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 29, 2014, 9:50 AM EDT
Will Fernando Torres be leaving Stamford Bridge, and are Diego Costa’s injury concerns far less than first reported? Ask The Special One.
Aug 29, 2014, 9:14 AM EDT
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Aug 29, 2014, 8:19 AM EDT
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Aug 29, 2014, 7:42 AM EDT
Joe Prince-Wright, Mike Prindiville and Jenna Corrado dig into the transfers of Angel Di Maria and Mario Balotelli to the Premier League.
Aug 29, 2014, 12:42 AM EDT
NBCSN games on Friday, Sunday highlight a nine-match weekend in the domestic league.
Aug 28, 2014, 10:10 PM EDT
The Nerazzurri icon moves to the East Midlands after 10 years at the San Siro.
Aug 28, 2014, 9:04 PM EDT
An arm to the back of Chad Marshall’s head earns the Timber’s center back a weekend off.
Aug 28, 2014, 8:20 PM EDT
Columbus, Sporting, Vancouver connected with a possible return.
Aug 28, 2014, 7:01 PM EDT
In 2010, a series of young Americans looked prime for breakthroughs. Their experience reminds up: Four years is a long way off.
Aug 28, 2014, 6:00 PM EDT
Our first Power Rankings of the 2014-15 season. What do you think?
Aug 28, 2014, 5:13 PM EDT
Rubio Rubin, Joe Gyau, and Emerson Hyndman are among the roster’s most-intriguing prospects for 2018.
Aug 28, 2014, 4:10 PM EDT
Jenna, JPW and Prindi break down Di Maria to United, Balotelli to Liverpool and Chelsea’s tough trip to Everton.
Aug 28, 2014, 3:44 PM EDT
A striker from Stanford could become the first collegian in the MLS era to play for the USA. Who is he?
Aug 28, 2014, 3:10 PM EDT
Four top teams in the hunt for Falcao. Will they cough up the cash for a loan deal?
Aug 28, 2014, 2:48 PM EDT
Klinsmann selects Stanford forward, several American youngsters based in Europe for Czech Republic clash.
Aug 28, 2014, 1:40 PM EDT
Can Arsenal and Man City navigate tough UCL groups, again?
Aug 28, 2014, 1:13 PM EDT
Ronaldo named ‘best player in Europe’ for outstanding 2013-14 season.
Aug 28, 2014, 12:44 PM EDT
The eight groups are set as the 2014-15 UEFA Champions League will kick off next month.
Aug 28, 2014, 11:49 AM EDT
Louis van Gaal delighted, yet realistic, as Di Maria speaks for the first time as a United player.
Aug 28, 2014, 10:55 AM EDT
All the latest gossip, right here.
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