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 31, 2014, 10:07 PM EDT
Manager remains insistent the Spanish international will stay at Stamford Bridge.
Jul 31, 2014, 9:03 PM EDT
Successful procedure marks the end of John’s 2014 hopes.
Jul 31, 2014, 8:12 PM EDT
De Laurentiis confirms the partenopei’s interest in the afro-laden star.
Jul 31, 2014, 7:22 PM EDT
Toe injury to sideline the U.S. international for an estimated 10 games.
Jul 31, 2014, 6:31 PM EDT
No. 1: Eddie Johnson. No. 2: These new-fangled rules.
Jul 31, 2014, 6:02 PM EDT
Young Americans set to blaze trail in La Liga academies.
Jul 31, 2014, 5:39 PM EDT
San Lorenzo is in Copa’s finals, but Piatti is unlikely to join them.
Jul 31, 2014, 5:14 PM EDT
Two players who spent plenty of time on the sidelines last season are pushing to be integral parts of Manuel Pellegrini’s plans.
Jul 31, 2014, 4:42 PM EDT
29-year-old Argentina arrives from Tigre, becoming the club’s third Designated Player of all-time.
Jul 31, 2014, 4:10 PM EDT
Everton’s frugality gave way to necessity. Is Lukaku worth it the serious cash they splashed?
Jul 31, 2014, 3:21 PM EDT
Remember when Marco Reus, Dries Mertens and Leighton Baines solidified Manchester United’s status in Europe? Us neither.
Jul 31, 2014, 2:56 PM EDT
Cristiano Ronaldo and Christopher Renzi are looking horns over the CR7 trademark.
Jul 31, 2014, 2:25 PM EDT
Guillermo Ochoa starred in the 2014 World Cup for Mexico, and now will try to fill Willy Caballero’s shoes at Malaga.
Jul 31, 2014, 2:08 PM EDT
As deadly virus continues to spread, the Seychelles refuse to let Sierra Leone travel for qualifier.
Jul 31, 2014, 1:50 PM EDT
Seydou Keita has left Barcelona, but being in a different league has not stopped the animosity between the AS Roma midfielder and Real Madrid’s Pepe.
Jul 31, 2014, 1:27 PM EDT
Gerrard: “With all due respect to them, I said to Suarez that he was too good for Arsenal.”
Jul 31, 2014, 1:02 PM EDT
Bayern Munich chairman Karl-Heinz Rummenigge said several Premier League teams had interest in 19-year-old American striker Julian Green.
Jul 31, 2014, 12:26 PM EDT
Ching said his former USMNT teammate needs incentive-laden contracts to thrive, while Johnson claims Ching is jealous.
Jul 31, 2014, 11:42 AM EDT
Jermaine Jones is not the only US midfielder rumored to come home, while two Red Devils are tipped for Madrid.
Jul 31, 2014, 10:52 AM EDT
An altercation between a player and referee in a men’s league game left the official dead. What followed has been anything but pretty.
- Matías Pérez García announced, becomes third Designated Player in San Jose history 0
- Is Everton’s new striker Romelu Lukaku worth $47 million? 8
- Simeone praises Klinsmann’s US program that “seduces us as coaches” 5
- Neymar’s recovery from World Cup back injury “almost 100 percent” 0
- Reports: Jermaine Jones coming to Chicago, move welcomed by Fire 2
- Atlético Madrid latest club linked with Javier ‘Chicharito’ Hernández 4