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.
Mar 4, 2015, 1:04 PM EST
“My missus said to me she had done the Euro lottery – a £54m jackpot – but I said I’d take three points all day.”
Mar 4, 2015, 1:00 PM EST
Re-tooled, re-loaded and deeper than ever before, Sporting KC look set for a huge 2015 campaign.
Mar 4, 2015, 12:40 PM EST
How to watch all of Wednesday’s games live online or via the app.
Mar 4, 2015, 12:14 PM EST
Raising the Capital One Cuppity Cup Cup may just be the first title for the Blues.
Mar 4, 2015, 12:00 PM EST
“El Profe” is back for year No. 2 in Dallas, and things are looking even better than last year’s successes.
Mar 4, 2015, 11:39 AM EST
The Manchester City midfielder said he would like to follow in the steps of fellow-Frenchman Thierry Henry and one day play in America.
Mar 4, 2015, 11:00 AM EST
Who’s the best from a loaded pack of returnees?
Mar 4, 2015, 10:43 AM EST
Spurs want their star striker to rest over the summer, rather than compete for the England U21 side.
Mar 4, 2015, 10:00 AM EST
West is best, and we all know it. 2015 will be no different that 2014, 2013, 2012, 2011, and so on.
Mar 4, 2015, 9:51 AM EST
From league leaders to bottom feeders, points are up for grabs all across England today.
Mar 4, 2015, 8:29 AM EST
With his loan deal up at the end of the season, reports state Radamel Falcao will not return to Manchester next year.
Mar 4, 2015, 7:50 AM EST
The Hammers are winless in their last five Premier League games and face a Chelsea side coming off their first trophy of the season.
Mar 3, 2015, 11:26 PM EST
We want to watch games this weekend. We’re not interested in the rationale. Find a way to get us your product.
Mar 3, 2015, 10:05 PM EST
Montreal has ensured that Major League Soccer will have at least one semifinalist in this season’s CONCACAF Champions League after a year out of the final four,
Mar 3, 2015, 9:30 PM EST
Oh MLS: What fun is there in following the narrative?
Mar 3, 2015, 8:40 PM EST
If you’d like your supporters group to be featured on future episodes of ‘I Was There’ simply send pictures/video to @NBCSportsSoccer or NBC Sports Soccer on Twitter on Facebook using the #IWasThere.”
Mar 3, 2015, 7:47 PM EST
Vancouver may be missing that huge, huge name but is solid top-to-bottom.
Mar 3, 2015, 7:00 PM EST
It could be a dark year in Commerce City, but don’t forget that this was a promising young team that floundered last year.
Mar 3, 2015, 6:47 PM EST
The brash Englishman is happy to call the win a turning point for his club, which moves out of the relegation zone for the time being.
Mar 3, 2015, 6:28 PM EST
Videos, recaps, analysis and more from the three PL games during Week 28 on Tuesday.
- 2015 MLS season preview: Sporting Kansas City 0
- WATCH: Premier League live online via NBC Sports Live Extra – Week 28 0
- 2015 MLS season preview: FC Dallas 0
- The Western Conference will continue to dominate MLS, and we all know it 0
- Wednesday’s Premier League Preview: Seven games in action-packed matchday 0
- WATCH: Incredible 60-yard pass leads Montreal ouster of Pachuca in CONCACAF Champions League 4