Earlier in the month, Arena had defaulted on a $3.75 million quarterly licensing payment, resulting in the termination of its SI deal.
Arena has never explained why it stopped paying to publish Sports Illustrated, but interviews with shareholders and current and former employees suggest that Arena missed the licensing payment by choice, not because it didn’t have the money to make it. The company had about $10 million in cash in December, enough to pay its debts, its licensing fees, and make payroll, according to two people directly familiar with the numbers. Public documents and interviews with other employees show Arena wasn’t running out of money, and the missed payment occurred during the football and holiday season, typically when its revenues were highest.
When Arena announced the mass layoffs at Sports Illustrated, the news was met with shock — including from managers directly familiar with magazine’s financial situation. “The business was growing, and there was no need to miss a licensing payment and cashier the SI staff,” Rob Barrett, the former Arena Group president who’d been dismissed from his job hardly a month earlier, said on LinkedIn a few days later.