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.
Aug 3, 2015, 8:55 AM EDT
Eagles sign young English striker from Black Cats.
Aug 3, 2015, 8:02 AM EDT
Costa remains a huge injury worry for Chelsea heading into the new season.
Aug 2, 2015, 9:15 PM EDT
David Accam helped lead Chicago Fire over FC Dallas to end the visitors five-game winning streak.
Aug 2, 2015, 8:06 PM EDT
Xavi gets up for preseason friendlies, and in his first match for his new club, the 35-year-old rips a classic free kick.
Aug 2, 2015, 7:03 PM EDT
Diego Valeri missed a penalty as neither side could take advantage of its few big chances.
Aug 2, 2015, 6:36 PM EDT
It was a tough day for a number of Premier League teams who suffered losses and setbacks, most notably Mark Hughes and Stoke City.
Aug 2, 2015, 5:25 PM EDT
The 23-year-old midfielder has struggled with ankle problems in the past, and another has cropped up.
Aug 2, 2015, 5:00 PM EDT
Some big signings this summer and a new manager has fans excited for what could be this coming year.
Aug 2, 2015, 3:14 PM EDT
Tony Pulis is a hard-nosed leader, but unless Saido Berahino can repeat his goal-scoring year from last season, it will be a tough go for the Baggies.
Aug 2, 2015, 2:30 PM EDT
Take a bow, Benteke. Take a bow.
Jose Mourinho says “best team lost,” attacks Arsenal’s defensive tactics, as Chelsea beaten at their own game
Aug 2, 2015, 1:50 PM EDT
Chelsea boss hits out at Gunners as he loses to Wenger for first time in 14 attempts.
Aug 2, 2015, 1:07 PM EDT
The long-time spat between the managers of Arsenal and Chelsea rumbles on.
Aug 2, 2015, 12:45 PM EDT
Catch up on all the latest transfer rumors and gossip, right here.
Aug 2, 2015, 11:57 AM EDT
Wenger finally beats Mourinho, while the Blues have some issues up front.
Aug 2, 2015, 11:55 AM EDT
Arsenal takes claim to the Community Shield as Arsene Wenger has finally defeated Jose Mourinho.
Aug 2, 2015, 10:49 AM EDT
The Gunners took a 1-0 first half lead over Chelsea in the FA Community Shield thanks to a classy finish from Alex Oxlade-Chamberlain.
Aug 2, 2015, 10:04 AM EDT
In the City of Brotherly Love, it was only fitting that the Wright-Phillips boys led New York to a victory.
Aug 2, 2015, 9:10 AM EDT
In both of Watford’s two seasons in the Premier League, the club finished in last place. Can the newly promoted Hornets avoid relegation the third time around?
Aug 2, 2015, 9:07 AM EDT
There’s a legitimate chance that Roy Keane has never taken a picture with his cell phone.
Aug 2, 2015, 8:12 AM EDT
Manchester United’s Di Maria experiment is all but over, and it’s going to cost them $20 million.
- Premier League friendly roundup: Southampton draws, Stoke swallowed 0
- Jose Mourinho says “best team lost,” attacks Arsenal’s defensive tactics, as Chelsea beaten at their own game 5
- Arsene Wenger, Jose Mourinho fail to shake hands, as Gunners boss finally prevails 1
- Three things we learned from Arsenal’s Community Shield win vs. Chelsea 0
- Arsenal 1-0 Chelsea: Oxlade-Chamberlain strike wins Gunners FA Community Shield 0
- Report: Manchester United, PSG agree to $70 million fee for Angel di Maria 3