"Publisher of Sports Illustrated Loses Naming Rights and Plans Staff Layoffs"

 

Sports Illustrated Publisher Faces Turmoil as Authentic Brands Group Revokes License:

The owner of Sports Illustrated, Authentic Brands Group (ABG), has taken a drastic step by revoking the license held by Arena Group to publish the iconic sports magazine. Arena Group, a publicly traded publisher, received the rights to publish Sports Illustrated in 2019 after acquiring it from ABG. The license revocation has prompted Arena Group to announce layoffs affecting staff working on the Sports Illustrated brand.

According to an email shared with Sportico, ABG officially notified Arena Group of the license revocation on January 18th. This move follows Arena Group's failure to make a $3.75 million quarterly payment on its license by the end of 2023, triggering ABG's right to pull the license. The companies were reportedly in discussions to salvage the arrangement, but the situation took a turn for the worse.

In a recent filing with the Securities & Exchange Commission (SEC), Arena Group revealed that the loss of the Sports Illustrated license means it owes ABG an immediate payment of $45 million, based on their existing agreement. However, Arena Group stated that the terms of the loss or financial arrangements are still subject to ongoing discussions with ABG.

The license granted to Arena Group by ABG covered the right to publish Sports Illustrated, including SI for Kids, the swimsuit issue, SI-branded events, and various media formats in English and Spanish across North America, the U.K., Ireland, Australia, and New Zealand. Arena Group had the option to renew its license for up to 100 years if it had been able to meet its regular quarterly payments.

As a consequence of these developments, Arena Group is initiating significant layoffs, affecting one-third of its total workforce. The company estimates costs of $5 million to $7 million due to these layoffs.

The NewsGuild of New York, representing SI reporters, expressed concern that "possibly all" SI staff could lose their jobs. The union called on ABG to explore alternative publishers to preserve jobs at the long-standing sports magazine.

ABG has yet to respond to inquiries seeking comments on the situation. Meanwhile, Arena Group's shares on the American Exchange experienced a sharp decline of over 30%, reaching $0.89 a share on Friday afternoon. The company's shares have plummeted more than 90% over the past year.

The uncertainties surrounding Arena Group extend beyond the Sports Illustrated issue, as the pending acquisition by 5-Hour Energy billionaire Manoj Bhargava adds another layer of complexity to the corporate landscape. This latest development follows a series of challenges for Sports Illustrated, including the use of AI-generated content and the subsequent firing of Sports Illustrated CEO Ross Levinsohn by Arena Group late last year.

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