “go nuclear”—and indeed have—by firing SI’s loyal staff, many of whom may have been protected by a collective bargaining agreement, refusing to turn over media and editorial content, websites, and subscriber lists that belong to ABG, refusing to cooperate with ABG and its new SI licensee in transitioning the business, and further damaging the value of the SI brand by posting stolen content on competing websites and creating widespread public and consumer confusion over the future of SI.
…For several years, this arrangement worked for both parties. … That all changed in the fall of 2023 when Defendant Manoj Bhargava entered the scene. Bhargava is a purported billionaire whose “sport” is litigation.
The complaint then gets into some more specifics on the last few months of turmoil, and says Bhargava “behaved more like a gangster than a trusted business partner”:
In a subsequent meeting with ABG, Bhargava demanded the negotiation of a new deal on terms more favorable to him and signaled that he planned to use any termination of the Licensing Agreement by ABG as grounds to fire Arena’s unionized SI staff. In response, ABG insisted that Bhargava honor Arena’s contractual obligations under the Licensing Agreement, while also negotiating with him to protect the SI brand and mitigate any damages. None of that mattered to Bhargava, who clearly felt unconstrained by Arena’s contractual promises to ABG and believed that he could simply strong-arm ABG into capitulating to his demands. Bhargava behaved more like a gangster than a trusted business partner and good-faith counterparty, threatening to rip up the Licensing Agreement, and essentially burn everything down and destroy the SI brand, unless ABG entered into a new agreement on completely new terms.
…ABG promptly directed Arena to transfer the SI-related licensed assets to Minute Media, including subscriber data and all editorial and other media content created in connection with the SI business, and to cease all use of the SI copyrights, trademarks, and content—anything and everything that is owned by ABG under the Licensing Agreement. Once again, however, Defendants opted for lawlessness.
Instead of turning over the critical subscriber data that ABG owns, Arena employees instructed third party vendors to either return the data to Arena or to destroy it. Instead of turning over the editorial and media content that ABG owns, Arena posted that content to its own competing websites. And instead of ceasing to use the SI trademarks, Arena flagrantly violated the Licensing Agreement by plastering those marks on its competing websites as well, creating extremely damaging consumer confusion and threatening SI’s search engine optimization (“SEO”) performance.
Arena has also tried to hijack the popular “FanNation” platform to compete with SI, relying on an improper application to register the “FanNation” mark with the U.S. Patent and Trademark Office (“PTO”), which was made in violation of the Licensing Agreement and trademark law. And Arena continues to refuse to pay the $48.75 million it owes ABG, even as it has conceded this obligation in multiple filings with the SEC. …None of this, of course, was an accident. It is simply Arena’s—and Bhargava’s—way of doing business.
…To help mitigate the damage to the SI brand and business and prevent the loss of consumers who regularly visit and trust si.com and related websites, ABG and Minute Media immediately redirected all URLs on the SI domains to “static” versions of those websites. The static versions are designed to preserve domain authority and traffic, but are not capable of serving advertisements or facilitating the publishing of content in the same way that the type of “dynamic” site previously operated by Arena would allow. As a result, the SI-related websites are not presently generating any advertising revenue, causing further damage to the SI brand and business.
While there are many new details here, some of the information in this complaint had already come out in reporting and in the lawsuit Levinsohn filed last week. That came after he was fired as Arena CEO in December, then resigned from the board in January while publicly blasting the company for the “destruction” of SI, and then went further still with accusations of Arena’s tactics being “illegal” and “abhorrent.” And his lawsuit went further on a number of fronts with specific details of Bhargava’s behavior, much of which this lawsuit also mentions.
There are maybe two overarching takeaways from this specific filing. One is the accusations on Bhargava in particular. Some of this has come out in past reporting on him, with his propensity for litigation cited in many profiles. The lawsuit also brings up the allegations that Bhargava kept undocumented hundreds of millions in Swiss bank accounts in a scheme to avoid taxes, brought up by Senate Finance Committee chair Ron Wyden (D-Oregon) in discussion of “Person 1” last month, with CNBC reporting that person is Bhargava. And the specifics it goes into on Bhargava breaking contracts and acting in ways Authentic contends are illegal are notable.
Meanwhile, litigation of this sort seems more unusual for Authentic. That company is more known for putting the focus on the brands it manages than anything on itself. But CEO Jamie Salter has made it clear he’s a strong believer in enforcing their contracts, with that coming up in comments he made to Ben Strauss of The Washington Post in January around some of this drama with Bhargava and Arena. And those aren’t always just about the finances.
That leads into the other big takeaway here: this isn’t just a money fight. Absolutely, the almost-$50-million Authentic says Arena owes it is significant for both companies. But for media consumers in particular, the Authentic and Arena bottom lines aren’t as notable as what happens with SI. And this Authentic lawsuit’s request for an injunction to stop Arena interference with Minute’s operation of SI is particularly notable there. That could seemingly make things much smoother for SI if it’s granted, and have implications for both Minute and Arena’s sports efforts.
