Sports Illustrated’s future comes all the way down to a high-stakes game of chicken between the long-lasting magazine’s billionaire overlords, The Post has learned.
In a single corner stands Manoj Bhargava, the founding father of 5-Hour Energy and top shareholder of SI publisher The Arena Group, who made a dangerous bet to withhold paying the licensing fee in a bid to renegotiate terms on a contract that runs through 2029.
In the opposite is Jamie Salter, a Canadian licensing magnate whose Authentic Brands owns the storied title and called Bhargava’s bluff — fearing the tactic could embolden other Authentic licensees, a source near the situation told The Post.
Stuck between the battling barons — with net worths of roughly $1.5 billion and $1.1 billion, respectively — are the roughly 100 Arena staff, most of them in the SI union, who could also be solid aside in the subsequent two months if the 2 can’t work out a deal.
“Manoj wanted to barter a latest licensing agreement and Jamie said no,” a source near the situation told The Post.
“Manoj was surprised of course,” a second source added. “It was a gambit that didn’t repay.”
Authentic, which has allowed Arena to maintain publishing SI, has said it should keep the SI brand alive after revoking Arena’s license. The 2 sides proceed talking, a source told The Post on Wednesday.
Salter has also held discussions with Penske Media, Vox and Essence to take over the Sports Illustrated license, The Post reported exclusively last week. Authentic Brands Vice Chair and Chief Strategy Officer Daniel Dienst is acting as Salter’s representative in the talks, in keeping with sources.
Arena said it couldn’t comment on account of its ongoing discussions with Salter’s Authentic Brands.
Bhargava and Salter declined comment.
Authentic owns 50-plus brands, including storied retail labels like Aeropostale, Brooks Brothers, Endlessly 21 and Izod, in addition to the rights to dead celebrities including Elvis Presley, Bob Marley and Marilyn Monroe.
A latest publisher could also be more interested in keeping seasoned reporters and the long-form journalism that made SI famous, one other source said.
A source said a part of Arena’s decision to enact the large layoffs was to do away with high-paid writers, eight of whom allegedly make a combined $2 million. The corporate sent out a compulsory 60-day WARN notice to SI staff last week and fired some staff immediately.
The magazine’s few remaining big-name writers include Tom Verducci, Jon Wertheim, Chris Mannix, Greg Bishop and Pat Forde. They continue to be on the payroll however the plan is to fireplace them and offer to bring them back on a contract basis, one in all the sources said.
“Manoj doesn’t like high salaries,” the insider said. “This must be on a unique platform to make sure great journalism.”
SI, which in its heyday had a circulation of three million per week, has been reduced to 12 issues a yr — for an annual fee of $20. There are also about seven annual special issues. Arena doesn’t break out what number of print subscribers remain for a magazine that featured a number of the nation’s best writers when it was launched nearly 70 years ago.
The publicly-traded company said SI’s website gets about 70 million users a month. It generates roughly two-thirds of Arena’s $250 million in revenue, sources said.
Two of the sources said SI turns a small profit, but a 3rd source said it loses money for Arena.
Bhargava desires to cut its $15 million annual licensing fee by at the least a 3rd, to $10 million, as digital ad sales across the publishing industry fall, in keeping with those with knowledge of Bargava’s considering.
Arena skipped making a quarterly $3.75 million licensing payment to Authentic on Jan. 2 to force Salter’s hand.
Authentic can charge Arena a $45 million penalty for non-payment, sources said.
Bhargava, 70, signed a letter of intent in August to purchase Arena Group. That deal has not closed.
Arena stock, which traded as high above $14 just 14 months ago, has fallen below $1 since news broke about Authentic yanking its SI license.
The corporate’s stewardship of the fabled brand got here under fire after it was reported last November that SI published AI-generated content.
Arena CEO Ross Levinsohn was fired shortly after and Bhargava took over as CEO last month but stepped down on Jan. 4 — two days after initiating the standoff with Authentic — citing a conflict of interest.
The corporate named FTI Consultant Jason Frankl as its Chief Business Transformation Officer.