Game over? Sports Illustrated thrown into chaos with mass layoffs

Sports Illustrated (SI), the venerable bible of sports journalism, has been in decline for years, as the Internet annihilated print magazines and cost-cutting turned the weekly publication into a monthly and whittled its staff.

But on Jan 19, the magazine received perhaps its toughest blow yet.

The company that publishes SI said in an e-mail to employees that it is laying off many of them.

The move came after the Arena Group, which publishes the magazine and website under a complicated management structure, had its licence to operate the publication revoked.

Reporters and editors for SI were asked on Jan 19 to attend a Zoom call at 2pm Eastern time (3am on Jan 20, Singapore time). It lasted just seven minutes.

On the call, Mr Jay Frankl, Arena’s newly hired chief business transformation officer, said: “We will continue to produce the Sports Illustrated brand and online content until the situation is fully resolved.”

This was according to a recording of the meeting heard by The New York Times. No questions were taken.

Some SI staff members received e-mails with immediate layoff notices, while others were told in further Zoom meetings that they would keep their jobs for at least 90 days. Around 100 journalists work for SI.

Arena executives told SI staff they plan on continuing to publish the magazine and website, despite having their licence to operate the publication revoked. But it was not immediately clear how that would work.

It was also unclear whether the magazine’s owner, Authentic Brands Group, would strike a new agreement with Arena or find a new company to operate it.

But it seems certain that even if SI survives in some form, it will be severely diminished.

The mood among staff members in the wake of the layoff announcement was a mix of anger, frustration and confusion.

Journalists at SI texted and messaged one another on Slack, unsure in some cases who had been laid off, and what the ultimate fate of the magazine would be.

For decades, SI was a weekly must-read for sports fans and a financial engine for the Time Inc. empire. It once had more than three million subscribers, and its writing, reporting and photography were considered the pinnacle of sports journalism.

Landing on the cover was the most coveted endorsement an athlete could receive, even well into the television and Internet eras.

And its annual swimsuit issue was a pop culture phenomenon.

“I think it is one of the best magazines to ever exist, with some of the best photographers, writers and editors that have ever been in one building,” said Mr Rick Reilly, who for years wrote the magazine’s popular backpage column.

He added: “If it is really dead, it has kind of been dying.”

SI has been in trouble for years. It struggled to shift to the digital media world, and was hampered by mismanagement.

Meredith Corporation purchased Time Inc., which included SI and other media assets, for US$3 billion (S$4 billion) in 2017.

Two years later, the media conglomerate sold SI to Authentic, which is primarily a licensing company that acquires the rights to celebrity brands, for US$110 million. It was bought for the value of the SI name and intellectual property, not because Authentic intended to run a magazine.

Arena – which owns Men’s Journal, Parade and TheStreet and was previously known as the Maven – quickly struck a 10-year agreement with Authentic to operate and publish SI. It paid at least US$45 million for the right to do so, while Authentic retained commercial rights for things like a potential SI-branded hotel in Michigan.

In a statement, Authentic said it is committed to ensuring that “the brand of Sports Illustrated, which includes its editorial arm, continues to thrive as it has for the past nearly 70 years”.

A spokeswoman for Arena said it is in negotiations with Authentic and plans to continue to publish SI. “We hope to be the company to take SI forward but if not, we are confident that someone will,” she said in a statement.

The union representing SI confirmed that Arena is laying off many employees.

“This is another difficult day in what has been a difficult four years for Sports Illustrated under Arena Group (previously the Maven) stewardship,” the union said in a statement. “We are calling on ABG to ensure the continued publication of SI and allow it to serve our audience in the way it has for nearly 70 years.”

It has been a particularly tumultuous several months at SI. In August, Mr Manoj Bhargava, the entrepreneur behind the 5-Hour Energy drink, agreed to buy a major stake in Arena, raising hopes that he might provide a measure of stability.

But shortly after he agreed to buy the stake, SI was thrown into chaos. Several Arena senior executives were forced out of the company, including its chief executive officer (CEO) Ross Levinsohn, president Rob Barrett, chief operating officer Andrew Kraft and general counsel Julie Fenster.

In November, reports circulated that SI published product reviews under fake author names, seemingly generated by artificial intelligence, which Arena blamed on a vendor.

“My God, they had AI writers with backstories, robots they were trying to pass off,” Mr Reilly said, before invoking renowned SI writers. “This is a place that hired Jim Murray and Dan Jenkins.”

The situation got worse after that. In early January, Arena failed to make a US$3.75 million payment to Authentic, breaching its licensing agreement.

Days later, Mr Bhargava resigned as its interim CEO, and the company signed an agreement with FTI Consulting to help turn the business around.

Things came to a head on Jan 18, when Authentic sent Arena a letter terminating the SI licence, according to public filings, setting off an immediate US$45 million payment to Authentic. The same day, Arena announced it was cutting one-third of its workforce.

In 2020, shares of Arena traded for as much as US$14.20. On Jan 19, they were trading for under US$1. NYTIMES