Mar 13, 2014, 4:31 PM EDT
Herbalife’s business model has always been a bit controversial. Late in 2012, billionaire investor Bill Ackman called their “multi-level marketing” model a pyramid scheme and proceeded to put his money where his mouth is. The Pershing Square hedge fund manager shorted the company’s stock with a $1 billion bet, contending the company was destined to go bust.
Yesterday was a big day for Ackman, with Herbalife stock closing down 7.4 percent after news the company is being investigated by the Federal Trade Commission. The term “pyramid scheme” is being thrown around.
Even if nothing comes of the investigation, this isn’t good news for Major League Soccer; or, more specifically, the LA Galaxy. The Cayman Islands-based company has been a long-time shirt sponsor of the four-time champions, with the partners’ latest 10-year, $44 million sponsorship deal only in its second year. But, as Bloomberg’s Kavitha Davidson explains, that sponsorship becomes a burden for both club and league if Herbalife’s perception goes in the tank:
This isn’t just any soccer club caught up in a potential fiscal fiasco – this is the face of the league. The Galaxy’s success has been a primary booster for the national and global MLS brand …
Herbalife is the official jersey sponsor of the Galaxy, who have several players on the list of the top-selling MLS jerseys. The partnership had only grown stronger in recent months, highlighted by the October launch of the “Be a Pro” Web series …
It would be a hard pill to swallow for both the Galaxy and MLS if these accusations ultimate prove to hold water.
That’s why the FTC’s involvement is so scary. Whereas Herbalife has always been surrounded by ifs, a federal investigation bolsters those hypotheticals.
Perhaps, as the company implies, the investigation could turn into a positive, allowing the brand to clear up any misconceptions about their model’s legality. Until then, though, both MLS and the Galaxy are stuck in the debate’s crossfire.
“Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace,” the Cayman Islands-based company said today in a statement. “We are confident that Herbalife is in compliance with all applicable laws and regulations.”
In the mean time, the league’s most recognizable franchise has a problem literally written across its chests. Should Herbalife go away, a brand as strong as the Galaxy’s would surely be able to replace it. In the interim, though, MLS and one of its marquee franchises will have to ride it out.
Oct 1, 2014, 7:47 AM EDT
Alan Pardew must deal with yet another off the field issue at St. James Park as reports he’s losing the dressing room don’t look any less true at the moment.
Sep 30, 2014, 11:43 PM EDT
Are you as tired of Vincent Tan as Cardiff City supporters are?
Sep 30, 2014, 10:50 PM EDT
The German defender was courted by Manchester United and Real Madrid, but says he is at Dortmund for the long-run.
Sep 30, 2014, 9:45 PM EDT
Wednesday features eight Champions League matches, including important matchups for Premier League sides Arsenal and Liverpool.
Sep 30, 2014, 8:56 PM EDT
The newly signed Bayern midfielder had 204 touches in Munich’s 2-0 win over FC Koln.
Sep 30, 2014, 8:03 PM EDT
Martin Odegaard made his international debut this summer as Norway’s youngest player ever.
Sep 30, 2014, 7:27 PM EDT
With City struggling in the group stages once again, why does this keep happening?
Sep 30, 2014, 7:00 PM EDT
All the stars were out to play as PSG took on Barca in the French capital on Tuesday.
Sep 30, 2014, 6:30 PM EDT
The Barcelona midfielder appeared in his 143rd Champions League match today.
Sep 30, 2014, 5:58 PM EDT
Cardiff City’s owner set to invest in Chivas USA?
Sep 30, 2014, 5:35 PM EDT
The Belgian international was taken off the pitch on a stretcher this weekend with an apparent hamstring injury.
Sep 30, 2014, 5:15 PM EDT
Want a recap of all eight UCL games that took place across Europe on Tuesday? Look no further…
Sep 30, 2014, 4:40 PM EDT
Totti, Aguero trade goals as City lose more ground in Group E.
Sep 30, 2014, 4:36 PM EDT
Only Nemanja Matic, much to the chagrin of the Sporting crowd, could beat a fantastic Rui Patricio.
Sep 30, 2014, 3:46 PM EDT
What’s happening around Europe? Find out, here.
Sep 30, 2014, 3:37 PM EDT
Magnifico from Totti, as Italian legend writes his name in the history books.
Sep 30, 2014, 2:18 PM EDT
Moscow was skunked by Roma 5-1 in the first round of group matches, while City fell 1-0 to Bayern.
Sep 30, 2014, 2:11 PM EDT
Check out if your favorite player made it onto Round 6’s Team of the Week.
Sep 30, 2014, 1:58 PM EDT
Mario Gotze drew a penalty that Thomas Muller finished, and Bayern Munich emerged victorious from a relatively-quiet stadium.
Sep 30, 2014, 1:30 PM EDT
A tough break, indeed (pun absolutely intended).
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