Metro Detroit billionaire businessman Manoj Bhargava faces a lawsuit tied to his ongoing takeover bid of the former publisher of Sports Illustrated magazine.
The lawsuit, filed last week in California in a Los Angeles County court, is brought by Ross Levinsohn, a veteran media executive and the former CEO of Arena Group Inc., a New York City-based publishing company for which Bhargava has been mounting a takeover bid since summer.
Bhargava is best known as the founder of the 5-hour Energy drink brand and runs myriad companies out of an office park he owns in Farmington Hills. He is named as a defendant in the lawsuit along with Arena Group — which up until January had published Sports Illustrated under a licensing deal from owner Authentic Brands — along with several other people connected to Bhargava.
The 60-plus-page lawsuit accuses Bhargava of being “a wolf in sheep’s clothing,” presenting himself as a “like-minded investor” in Arena Group but engaging in “illegal misconduct, overt self dealing, and systematic destruction of shareholder value.”
Bhargava spokesman Steve Janisse declined to comment Wednesday, citing pending litigation, while a spokesperson for Arena Group did not respond to a request for comment.
News of Levinsohn’s lawsuit was first reported Monday by Business Insider.
"Ross Levinsohn, like so many others, gave his full energy and devotion to the company in the belief that his contractual rights would be respected," Bryan Freedman, a Los Angeles-based attorney representing Levinsohn, wrote in an emailed statement to Crain's on Wednesday. "This unnecessary distraction and added cost to the company, which could easily have been avoided, hurts the shareholders’ interest, which should be a priority."
The lawsuit also alleges that Bhargava illegally fired Levinsohn from his position as CEO of the publicly-traded Arena Group (NYSE: AREN), a company that has seen its stock plummet more than 75% in the last year and now trades at around $1 per share.
Per the lawsuit, Levinsohn took over as CEO of Sports Illustrated in 2019 and subsequently became chief executive of its publisher, Arena Group, the following year. Levinsohn and his team immediately began a turnaround of the company, which “was nearly insolvent, loaded with more than $90 million in debt, burdened by millions of dollars in lease payments and public company costs, and operating under a license agreement for Sports Illustrated that mandated a minimum payment of $15 million a year,” according to the complaint.
While the lawsuit says that revenue and profits improved considerably under Levinsohn’s leadership, additional capital was needed for general operations and growth.
An early warning sign for Levinsohn, the lawsuit says, came last fall shortly after Bhargava’s deal to acquire a majority stake in Arena Group had been announced. The complaint says that in November, B. Riley Financial — described as a “financial partner for Arena Group,” owning more than 40% of the company’s equity and nearly all of the debt — “found itself in a precarious position.”
That’s because Bhargava and B. Riley Financial CEO Bryant Riley had struck a deal for the metro Detroit businessman to acquire all of the financial firm’s debt and equity in Arena Group, in what the complaint says was a transaction worth $100 million.
“While the B. Riley transaction first appeared to be an expression of Bhargava’s continued enthusiasm for the merger he’d negotiated and diligenced with Arena, it swiftly became apparent that his intentions were far more Machiavellian,” the complaint says.
Upon becoming the largest equity shareholder with 44% of the company’s stock, “Bhargava seized on the powers and privileges this afforded him, including the immediate replacement of two B. Riley-appointed directors with two of his own representatives to the Arena board," the complaint says. "However, in the days and weeks that followed, emboldened by a false sense of control, Bhargava and his sitting board members would take stunning actions that far exceeded their legal authority, in an effort to take over the Company.”
The complaint by Levinsohn — whose career before serving as CEO of Arena Group included stints as interim CEO of Yahoo and several other tech and media properties — goes on to levy a host of allegations against Bhargava and his associates, including:
- Breaching the employment contracts of Levinsohn and other top Arena Group executives;
- “Unilaterally” reorganizing the company and disparaging top executives, despite being “a mere minority shareholder;”
- Retaliation against Levinsohn and others for a refusal to participate in various plans proposed by Bhargava;
- Providing false financial information for his own media holdings, which have been slated to be merged into Arena Group as part of the deal;
- Seeking to use Sports Illustrated swimsuit models to promote his own businesses and providing them with gifts such as diamond jewelry.
Bhargava’s looming takeover of Arena Group became the object of national attention in January when Sports Illustrated’s owner, Authentic Brands, canceled the licensing agreement after the licensee missed an interest payment. Subsequently, nearly all of the staff was at least temporarily laid off.
Levinsohn’s complaint states that Bhargava had issued a directive that the company cease paying debt payments, “thus putting Arena in default and allowing Bhargava the opportunity to take over Arena in the event of bankruptcy, all to the detriment of shareholders.”
Earlier this month, Lower Manhattan-based Minute Media announced it had struck a deal to license the publishing rights of the storied Sports Illustrated brand.
Bhargava’s deal to acquire the majority stake in Arena Group has yet to close, but the proposed deal remains ongoing.
This article originally appeared in Crain's Detroit Business.
New York City will test weapon-detecting scanners in the subway system to make commuters feel safer after a string of violent incidents. Mayor Eric Adams on Thursday unveiled a portable scanner designed to detect guns carried by riders. The pilot program can begin following a 90-day waiting period during which the public can share their [...]
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Metal detectors equipped with artificial intelligence will soon come to subway stations in a move by the Adams administration to be responsive to a string of shootings and assaults with knives in the system, police and transit officials said Tuesday.
Mayor Eric Adams said the city will move forward with testing scanners manufactured by Massachusetts-based Evolv, a company that is under fire for potentially overstating the capabilities of its technology and is actively being investigated by the U.S. Securities and Exchange Commission and the Federal Trade Commission.
The mayor said the city is working to finalize a deal with Evolv and would not specify how many scanners will enter the system or which stations will receive the hardware. Based off of initial tests, Adams said the scanners are so far “living up to our expectations.” The technology, the mayor said, will help address the “chilling effect” of recent high-profile subway crimes, including a Downtown Brooklyn shooting and a homophobic slashing in Midtown.
“Would I prefer us not having to walk through this to come onto our system? You’re darn right I do,” said Adams during a Thursday news conference at the Fulton Transit Center in Lower Manhattan. “But we have to live life the way it is and work to make it what it ought to be, and right now we have a small number of bad people that are doing bad things to good people.”
NYPD officials will begin testing Evolv scanners in the subway after a 90-day waiting period required by city law before the new technology can be tested. The scanners do not include facial recognition or biometric scanners, but do utilize artificial intelligence as the “brain and connective tissue to seamlessly integrate and process data from multiple sensors,” according to Evolv’s website.
The city wouldn't disclose how much it intends to spend on the initiative, or where the funds would come from to finance the pilot. A typical Evolv subscription can cost between $2,000 and $3,000 per scanner per month. If the city were to scale up the effort to place scanners at the more than 1,900 entrances at the subway’s 472 stations, it could cost taxpayers hundreds of millions of dollars each year.
New Yorkers are not required to walk through a scanner, and declining to do so is not probable cause for police to conduct a search, according to Michael Gerber, the city’s deputy commissioner of legal matters. Police officers can only search someone in the area a scanner has identified as potentially concealing a weapon, Gerber added.
But equity advocates are skeptical of the technology. Jerome Greco, supervising attorney of the digital forensics unit at The Legal Aid Society, urged New Yorkers to be cautious of the “dystopian technologies” the city wants to deploy into mass transit.
“Simply put, gun detection systems are flawed and frequently trigger false alarms, which induces panic and creates situations that could result in the loss of life,” said Greco in a statement. “This Administration’s headstrong reliance on technology as a panacea to further public safety is misguided, costly, and creates significant invasions of privacy.”
Evolv scanners are already in use throughout the city, including at One Vanderbilt, the Metropolitan Museum of Art and baseball stadium Citi Field. But some transit advocates note that the scanners tend to create lines and could make it less convenient for riders to access the subway.
“Of course we want to use as many means as we can to get guns off the subway, but those can't interfere with the service,” said Danny Pearlstein, policy and communications director for the Riders Alliance, an advocate for subway and bus riders.
“What we do know is that we can't turn a subway station into an airport terminal,” Pearlstein added. “Metal detectors, as we know them, don't make sense for the subway.”
Adams brushed off crowd concerns Thursday. “People will wait in line to be safe,” he said.
Mayor Eric Adams is calling on the state to lift a policy restricting the density of residential towers to allow for bigger apartment buildings and more affordable housing in New York City. Enacted in 1961, the existing floor-to-area ratio, or FAR, cap allows buildings up to 12 times the size of their lot. On Thursday, [...]
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A prominent piece of religious real estate in Morningside Heights could soon meet its maker.
Charney Cos., a residential developer that has previously built in Brooklyn and Queens, has purchased a Gothic-style dorm for divinity students next to the Riverside Church for $38 million.
The latest example of a nonprofit religious group unloading holdings in order to raise funds, the deal for 97 Claremont Ave., a 7-story granite-and-limestone structure at West 122nd Street near Columbia University, went into contract Aug. 17 and closed March 18, according to the city register.
A non-landmarked property just outside the neighborhood’s historic district, the 44-room, 1932 building, called McGiffert Hall, had been used for decades by Union Theological Seminary to house students. A tunnel runs under Clermont Avenue from the dorm to the seminary’s main campus.
But No. 97 seems to have been eyed for redevelopment for a while. Reportedly unable to come up with enough money for improvements to facades and heating systems, Union began selling portions of its Gothic-style prewar campus in recent years. Indeed, in 2018 the seminary sold No. 97 to the Riverside Church for $46.5 million, records show. As part of the deal, the church agreed to keep the L-shaped, 78,400-square-foot property as student housing for five years.
Yet with the expiration of that promise in 2023, the church apparently moved to sell to help fund its own operations, though it fetched a lower price than it paid. It’s not clear what kind of housing might rise on the site, which seems underbuilt relative to its surroundings and would likely be able to avail itself of local air rights.
No permits are yet on file with the Department of Buildings for No. 97. And a phone message left with a church spokeswoman was not returned. Also, Charney declined to comment through a spokeswoman.
But a glance across the street might offer insight. Soaring above Union’s campus today is a 41-story, 165-unit apartment building from the team of L+M Development Partners, Lendlease and Daiwa House, another outcome of the school’s recent redevelopment push. The seminary later bought 28 units in the tower, called Claremont Hall, for faculty housing.
In the past church officials have said that they hope whatever becomes of McGiffert reflects the progressive mission of the institution, which was founded by John D. Rockefeller Jr. and has hosted sermons by civil rights leaders Dr. Martin Luther King Jr. and Nelson Mandela. As of 2022, its pastor, the Rev. Adriene Thorne, is a Black woman, the first ever to lead the church.
The church in recent years has also faced nearly three-dozen lawsuits over sex abuse claims related to children who once played in the church’s popular basketball program under a former coach, court records show.
Some neighbors have opposed any kind of demolition at the site, which was not included in the 2000 landmark designation that protected next-door Riverside Church and sits three blocks north of the historic district.
The Morningside Heights Historic District Committee, founded in 2016, has led many of the protests. “We are concerned that McGiffert is at risk of gross non-contextual development, or even demolition to accommodate the purchaser's financial development objectives and expected return on investment,” the group said in its September newsletter.
Other lofty projects to go up in the area in recent years include Vandewater, a 32-story condo tower from Savanna that replaced a library wing on the Jewish Theological Seminary campus; the seminary sold Savanna the parcel in 2016 for $77 million.
With the acquisition, Charney, which was founded in 2013 by former Two Trees Management executive Sam Charney, appears to have picked up its first Manhattan site. Previously, it built a string of midsize condo and rental projects in places such as Long Island City, including the Green House on Jackson Avenue, a 50-story, 46-unit development decorated in vivid murals.
New York, one of the biggest hubs for e-commerce, is not immune to United Parcel Service's nationwide layoffs.
The 116-year-old multinational shipping company plans to lay off more than 100 employees at one of its largest warehouses in the city this June, according to a state unemployment filing made public Wednesday.
The company is cutting ties with 103 employees who currently work out of its 643 W. 43rd St. hub in order to address what it says is dwindling demand.
“We continue to right-size our network and staffing to meet volume demands. … Our employees are extremely important to us, and we are working to place as many employees as possible in other positions,” said Mitch Polikoff, the director of media relations at UPS.
The notice comes after UPS last month announced its largest staffing cuts in history, which CEO Carol Tomé partly attributed to the rise of artificial intelligence, which has made some jobs obsolete.
The layoffs, which are set to take effect June 21, will impact 99 union members, represented by Teamsters Local 804, and four management-level staffers who now work the night shift at the 1950s-era warehouse between 11th Avenue and the Hudson River Greenway. Those staffers are responsible for sorting the hundreds of thousands of packages that get shipped into the Big Apple each day. New York City residents received an average of 2.3 million packages per day, Crain’s reported in 2021.
But these days there are fewer packages that need sorting, according to UPS. The company declined to provide the number of parcels that come in and out of its Manhattan warehouse. Nationally, however, UPS is delivering less as Amazon is far outpacing its competitors. In 2021, UPS delivered an average of 25.2 million packages daily while last year the company delivered only 22.3 million. And according to reports, e-commerce across the country, which is largely driven by Amazon, is only expected to grow over the next few years.
But Vinnie Perrone, the president of Teamsters Local 804, accused the company of spinning its own story about the layoffs, which he said are “destroying” his members’ lives. Perrone told Crain’s Thursday that UPS is not worried about volume but is diverting overnight work from two New York City warehouses to automated facilities in New Jersey.
“If they could do everything using AI and robots, they would gladly do it,” said Perrone.
UPS spokesman Polikoff disputed the union's claims.
The $104.5 million mortgage for a prewar office building near Union Square has been sent to special servicing after the building fell behind on property taxes.
Located at the corner of 14th Street and built in 1903, 90 Fifth Ave. is a 140,000 square-foot building grappling with rising vacancy rates and declining cash flow, a common problem among older Manhattan office buildings. Its former anchor tenant, struggling residential real estate broker Compass, is subleasing space, and half the 11-story building is available immediately, according to landlord RFR Realty. Cash flow fell by 8% last year, to $5.9 million, bond-rating firm KBRA said.
Even so, rising vacancies and declining cash flow don’t appear to entirely explain why a special servicer was called considering 90 Fifth’s mortgage doesn’t come due until 2027. Special servicing is where loans showing signs of trouble get worked out.
“The loan is reported as late but less than 30 days delinquent,” KBRA analysts wrote in a report today. “However, prior commentary by the master servicer indicated that the borrower was delinquent on property taxes.”
The most recent property tax bill for 90 Fifth, dated Nov. 18, 2023, showed new charges of $1.8 million due by Jan. 2, 2024, plus outstanding charges of $2 million. The outstanding charges appeared because 90 Fifth, which typically pays taxes in two installments each January and June, made no payment last June, records with the Department of Finance show. The bill, including more than $100,000 in past-due charges, was paid in full on February 13.
RFR declined to comment.
The firm run by developer Aby Rosen owns the Chrysler Building, Seagram Building, and several other office towers and retail spaces.
RFR acquired 90 Fifth in 2000 and in 2013 said it would renovate the lobby and install new elevators, bathrooms and common areas. It also restored the exterior and refinished the storefront, currently occupied by Republic First Bank, whose lease expires in July.
“90 Fifth Avenue is perfectly suited to our portfolio of architecturally significant office buildings in New York,” Rosen said at the time. “This location at the crossroads of Manhattan's hottest growth neighborhoods will make the office space appealing to a variety of businesses.”