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.
May 4, 2015, 11:15 PM EDT
Christian Benteke’s two goals against not only pushed Aston Villa closer to Premier League safety, but earned the Belgian POTW honors.
May 4, 2015, 10:25 PM EDT
This week’s standout performers are recognized as the 2014-15 Premier League season winds down.
May 4, 2015, 8:54 PM EDT
The first semifinal kicks off on Tuesday, as Juventus host Real Madrid, with Paul Pogba and Karim Benzema out injured.
May 4, 2015, 6:15 PM EDT
If not for an incredibly slow start to the season, Arsenal might be neck and neck with Chelsea for the Premier League title.
May 4, 2015, 5:30 PM EDT
PST’s Lead Writer and Editor takes a look back at Week 35 of the PL.
May 4, 2015, 4:53 PM EDT
Alexis Sanchez and Aaron Ramsey provided all the scoring Arsenal needed in a dominant first half, making it a comfortable victory in the end.
May 4, 2015, 4:15 PM EDT
Our first repeat winner as MLS Player of the Week, Fabian Castillo is in scary-good form right now.
May 4, 2015, 3:30 PM EDT
The stars of Week 9 are recognized as MLS’s standout performers. Giovinco, Oba and the Dallas duo highlight this star-studded cast.
May 4, 2015, 3:15 PM EDT
Twenty-two players have hit the pitch for Chelsea so far this season. Let’s grade them out in order of Premier League import.
May 4, 2015, 2:30 PM EDT
But what does that mean? If you’re reading it like we are, Marotta has not ruled out accepting a mega-millions offer for Pogba.
May 4, 2015, 2:05 PM EDT
Laurent Koscielny makes his 200th appearance for Arsenal, which seeks to move into second place in the Premier League standings.
May 4, 2015, 12:55 PM EDT
Inside: some keys to the fortunes of Bayern Munich, Barcelona, Real Madrid and Juventus as the first legs begin this week.
May 4, 2015, 12:07 PM EDT
Arsenal still holds the inside track in the race for second place in the Premier League.
May 4, 2015, 11:11 AM EDT
Now, when United prepares for a home match, it can prepare for everything but the crowd.
May 4, 2015, 10:22 AM EDT
The Magpies have allowed multiple goals in all but two matches of the losing streak, and have dropped to just two points shy of the drop zone.
May 4, 2015, 9:39 AM EDT
Chelsea are the champions of England, and anyone holding a gripe with the Blues’ title simply harbors some other form of resentment for the London club.
May 4, 2015, 8:34 AM EDT
The 24-year-old right back has long been behind Dani Alves in Barca’s pecking order. Alves is out of contract this summer, but the 31-year-old is still wanted by Barcelona.
May 4, 2015, 7:49 AM EDT
Greaves also played for Chelsea, AC Milan and West Ham United during the prime of his career.
May 3, 2015, 11:10 PM EDT
Sour grapes from a manager who just lost his trophy.
May 3, 2015, 10:00 PM EDT
One miss and you’re out. That’s the Louis van Gaal way.
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