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 30, 2014, 8:19 AM EDT
PSS Sleman and PSIS Semarang have been disqualified from their country’s playoffs after conceding five own goals in their their match.
Oct 30, 2014, 7:44 AM EDT
Michel converted the penalty past David Ousted, and FC Dallas hung on for the win in an otherwise fast-paced, fun game in Texas.
Oct 29, 2014, 11:10 PM EDT
Carlos Vela is set to return to the Mexican National Team making them a much more dangerous side.
Oct 29, 2014, 10:30 PM EDT
Nothing like a behind-the-scenes World Cup doc to pique the interest.
Oct 29, 2014, 9:42 PM EDT
Vincent Tan. Coming to a MLS club near you!
Oct 29, 2014, 8:50 PM EDT
Steve Zakuani. A supremely talented player, forced to call it quits way too early.
Oct 29, 2014, 8:01 PM EDT
Franck Ribery is short but probably not the kind of guy you want to mess with.
Oct 29, 2014, 7:00 PM EDT
A late equalizer from Mario Balotelli helps spur the rally that sees Liverpool into the League Cup quarter-finals.
Oct 29, 2014, 6:08 PM EDT
Add another Arsenal attacker to the roster.
Oct 29, 2014, 5:07 PM EDT
Beware, Premier League footballers. The FA is all over Twitter.
Oct 29, 2014, 4:15 PM EDT
Raul signs with the Cosmos, will head up the youth program upon retirement.
Oct 29, 2014, 3:42 PM EDT
Mandzukic makes a meal of it and the Royal Spanish Football Federation eats it up.
Oct 29, 2014, 3:10 PM EDT
In the lead up to the Manchester Derby, Aleksander Kolorov believes City have overtaken United as kings of Manchester.
Oct 29, 2014, 2:07 PM EDT
Garry Monk really, really doesn’t like officials.
Oct 29, 2014, 1:15 PM EDT
The former Everton and Manchester United boss has been linked with a possible move to Real Sociedad.
Oct 29, 2014, 12:23 PM EDT
The Nigerian Football Federation faces a seven-month ban if they do not comply with FIFA’s demands.
Oct 29, 2014, 11:35 AM EDT
The left-back on loan from Chelsea says it makes sense to stay at St. Mary’s.
Oct 29, 2014, 10:47 AM EDT
It’s all on the line as the knockout round of the MLS Playoffs kicks off tonight.
Men in Blazers podcast: The van Gaal-Mourinho Rom-Com, Jurgen’s unexpected FIFA award and Megan Rapinoe guests
Oct 29, 2014, 10:03 AM EDT
Rog and Davo break down the Louis van Gaal-Jose Mourinho Rom-Com, Saturday’s El Clásico and Jurgen Klinsmann’s unexpected FIFA award nomination. U.S. women’s national team star Megan Rapinoe guests.
Oct 29, 2014, 9:25 AM EDT
Tottenham boss Mauricio Pochettino believes the small pitch at White Hart Lane is hurting the Spurs style of play.
- VIDEO: Hugely-controversial call sees FC Dallas past Vancouver in playoffs. Your vote? 0
- Timbers’ Steve Zakuani announces retirement from professional soccer 1
- League Cup Roundup: Balotelli saves Liverpool, Newcastle defeat Manchester City 0
- Report: Spanish legend Raul signs with the New York Cosmos 0
- Kolorov: City have been better than United for ‘five or six years’ 0
- MLS Playoffs Knockout Round Preview: Win or go home 1