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.
Oct 26, 2014, 12:39 AM EDT
The Vancouver Whitecaps did themselves well to clinch a late playoff birth, besting the Colorado Rapids, 1-0.
Oct 25, 2014, 11:44 PM EDT
The Timbers’ postseason aspirations are hanging in the balance, but this 2-0 win over FC Dallas has certainly put them in a nice spot.
Oct 25, 2014, 10:31 PM EDT
Final: New England Revolution 1, Toronto FC 0
Oct 25, 2014, 9:49 PM EDT
AS Roma defender Ashley Cole has drawn the interest of MLS teams once again.
Oct 25, 2014, 8:48 PM EDT
Cristiano Ronaldo praises manager Louis van Gaal and is convinced that the 63-year-old will lead Manchester United to its former glory.
Oct 25, 2014, 7:23 PM EDT
Short recap and highlights of Saturday’s Round 9 Premier League matches.
Oct 25, 2014, 7:08 PM EDT
With three games on the slate, here’s what you can look forward to on Sunday.
Oct 25, 2014, 6:18 PM EDT
Final: Montreal Impact 1, D.C. United 1
Oct 25, 2014, 5:23 PM EDT
The Chicago Fire are seeking to bolster the strength of their roster, examining the possible signing of ex-Tottenham Hotspur midfielder Jaime O’Hara.
Oct 25, 2014, 4:55 PM EDT
A sleepy game for over an hour, Seattle and L.A. used the last hour to stage a contest worthy of a trophy-winning event.
Oct 25, 2014, 4:29 PM EDT
Pique speaks of his handball in Barcelona’s 3-1 defeat to Real Madrid: “It was unintentional.”
Oct 25, 2014, 3:47 PM EDT
The L.A. Galaxy and Seattle Sounders are scoreless through 45 minutes at CenturyLink in Washington.
Oct 25, 2014, 3:30 PM EDT
Leeds United have fired manager Darko Milanic after only 32 days leading the squad.
Oct 25, 2014, 2:59 PM EDT
Several fun games whet the appetite for a massive top of table Sunday tilt between Bayern Munich and Borussia Monchengladbach.
Oct 25, 2014, 2:29 PM EDT
With six games on Saturday in the PL, here’s what happened.
Oct 25, 2014, 2:20 PM EDT
Wilfried Bony scored both goals for Swans, 2-0, who cruised to the win against the suddenly-struggling Foxes.
Oct 25, 2014, 2:07 PM EDT
Will the Sounders handle the Galaxy and expectations to clinch home-field throughout the playoffs?
Oct 25, 2014, 1:54 PM EDT
“Maybe they [Stoke] created two possibilities, not chances and that’s a great team effort,” Koeman said of his Saints.
Oct 25, 2014, 1:47 PM EDT
Despite going behind earlier, Real came roaring back to win the first El Clasico of 2014-15.
Oct 25, 2014, 1:28 PM EDT
Watch and enjoy, then follow the second half live on NBC and online via Live Extra.
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- Sunderland 0-2 Arsenal: Sanchez seals win after horrendous defending (video) 0
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