Sports Illustrated’s Owner Sues Energy Drink Mogul After Chaos at Magazine
Sports Illustrated’s owner on Monday sued Manoj Bhargava, the energy drinks mogul whose foray into media has been rife with chaos and conflict, accusing him of failing to pay millions of dollars for the rights to publish the iconic magazine.
The 51-page lawsuit, filed in U.S. District Court for the Southern District of New York, says that Mr. Bhargava and Arena Group, the publisher he controls, owe $48.75 million in missed payments, as well as damages for infringing on Sports Illustrated’s copyrights and trademarks.
The lawsuit represents the latest public skirmish between Authentic Brands Group, which owns Sports Illustrated, and Mr. Bhargava, the 5-Hour Energy drink founder whose effort to take control of Sports Illustrated’s parent company has resulted in a series of lawsuits and turmoil at the sports publication.
Sports Illustrated is being operated by Minute Media, a New York-based sports-media company that wrested the title away from Arena Group last month by striking a new deal with the magazine’s owner. After Arena Group laid off scores of employees in January and threatened to discontinue Sports Illustrated’s print edition, Minute Media pledged to hire some of them back and keep the magazine alive.
Authentic Brands Group, a New York-based intellectual property company that also owns the rights to celebrities like Shaquille O’Neal and Marilyn Monroe, said in its suit that Mr. Bhargava had repeatedly “opted for lawlessness” in his dealings with Sports Illustrated, deliberately missing payments to license the magazine and interfering with its new operator.
“In less than five months, Bhargava’s new venture not only crashed and burned, but almost took SI down along with it,” the lawsuit says.
Arena Group and Mr. Bhargava did not immediately respond to a request for comment.
Mr. Bhargava, in effect, took control of Sports Illustrated’s publisher, Arena Group, last year after striking deals to obtain an ownership stake in the company and buy up its debt. He then orchestrated the ouster of the company’s chief executive, Ross Levinsohn, and installed his own executives, according to the lawsuit.
Relations between Authentic Brands Group and Arena Group soon deteriorated. Arena Group had agreed to pay a $15 million annual fee to Authentic Brands Group for a license to publish the magazine. Mr. Bhargava deliberately skipped an installment of that payment in January, according to the lawsuit, in an attempt to lower the cost of operating the magazine. He also failed to pay Authentic Brands Group a $45 million termination fee when the company revoked Arena’s license to the magazine in February and threatened to “go nuclear” in response to demands from the magazine’s owner, according to the lawsuit.
After Authentic Brands Group found a new publisher for Sports Illustrated, Minute Media, according to the lawsuit, Arena Group shut down websites affiliated with Sports Illustrated and interfered with the orderly transfer of the site’s data to Minute Media.
In addition, according to the lawsuit, Mr. Bhargava and Arena Group misused Sports Illustrated’s intellectual property, applying its logo to sites affiliated with Mr. Bhargava without permission from Authentic Brands Group. In one instance, the lawsuit said, Arena Group published a news release for 5-Hour Energy that was labeled a Sports Illustrated editorial piece, which undermined “the value and reputation of the SI brand and business.”
Mr. Bhargava is already facing other lawsuits related to his association with Sports Illustrated. Former Arena Group executives, including Mr. Levinsohn, are suing Mr. Bhargava for withheld severance payments, as well as punitive damages and legal fees.
