Sports Illustrated has had a very bad year, and on Monday, after the magazine’s owner filed a lawsuit against its former publisher, it looks like it’s going to get uglier. Authentic Brands Group has sued Manoj Bhargava, the guy who owns 5-Hour Energy and controlled the publishing rights to the magazine for about six months, during which he reneged on paying millions of dollars in publishing fees, allegedly threatened to end the print magazine, and tried to fire the entire staff. The 51-page suit is an absolute scorcher, calling Bhargava a “gangster” with “considerable experience with questionable business practices” and accusing him of transphobia, racism, and continuing to “sabotage” the magazine. It is a seething, mud-throwing lawsuit looking for $50 million in unpaid fees and damages, and it holds nothing back, laying bare the absolute madness under the surface of the sport’s world’s most venerable magazine.
The drama boils down to a question of who really has a say over the magazine. There’s Authentic Brands Group, the management company owned by Canadian billionaire Jamie Salter, which holds the image rights to figures like Muhammad Ali and Marilyn Monroe and has owned Sports Illustrated since 2019. The other major company involved is Arena Group, a media company that had licensed the right to publish the magazine for $15 million a year. For most of that time, things were shaky but not disastrous — the company had a lot of debt and had let a lot of staff go, but it still operated without much controversy.
In 2023, though, Arena Group needed money and received a $100 million lifeline from Bhargava in exchange for control. The Authentic Brands lawsuit goes directly after Bhargava’s reputation, airing many of the unseemly aspects of his business history: “He is best known for owning ‘5-hour ENERGY,’ a caffeinated beverage sold in convenience stores and gas stations that has been the subject of numerous government investigations and lawsuits following the deaths and hospitalizations of dozens of consumers.” The animus doesn’t stop there. Authentic, which filed the suit in Manhattan federal court, notes that Oregon senator Ron Wyden had accused Bhargava of “improperly hid[ing] hundreds of millions of dollars in offshore bank accounts over the last 15 years.”
The Bhargava era of S.I. has been, according to the lawsuit, characterized by the whims of an inexperienced media mogul. In particular, Bhargava seems to have been particularly interested less in the sports side of things than in the magazine’s swimsuit models. In October, he “flew several SI Swimsuit Issue models on his private jet to 5-hour Energy’s Farmington Hills, Michigan, campus to pitch them on selling his energy drink,” the suit reads. Then, at some point this year, after finding out the “Swimsuit Issue” had published pictures of transgender models, Bhargava “immediately pushed to either shut down Swimsuit entirely, return Swimsuit to ABG, or separate Swimsuit into two magazines — one highlighting women who better suited his personal tastes, and the other for those who did not,” the suit claims.
ABG’s suit may answer one of the most baffling outstanding questions of this saga in S.I.’s history: Why did someone with negligible experience in media take over, and immediately scorch, one of the industry’s most recognizable names? Despite what some of Bhargava’s employees have been privately saying about not having the money to pay the licensing fees, the suit claims that “Arena certainly had more than enough money to make the royalty payment” — which matches my reporting from January. ABG characterizes Bhargava as someone who sees S.I. as merely a vehicle to sell his other products, and the various costs that came with owning that distribution were subject to negotiation. One of those costs was labor, and Bhargava “threatened to use any subsequent termination of the Licensing Agreement as a pretext for terminating SI’s unionized staff,” the suit claims. That echoes previous statements from former Arena Group CEO Ross Levinsohn, who accused Bhargava of “union-busting” tactics.
Bhargava said he would “go nuclear” on the licensing agreement last year, apparently in a bid to drive down costs, according to the suit. But the plan seems to have backfired. In January, when Arena Group — then effectively controlled by Bhargava — failed to make its payment, that triggered a $47 million penalty. (ABG says an earlier announcement from Bhargava’s company that the $47 million debts to ABG were nullified, as detailed in securities filings, is “fiction”). Since Bhargava took over, he has threatened to shutter the magazine’s print operations after spiking a print story about transgender boxers, the suit claims, and was going to take about a third of the print ad space for his own company’s products.
Last month, ABG announced that Minute Media — the company that owns Derek Jeter’s Players’ Tribune — would be taking over the licensing agreement from Arena Group. While the deal seemed to mark the end of Bhargava’s reign over the magazine, ABG claims Bhargava is still violating its rights. He has allegedly tried to undermine ABG’s brand by using the S.I. logo on unaffiliated sites and press releases and even telling vendors to destroy consumer data and intellectual property that otherwise belong to ABG or Minute Media.
A spokesman for Bhargava declined to comment for this story. Roberta Kaplan — the lawyer who represented writer E. Jean Carroll in her defamation suit against Donald Trump — said Authentic has no comment beyond the suit.
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Sports Illustrated’s Ex-Publisher Was a Transphobic ‘Gangster’: Suit
7
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01.04.2024
Sports Illustrated has had a very bad year, and on Monday, after the magazine’s owner filed a lawsuit against its former publisher, it looks like it’s going to get uglier. Authentic Brands Group has sued Manoj Bhargava, the guy who owns 5-Hour Energy and controlled the publishing rights to the magazine for about six months, during which he reneged on paying millions of dollars in publishing fees, allegedly threatened to end the print magazine, and tried to fire the entire staff. The 51-page suit is an absolute scorcher, calling Bhargava a “gangster” with “considerable experience with questionable business practices” and accusing him of transphobia, racism, and continuing to “sabotage” the magazine. It is a seething, mud-throwing lawsuit looking for $50 million in unpaid fees and damages, and it holds nothing back, laying bare the absolute madness under the surface of the sport’s world’s most venerable magazine.
The drama boils down to a question of who really has a say over the magazine. There’s Authentic Brands Group, the management company owned by Canadian billionaire Jamie Salter, which holds the image rights to figures like Muhammad Ali and Marilyn Monroe and has owned Sports Illustrated since 2019. The other major company involved is Arena Group, a media company that had licensed the right to publish the magazine for $15 million a year. For most of that time, things were shaky but not........
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