Mar 13, 2014, 4:31 PM EST
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.
Dec 17, 2014, 2:40 PM EST
ICYMI, Mourinho is a big fan of Monsieur Henry.
Dec 17, 2014, 1:50 PM EST
Falcao wants to stay at United. But should the Red Devils splash the cash on El Tigre?
Dec 17, 2014, 12:56 PM EST
Rog and Davo talk Manchester United’s shaming of Liverpool and Arsenal’s return to potency.
Dec 17, 2014, 12:23 PM EST
Historic day for soccer in D.C., as new soccer-specific stadium becomes a reality for United.
Dec 17, 2014, 11:06 AM EST
Garcia walks away from FIFA after his appeal against how his own work on alleged corruption in the World Cup bid process was represented.
Dec 17, 2014, 10:00 AM EST
Are two MLS teams fighting it out for the Brazilian winger?
Dec 17, 2014, 9:20 AM EST
Liverpool’s star man to spend time with medical specialists from the Red Sox.
Dec 17, 2014, 8:38 AM EST
Saints have now lost five on the spin. The latest loss was the most embarrassing yet.
Dec 17, 2014, 7:58 AM EST
After Mignolet is dropped, Reds are apparently lining up two replacements for January.
Dec 16, 2014, 10:45 PM EST
That’s a good look for the Scottish giants during this holiday season.
Dec 16, 2014, 9:52 PM EST
As easy as Ronaldo serves up passes to teammates, it’s very difficult to serve him papers.
Dec 16, 2014, 9:00 PM EST
Portland acquired Powell’s rights from Portmore after carrying him on loan last season.
Dec 16, 2014, 7:58 PM EST
“The moment I’ve got a ball at my feet, I’m happy.”
Dec 16, 2014, 7:17 PM EST
It’s officially the biannual time of year that is silly season in the world of transfer rumors.
Dec 16, 2014, 6:09 PM EST
RSL assistant coach Craig Waibel has been promoted to technical director by the club, as it looks to fill the void left by Lagerwey.
Dec 16, 2014, 5:38 PM EST
Sergio Ramos, Gareth Bale and Karim Benzema also scored for Madrid, who waits for the Wednesday winner of Auckland City FC and San Lorenzo.
Dec 16, 2014, 4:48 PM EST
The Blues and Blades will be joined by the winners of Wednesday’s quarterfinal games.
Dec 16, 2014, 3:36 PM EST
CONCACAF released the 13 cities for the group and knockout rounds on Tuesday, and here’s the list via MLSSoccer.com.
Dec 16, 2014, 3:08 PM EST
The whole incident is extremely unfortunate, and takes away from Howard’s interesting telling of his rise to soccer prominence while dealing Tourette Syndrome.
Dec 16, 2014, 1:00 PM EST
Beasley’s phenomenal career for the USA may have flown under the radar, but his longevity is inspirational.
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