As Sports Illustrated sputters, Authentic Brands parties on

The Daily Mail, Page Six and “Entertainment Tonight” reserved spots along the velvet rope guarding the red carpet down which Shane Bieber, Brittany Mahomes, Aly Raisman and Jayden Daniels strutted. Victor Cruz posed with a bottle of Captain Morgan. Inside, more A-list celebrities: Justin Bieber, Kim Kardashian, Miles Teller, Tiffany Haddish, Diplo. (Washington Commanders and Philadelphia 76ers owner Josh Harris was there, too.)

Down a hallway from the dance floor, Sports Illustrated covers of the past decorated the walls: Yao Ming, LeBron James, Serena Williams, Muhammad Ali, a screaming Tiger Woods, Sugar Ray Leonard in the ring. “The Old Man Who Hates to Give Up,” the headline on his cover read.

The next day, longtime Sports Illustrated writer and “60 Minutes” correspondent Jon Wertheim appeared on “CBS Sunday Morning.” He looked into the camera and delivered a somber message about Sports Illustrated, the magazine that revolutionized and glamorized sports journalism when it was founded 70 years ago.

“Reports of its death may be premature,” he said. “But in sports terms, it’s in need of a comeback as the scoreboard clock ticks down.”

Wertheim was not exaggerating. A month earlier, nearly the entire staff of Sports Illustrated was sent layoff notices. Staffers at the magazine are not sure of its path forward — or whether they will have jobs come spring.

“SI remains vital to the cultural conversation, especially as sports mean more than ever,” Wertheim said. He closed: “Super Bowl LIX will be held next year in New Orleans. We hope your team will be there. I hope mine will, too.”

For now, though, he was a long way from Vegas.

“Shout out to Celsius, keeping us energized all night long!” the DJ said. “This is the party of the week!”

“Vegas,” Jamie Salter said, “was epic.”

It was a few days after the Super Bowl. Salter, CEO of Authentic Brands Group, the company that owns Sports Illustrated, was back in New York, gushing on a Zoom call from his Manhattan office. He wore designer glasses, a navy blazer and a white shirt, with a few buttons loosened at the top. He was joined by his deputy, Dan Dienst, who held a baseball bat with an SI logo.

The SI party, Salter said, was one of seven live events Authentic hosted in Las Vegas, including Gronk Beach, Shaq’s Fun House and Guy Fieri’s tailgate. The table next to Salter’s at the SI party Saturday was bought by white-shoe law firm Paul, Weiss, whose chairman, Brad Karp, is a top lawyer for the NFL. The firm paid $175,000, Salter said, and, according to Authentic, the bash set a record for most money generated at a nightclub party in Las Vegas history. Forty-five hundred people attended, the company said.

A Wynn spokesperson said the hotel doesn’t confirm the financial details of parties; a Paul, Weiss spokesperson did not reply to an email seeking confirmation.

“The people that buy those tables are private equity guys, law firms,” Salter said. “You got a very high-end crowd in the room.”

Added Dienst: “It’s like Davos in the desert.”

Salter founded Authentic in 2010 after a career in financial services. It is a brand ownership firm that buys the intellectual property of celebrities dead and alive — including Elvis, Shaquille O’Neal and David Beckham — and then collects royalties from their use. Authentic launched a production studio that was involved in “Elvis” the movie and Beckham’s Netflix docuseries. It bought O’Neal’s brand rights and owns approximately 50 percent of his future lifetime earnings, from endorsements to his HBO show to his broadcasting deal with TNT.

“He got a lot of money from us [upfront], and [we] grew his brand exponentially,” Salter said.

The other pillar of Authentic’s business is buying fashion brands such as Brooks Brothers and Quiksilver, sometimes out of bankruptcy, and creating licenses that clothes makers and retailers can purchase if they want to make or sell that brand. At the SI party, Authentic’s “activations,” as they call them, were on display next to the pool: Nine West shoes and apparel from Reebok, which Authentic bought for $2.5 billion from Adidas. Authentic is doing $30 billion in retail sales worldwide, the company says. Its largest shareholders are private equity firms and O’Neal. Salter flies around in a Bombardier private jet.

Authentic has an event licensee, too, which put on the SI party and sells sponsorships and tickets. Dienst said the SI party turned a profit of at least several million dollars.

The parties weren’t Salter’s only Super Bowl headlines. He and O’Neal gave Taylor Swift a jewel-encrusted football-shaped Judith Leiber purse — from another of Authentic’s brands, naturally — and visited her suite at Allegiant Stadium, where they snapped a photo with the pop star. “It went viral!” Salter said.

Much of this was part of Authentic’s business plan when it bought SI from magazine publisher Meredith in 2019. The company paid around $90 million in cash for SI, which had already undergone several rounds of layoffs and was struggling with the digital transition across media. Authentic has recouped all of that payment through licensing deals, Dienst said, including earning tens of millions of dollars from the media company that pays Authentic to publish SI in print and online. The licensing side of the SI business, Dienst said, now accounts for more revenue than the media side and makes up around 5 percent of Authentic’s total business.

SI has a gambling licensee and a resort partner. (The Eastern Band of Cherokee Indians is a major investor.) A hotel in Punta Cana, Dominican Republic, is now a Sports Illustrated-branded resort. How successful these businesses are is unclear; the Ann Arbor (Mich.) City Council just nixed a downtown SI hotel, and SI gambling is not a leading operator. But Authentic is still collecting licensing fees for the SI name. Churchill Downs will launch an SI hospitality suite at this year’s Kentucky Derby.

Asked if the proceeds from the parties or the live events get funneled to the media side of the business, Salter said they did not. Dienst said the bifurcation was in part to protect SI’s journalism. “We would never call an editor, a journalist or even know how to find the newsroom,” he said. “Without that editorial independence, the brand is dead.”

That happened after the Arena Group, the company that had an agreement to pay Authentic around $15 million per year to publish SI, missed a payment, seemingly as a negotiating tactic to lower that fee. Authentic pulled the publishing license, and Arena — which is led by the founder of 5-Hour Energy, Manoj Bhargava — issued the layoff notices. Staffers got an email from New York’s Department of Labor with new job search resources two days before the SI party.

The SI situation, then, is a parable for media in 2024, and it raises a question that feels very of the moment. What is a media brand today: Journalism? Nostalgia? A neon sign at a party in Vegas?

On the red carpet, Rob Gronkowski’s girlfriend, Camille Kostek, wore a black football jersey with his No. 87 on the back and “Sports Illustrated” across the nameplate. Brittany Mahomes, who will appear in this year’s swimsuit issue, wore a jacket emblazoned with “Sports Illustrated” on the back.

To Wertheim’s point, the name “Sports Illustrated” still means something, but maybe it’s not journalism. Victor Cruz, the former NFL wide receiver, was asked on the red carpet if he had a favorite SI cover; he said it was a Kate Upton swimsuit issue. Jerry Jeudy, a wide receiver for the Denver Broncos, said he didn’t have a favorite.

Salter insisted SI’s journalism remains central to his mission. “That’s the mouthpiece to the brand,” he explained. “It’s not as critically important from the financial side, but what we put out there from journalism [is the] core. If you took the shoes out of Reebok, I’m not sure Reebok would be Reebok anymore.”

By that logic, the past few years have been brutal for the SI brand, even if it hasn’t tanked the licensing business. SI’s troubles, Salter said, are rooted largely in Arena’s financial problems and debt load. Asked if Arena has been a good steward for SI, Salter responded emphatically, “No!”

“We don’t like the noise,” Dienst said. “We don’t like lack of professionalism. Jamie built a $30 billion company, right? And we do it privately. We like to party and tell stories and bring heat to our brands and tell how amazing our teammates are here. … It’ll pass. It’s going to be a blip in the 71-year history [of SI].” He added: “We’re going to get this right.”

Salter said Authentic is now considering four proposals for SI’s publishing license, though he declined to name the companies. One new possible publisher is Minute Media, which publishes the Players’ Tribune, according to people familiar with the deliberations.

Arena also has interest in buying the the license back with plans to focus on video, according to the New York Post. That report spooked the SI staff, though many were already hoping for a new publisher and some kind of an agreement to maintain the staff. (An Arena spokesman said, “We are transforming the business, and that takes change.”)

Through it all, there are still SI staffers who squint and see a real business that combines more of the licensing revenue with the media operation. The print magazine, according to multiple people familiar with its finances, has around 1 million subscribers and at least breaks even. Digital traffic, according to Comscore, has doubled over the past four years.

If Authentic is forging a new way to monetize a media brand — and, to be sure, there are not a lot of happy stories anywhere in media today — why, SI staffers asked, can’t they get a real cut? (Dienst, in a follow-up interview, clarified that there is revenue sharing between some licensing businesses and the media operation, though he declined to discuss specifics.)

As the fates of some 80 staffers hang in the balance and Authentic contemplates its next move, whatever comes next for SI — a new publisher, a zombie website, a cultural renaissance or anything else — Salter probably will be just fine.

“When your magazine comes to your door, everything that’s in there, you and I already know about,” Salter said. “What I’m saying to these guys, you got to change the strategy a little bit. It’s got to be more about the highlights. … Show us that Super Bowl catch. Like, how did he catch that ball? Like, the glue on his hands. … Talk about that story. Talk about the real moments that I want to hold on to forever.”

He continued: “These guys should have a Super Bowl edition after the Super Bowl … because I want to know about Kanye West getting kicked out [of a party]. I want to know about Kim Kardashian. … Take a page out of entertainment. Why does my wife watch ‘Entertainment Tonight’? She wants to see all the stuff that’s happening. … I can tell you I’m inside. I’m on the owners’ floors. I’m in the boxes where it’s all happening. It was unbelievable, but I saw it. You didn’t get to see it, so you don’t really know. You only know what you saw on social media. But I saw it all.”