The sudden break-up between SI.com and one of its affiliates shows the ugly side of sports website acquisition

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February 23, 2017 9:31 PM

In early February, Sports Illustrated abruptly ended an affiliate arrangement with the sports website, The Cauldron, in a move that barely made a ripple, even inside the sport blog community.

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Daniel Roberts of Yahoo Finance spoke to people at The Cauldron and Chat Sports — the two sites that were seemingly set to join forces, but instead ended up in an ugly war

According to Roberts, in early 2016,

Here are some of the uglier details and accusations from Yahoo Finance (in most cases, documents and emails were witnessed by Roberts):

Chat Sports agreed to pay O'Grady $20,000 up front, regardless of what happened, and another $30,000 if the deal fell through. The $20,000 was eventually paid in full, but not until after things had gone sour.
O'Grady says that Yoder suddenly became difficult to reach. Roberts spoke with owners of two other websites who told similar stories of receiving "generous" offers from Yoder and then suddenly having trouble getting in touch with him.
Yoder accused O'Grady of contacting potential investors directly after they had met with Yoder, to see if the investors wanted to invest directly in The Cauldron, as opposed to the two sites combined. According to Yahoo Finance, O'Grady "
When asked about the email from the lawyer and the term sheet, Roberts says Yoder acknowledged their existence, but accused O'Grady of fabricating both.
After it was clear the deal was off, O'Grady reportedly sent Yoder a letter demanding $180,000 in damages. Yoder reportedly countered by sending O'Grady a letter demanding $10 million in damages. Both sides say they are considering suing the other.

Sports Illustrated's decision to cut ties with The Cauldron came "just days" after the deal with Chat Sports fell apart. SI told Yahoo Finance that ending the relationship was just part of a routine review they do with all their digital partnerships. However, several sources told Yahoo Finance that the divorce was pushed by an email from Yoder.

The email reportedly warned executives and the legal department at SI's parent company, Time Inc., that The Cauldron was about to run "a hit piece about Chat Sports" that would run on SI.com.

One source at Time told Roberts that they had already decided not to invest in The Cauldron, but that Yoder's email acted as a "catalyst" to terminating the relationship.

As of Thursday, Chat Sports remains part of the Sports Illustrated network.

Prior to the story in Yahoo Finance, Chat Sports wrote about the situation here.

When reached for comment, Yoder told Business Insider that the Yahoo Finance story was biased.

You can read the entire story at Yahoo Finance. It's a doozy.

Time did not immediately respond to a request for comment.

Correction: An earlier version of this report said that SI had decided to cut ties with The Cauldron before the email was received from Yoder. Rather, SI had reportedly only decided not to fund The Cauldron prior to the email.

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