The battle for control of Sports Illustrated—and stability within the historic brand—is increasingly playing out in court.
Sports Illustrated owner Authentic Brands Group filed a lawsuit against previous publisher The Arena Group in New York on Monday, demanding nearly $50 million for what it says are a missed licensing payment and a $45 million termination fee.
Notably, the lawsuit also alleges a number of harmful management decisions by Arena Group owner Manoj Bhargava in addition to missed payments. In total, the 51-page complaint spells out 14 claims of wrongdoing, including breach of contract, tortious interference, trademark infringement and patent infringement.
“Bhargava behaved more like a gangster than a trusted business partner and good-faith counterparty,” the suit alleges, “threatening to … essentially burn everything down and destroy the SI brand, unless ABG entered into a new agreement on completely new terms.”
In March, Authentic announced a deal with Minute Media to continue publishing SI both online and in print. Meanwhile, the company has continued to leverage SI’s brand in other categories, though its sports betting strategy has also faced recent disruption.
According to the lawsuit, Arena continued to violate its agreed-upon licensing deal after the Minute Media announcement, holding onto SI marks, posting ABG-owned content on competing websites, and refusing to turn over proprietary information to Minute Media. Instead, Authentic alleges, Arena illegally demanded a “$50 million ransom” to cooperate and has gone so far as “threatening to shut down SI’s operations if they were not paid.”
Authentic declined to comment on ongoing litigation. An Arena representative has not yet returned a request for comment.
Arena is likely to respond legally by answering the complaint, denying the accusations and raising counterarguments. The allegations in a complaint reflect plaintiff advocacy, and not a neutral retelling of events. There’s a good chance Arena will insist it has acted within reasonable and lawful interpretations of business agreements and other contracts, and that Authentic is attempting to exploit the legal system to obtain negotiation leverage.
Monday’s lawsuit comes after ex-Arena Group CEO Ross Levinsohn sued his former employer, claiming it owes him more than $40 million. That suit calls Bhargava out for “illegal misconduct, overt self-dealing and systematic destruction of shareholder value.” Specifically, Levinsohn alleged that Bhargava intended to use Sports Illustrated assets, including SI Swimsuit models, to promote his other companies, which include 5-Hour Energy and a jewelry line. Bhargava replaced Levinsohn as CEO in December.
The union representing Sports Illustrated staff members has also fought against its erstwhile publisher, alleging union-busting tactics in a filing with the National Labor Relations Board’s New York office. Arena declined to comment on those allegations at the time.
