Arena Group said in a regulatory filing that it expects to continue to publish Sports Illustrated despite having its license revoked last month by SI’s owner Authentic Brands Group.
Arena “expects to enter into a letter agreement with ABG,” the company stated in an SEC filing Friday, which will allow it to continue operating the Sports illustrated business until or unless “ABG provides written notice of its desire to transfer the license to another party.”
As part of this arrangement, Arena said it expects Authentic Brands to drop the $45 million penalty that was triggered when Arena failed to make its $3.75 million quarterly payment at the end of 2023. In response, ABG revoked Arena’s license and announced it would be laying off a third of its staff, putting the future of the storied sports publication in doubt. Arena now says it believes that ABG will forego the licensing fees it would have to pay since the start of the year.
A representative for the Arena Group said the company anticipates additional public disclosures being made in the next two weeks, but declined to comment on the latest filing. A spokesperson for ABG did not respond to a request for comment.
SI has persisted—its website has recently published stories on topics such as the Super Bowl, fantasy sports and Major League Baseball—despite the fact that ABG formally pulled the license from Arena.
The latest filing lays out a number of risks associated with “New Arena Holdco, Inc.”–the end result of its pending merger with Bridge Media–including the possibility that it might not work out a deal with ABG. Arena also provides some new details of the company’s workforce, reporting that it had 459 employees at the end of September. It confirmed its prior announcement that it would reduce its personnel by a third, as part of Sports Illustrated’s changes.
Some members of SI’s staff were fired immediately, while others were told in mid-January they would have their jobs for at least 90 days. Arena has projected revenue losses of $5-$7 million in “total restructuring charges,” which included employee severance and termination fees. Arena posted sales of $173.6 million—and a net loss of $50 million—in the first nine months of 2023, according to the company’s prospectus. Arena doesn’t disclose how much of its revenue stems from SI.
Arena publishes SI in English-speaking countries and a Spanish-language version for Mexico, as well as editions for kids and the annual swimsuit issue. Other SI-branded efforts, such as sports betting and events, are licensed to other parties by Authentic Brands. ABG’s business model is to buy intellectual property, such as the publicity rights of athletes like Shaquille O’Neal and David Beckham, and collect royalties on their use.
Arena’s recent disclosure was made in a preliminary merger prospectus with Bridge Media, a business of 5-hour Energy billionaire Manoj Bhargava. In the filing, publicly traded Arena also disclosed it is in default on a $111 million loan from Renew Group Private Limited, another one of Bhargava’s businesses, due to missing an end-of-2023 payment. Renew has agreed to suspend any action on the default until at least March.
In addition to SI, Arena publishes TheStreet and Parade, among its 320 brands. Bridge Media operates streaming and over-the-air channels, including Sports News Highlights and Driven Automotive.