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.
Jul 24, 2014, 7:45 AM EDT
Almost 90,000 fans in Los Angeles watched Manchester United put an old-fashioned punking on their hosts. And then both sides reacted.
Jul 23, 2014, 11:27 PM EDT
Surely one of these clubs enjoyed the sweeter side of this deal and here we set out to see who it was.
Jul 23, 2014, 10:40 PM EDT
Despite starting only 12 Premier League matches last year, James Milner has decided to remain at Manchester City and fight for his place.
Jul 23, 2014, 10:00 PM EDT
Catch the San Jose Earthquakes and Chicago Fire live on NBCSN and online via Live Extra tonight at 10:30pm ET.
Jul 23, 2014, 9:43 PM EDT
In a relaxed match featuring over forty players, the difference came in the 89th minute as Marco Borriello knocked home a corner.
Jul 23, 2014, 8:50 PM EDT
Rijeka have come forward to say they “clearly and unequivocally reject” City’s allegation of racism.
Jul 23, 2014, 8:21 PM EDT
Beasley signed a two-and-a-half-year deal with the Dynamo and becomes the club’s third Designated Player.
Jul 23, 2014, 6:48 PM EDT
Catch Liverpool and AS Roma live on NBCSN and online via Live Extra tonight at 7:00pm ET.
Jul 23, 2014, 5:49 PM EDT
Jurgen Klinsmann has long coveted Zelalem and the 17-year old looks to be next in line to don the Stars & Stripes.
Jul 23, 2014, 5:01 PM EDT
According to Fuchs, Germany and France would be happy to take over if needed.
Jul 23, 2014, 4:21 PM EDT
Sigurdsson, who scored seven goals during a loan spell with Swansea in 2011/12, returns at the Liberty after two seasons at Spurs.
Jul 23, 2014, 2:40 PM EDT
Can the Spanish international be a success at Chelsea? You bet.
Jul 23, 2014, 1:46 PM EDT
Is there anything Balotelli can’t do?
Jul 23, 2014, 1:16 PM EDT
Will Lampard be suiting up at Yankee Stadium for NYC FC next season? We find out Thursday…
Jul 23, 2014, 12:26 PM EDT
What would your school look like as a professional soccer team?
Jul 23, 2014, 11:40 AM EDT
The show will go on, but not in eastern Ukraine as fighting between pro-Russian rebels and the military continues.
Jul 23, 2014, 10:52 AM EDT
German boss reveals he will stay on as manager until at least 2016. Can you smell a dynasty?
Jul 23, 2014, 10:18 AM EDT
Substance over style: Barca sign towering defender from La Liga rivals Valencia.
Jul 23, 2014, 9:29 AM EDT
Will the Mexican international be moving on this summer?
Jul 23, 2014, 8:46 AM EDT
Aspas to Spanish radio: “They are treating Luis like a murderer and not like a footballer.”
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