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.
Sep 2, 2015, 9:57 PM EDT
The NBC Deadline Day show is here in podcast form.
Sep 2, 2015, 9:32 PM EDT
A fraction of the transfer fee has made its way to the lower division team in France that helped mold Anthony Martial into the $55 million player he is today.
Sep 2, 2015, 8:18 PM EDT
Rog and Davo break down Chelsea’s loss to Crystal Palace and Swansea’s stylish win over Manchester United. Plus, a recap of transfer deadline day.
Sep 2, 2015, 6:56 PM EDT
Tim Howard looked good for Everton last weekend, but the U.S. coach says it’s too close to the Mexico game to make a change.
Sep 2, 2015, 5:42 PM EDT
The former Chelsea defender is no longer listed on the team’s website and was left out of both the club’s domestic and European squads.
Sep 2, 2015, 4:29 PM EDT
The paperwork was late, and FIFA rejected the deal, but the two sides still wish for it to be completed.
Sep 2, 2015, 3:40 PM EDT
The San Siro wanted Zlatan back, but he is happy in France.
Sep 2, 2015, 2:46 PM EDT
Villa had a very quiet Deadline Day, but they tried to make a splash.
Sep 2, 2015, 2:07 PM EDT
After the match, Noble said it was a tackle that happens “10 times a game” and that he felt it didn’t even deserve a yellow card.
Sep 2, 2015, 1:15 PM EDT
After finishing second in its group thanks to a 3-1 win over the Netherlands, Herzog’s Yanks toppled England’s U-20 team this summer. Now: the U-21s.
Spain’s Del Bosque says De Gea’s Euro spot in trouble without playing time; Speaks on Chelsea’s Costa
Sep 2, 2015, 12:31 PM EDT
“He needs to be professional and move on from this episode,” Del Bosque said of the Manchester United keeper.
Sep 2, 2015, 11:29 AM EDT
Unified Germany hasn’t medaled since 1964 in Tokyo (Bronze). East Germany won gold in 1976.
Sep 2, 2015, 11:12 AM EDT
“The Financial Fair Play today is too complicated to be efficient,” said the Premier League’s longest-tenured manager. “There’s a need to simplify the process.”
Sep 2, 2015, 9:24 AM EDT
Bournemouth took a big hit on transfer deadine day, but it had nothing to do with sales or purchases.
Sep 2, 2015, 8:47 AM EDT
Let’s dig into the figures, at least in terms of the 20 Premier League clubs, including the controversial amount of players on loan from Chelsea.
Sep 2, 2015, 8:16 AM EDT
We’re just a few weeks away from further information on the strength of the cases against Sepp Blatter’s FIFA.
Sep 1, 2015, 10:08 PM EDT
If both sides really wanted to make this transfer happen, they could have. Is it possible neither team wanted the deal to get done?
Sep 1, 2015, 9:37 PM EDT
Based on the Citizens’ form to start the season, it looks like money well spent.
Sep 1, 2015, 9:08 PM EDT
After spending just $20 million this summer on a goalkeeper and a teenager, Arsenal fans want to know what’s going on in the boardroom.
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- Full list of every transfer made by Premier League clubs during the Summer Transfer Window 0
- Manchester United fires back on De Gea saga, laying blame at feet of Real Madrid 1
- GRADES: How did each Premier League team fare in the Summer Transfer Window? 7
- Manchester United confirm $55 million signing of teenage striker Anthony Martial 0
- Deadline Day transfer rumor roundup: Hector to Chelsea, Berahino to Tottenham 0