After an illustrious run of almost 70 years, Sports Illustrated, a magazine that has been a bastion of top-notch sports journalism for centuries, seems to be on the brink of extinction as we know it. On Friday, the union representing the magazine's reporting staff made the disheartening announcement that the Arena Group, the company holding S.I.'s publishing license, plans to lay off "a significant number, possibly all" of its 100 employees. An email to staffers revealed that some employees would be terminated immediately, receiving payment in lieu of the applicable notice period under the union contract, as reported by Front Office Sports.
The abrupt closure of the magazine can be attributed to financial debt. Since its sale by Meredith to Authentic Brands Group in 2019 for $110 million, Sports Illustrated has been entangled in a complex corporate structure. Later that year, ABG, with BlackRock as its largest shareholder and also managing the likeness of Muhammed Ali, sold the publishing rights to Maven, later renamed The Arena Group, led by publisher Ross Levinsohn. This deal obligated Arena to make annual payments of $15 million for ten years.
These hefty payments strained the magazine's operations significantly. In February, the magazine's sports editors were laid off, causing upheaval among the remaining staff. The situation became dire, as one employee revealed, "What do we do when one of the NBA writers files something when the editor was just fired?" This scenario played out across all sports, creating a challenging atmosphere for the remaining staff.
In August, Simplify Inventions, the company behind 5 Hour Energy drinks, acquired a majority stake in Arena. Soon after, it was discovered that Sports Illustrated was publishing error-riddled, A.I.-written articles, leading to internal embarrassment and an investigation. Bhargava, the CEO, held a town hall where he criticized the staff for their perceived inefficiencies. Levinsohn and Kraft, the president and COO, departed amid internal clashes. Bhargava took on the role of Arena's interim CEO.
The final blow came on January 3 when Arena Group failed to make a $3.75 million debt payment to Authentic Brands, granting Authentic the right to revoke the publishing license and collect a $45 million payment. Bhargava stepped down as interim CEO the next day to avoid conflicts of interest.
The closure left Sports Illustrated staff in a bleak situation with low morale. The fate of the magazine's stories and brand remains uncertain. Arena Group stated its commitment to delivering quality content during ongoing discussions with Authentic Brands. Authentic Brands Group, in turn, assured its dedication to preserving the legacy of Sports Illustrated. The fate of this iconic publication now hangs in the balance.
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