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.
Jan 31, 2015, 11:20 PM EST
Diego Costa has again claimed his own innocence. And you know what? I believe that he believes he’s done nothing wrong.
Jan 31, 2015, 10:43 PM EST
Big Sam was quick to take the credit away from Liverpool and place the blame for Saturday’s loss on his own injury “crisis.”
Jan 31, 2015, 9:24 PM EST
Van Gaal remembers what happened last time his side led Leicester, and he learns his lessons the first time.
Jan 31, 2015, 8:30 PM EST
All of the day’s confirmed, officially official transfer dealings from Saturday, Jan. 31.
Jan 31, 2015, 7:27 PM EST
The actual games took a backseat to shenanigans as two of four semifinals places were booked on Saturday.
Jan 31, 2015, 5:45 PM EST
All of Saturday’s action from Spain and Italy.
Jan 31, 2015, 4:57 PM EST
Arsenal and Southampton hope to keep their assaults on the Top Four in order, while Aston Villa and Swansea City hope to snap skids.
Jan 31, 2015, 4:19 PM EST
And to think, we’ve still a pair of Sunday matches on the slate. Let’s go through what’s done and dusted.
Jan 31, 2015, 3:40 PM EST
There were eight games in the PL on a busy Saturday. Here’s how it all went down with recaps, analysis and much more.
Jan 31, 2015, 3:20 PM EST
Manchester City’s boss thought his charges were very good, but is disappointed to snare a solitary point against Chelsea.
Jan 31, 2015, 3:12 PM EST
Lampard was the last player on the pitch, saluting both groups of supporters.
Jan 31, 2015, 3:06 PM EST
What did we learn from the tense draw at Stamford Bridge? Here’s three things.
Jan 31, 2015, 2:47 PM EST
Giving Chelsea and City’s players a mark out of 10.
Jan 31, 2015, 2:21 PM EST
All the goal scoring came within the 41st and 45th minutes at Stamford Bridge, as City failed to cut into Chelsea’s first-place advantage.
Jan 31, 2015, 2:00 PM EST
Want to see Benzema’s brilliant bender? Of course you do.
Jan 31, 2015, 1:40 PM EST
Blind believes United are getting close to what LVG expects.
Jan 31, 2015, 1:21 PM EST
It started off slow and tentative, but the big match between Chelsea and Manchester City is opening up
Jan 31, 2015, 1:04 PM EST
Moyesy is learning Spanish from a Manchester United fan…
Jan 31, 2015, 12:50 PM EST
For the Toffees, defense is the way forward for the rest of the season.
Jan 31, 2015, 12:33 PM EST
“It’s always difficult to be honest when you’ve had a long break,” Defoe said. “But I’ve had a mini-pre-season and I’m getting sharper and sharper.”
- Diego Costa maintains his innocence, says “I’ve not done anything wrong” 0
- DONE DEAL: Seydou Doumbia to Roma headlines quiet Saturday for transfers 0
- Premier League Sunday preview: Top-half teams jockey for position 0
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- Three things we learned from Chelsea vs. Manchester City 0
- Player Ratings: How did Chelsea, Manchester City’s stand-in’s fare? 0