• by Ray Schultz , June 9, 2024

The Arena Group has answered what it calls the “sensationalized” suit filed against it two months ago by Authentic Brands Group (ABG) over the stewardship of Sports Illustrated, and is claiming damages of $200 million.

In March, ABG cancelled Arena Group’s license to publish Sports Illustrated, awarding the license to Minute Media, then sued the Arena Group for a $45 million termination fee. Among other things, it alleged that Manoj Bhargava, majority owner of The Arena Group, acted “more like a gangster” than a trusted business partner. 

But Arena Group’s answer claims that “Arena is just the latest licensee to fall victim to ABG’s extensive and public history of strip-mining its license partners, imposing steep guaranteed royalties and termination fees that award ABG a windfall, and plunging its contractual counterparties into near-insolvency before abandoning them for new targets.”

In addition, the answer accuses ABG of “conspiring with Arena’s competitor, Minute, to steal the crown jewel of Arena’s business—the proprietary code technology and trade secrets comprising the valuable internet platform Arena developed at significant expense.

The answer names Minute Media as a third-party defendant,” arguing that “this action is about ABG enlisting businessmen from top tier investment firms (including CVC, BlackRock and others) to help steal from Arena, conspiring with its new licensee (Minute) to orchestrate a multi-step corporate heist against Arena.”

Arena Group missed a $3.75 million payment to ABG, but the company asserts that ABG was “slowly but steadily turning the financial screws on Arena until it was forced to make the necessary choice to pay its employees instead of paying a quarterly license fee owed to ABG.”

The Arena Group laid off almost the entire staff of SI after its license to produce the magazine was suspended.

The company owns and operates such brands TheStreet, Parade, Men’s Journal and Athlon Sports.

The case is on file with the U.S. District Court for the Southern District of New York.