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- The owner of the Sports Illustrated brand filed a lawsuit Monday against the magazine's old publisher.
- The Arena Group lost SI, its crown jewel, after 5-Hour Energy owner Manoj Bhargava took control.
- In a lawsuit, Authentic Brands Group says Bhargava threatened to "go nuclear" and seeks $49 million.
Manoj Bhargava, the 5-Hour Energy drink mogul who acquired the company that published Sports Illustrated and promptly lost the rights to publish the iconic sports media brand, found himself on the receiving end of yet another lawsuit on Monday.
Authentic Brands Group, which owns the Sports Illustrated brand, said Bhargava and others are on the hook for $49 million after defaulting on a multi-year deal to publish the sports magazine and its website, as well as damages to the brand.
It's at least the third suit against Bhargava and the media company he acquired, the Arena Group, stemming from his acquisition of most of its shares last year.
Arena failed to make a licensing payment to ABG in early January. Behind the scenes, according to the complaint, Bhargava "behaved more like a gangster than a trusted business partner," using his failure to pay as a way to attempt to restart negotiations between Arena Group and ABG.
The lawsuit claims Bhargava was threatening to "go nuclear" by holding Sports Illustrated hostage — threatening to shut down its websites, steal its content and subscriber data, and infringe its trademarks and copyrights. The lawsuit alleges this was all done to force Authentic Brands back to the negotiating table after their licensing deal fell apart.
After ABG awarded the Sports Illustrated publishing rights to another media group, the lawsuit states Bhargava and Arena forced the websites to go dark, risking the loss of subscribers and ad revenue at the start of March Madness.
"The timing of this action — right at the beginning of the NCAA men's and women's basketball tournaments, a particularly busy time for sports news outlets — shows Arena's deliberate and unlawful torpedoing of SI's web traffic and Google rankings to the benefit of Arena's own properties," the complaint states. ABG also claims Bhargava instructed Arena employees to tell third-party vendors to withhold or destroy Sports Illustrated's intellectual property and consumer data.
It's the latest challenge for Bhargava, a Michigan-based monk-turned-entrepreneur who founded 5-Hour Energy and is reputed to be a billionaire from the brand's success (though Bhargava claimed in 2021 not to know his net worth).
Last week, former Arena Group CEO Ross Levinsohn sued Bhargava, saying he was fired for pushing back on a false press release and a plan to steamroll SI's union. Rob Barrett, another fired exec, has also sued.
Bhargava's tax issues have also been thrust into the spotlight. Senator Ron Wyden sent a letter to a Swiss bank in March seeking information about an array of accounts that are reportedly linked to Bhargava. And the IRS said in 2019 court filings that it regarded hundreds of millions of dollars of charitable donations by Bhargava as suspicious; that case hasn't been resolved.
ABG's lawsuit touches on tax issues as well, stating "Bhargava allegedly used the bank to hide hundreds of millions of dollars overseas over the last 15 years" and citing Wyden's letter that, if the allegations are true, Bhargava would be facing one of the largest tax penalties in US history.
"ABG does not comment on pending litigation," a spokesperson for Authentic Brand Groups said.
Bhargava and Arena Group also declined to comment.
Sports Illustrated — which is a relatively small part of Authentic Brands' licensing empire, which includes Reebok, Brooks Brothers, and Nautica, among other labels — found a new home in March when Authentic Brands transferred the license to Minute Media, a publishing firm whose websites include the Derek Jeter-founded outlet the Players' Tribune.
But it's not clear whether dozens of unionized staff will find new jobs there; in recent days, nearly all the articles on SI.com have been written by contributors to The Big Lead, another Minute Media digital property.