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.
Nov 21, 2014, 9:20 PM EST
Zinedine Zidane can return to coaching after his nonsensical coaching suspension was lifted on Friday. Perhaps “qualified” needs redefining.
VIDEO: Louis van Gaal calls Wayne Rooney “not a typical striker,” praises versatility ahead of Arsenal showdown
Nov 21, 2014, 8:42 PM EST
Louis van Gaal has called Wayne Rooney “not a typical striker,” but a “fantastic player” nonetheless before Arsenal showdown.
Inside Look: All-time greats, LA Galaxy & Seattle Sounders, to square off in Western Conference Championship, leg 1
Nov 21, 2014, 8:15 PM EST
It’s tempting to look ahead and crown the LA Galaxy MLS Cup champions already. A word of warning: Don’t do it at the Sounders’ expense.
Nov 21, 2014, 6:15 PM EST
Dear haters: Jermaine hears you, is not bothered by you and still loves you. Look out, Red Bulls.
MLS Cup Playoffs Preview: Red Bulls vs. Revolution, Galaxy vs. Sounders in Conference Championship first legs
Nov 21, 2014, 4:45 PM EST
The 2014 season is nearly finished, as the MLS Cup Playoffs resume this weekend. A few facts and stats to excite ahead of Sunday’s action.
Nov 21, 2014, 3:10 PM EST
The English-born coach has had big success in Orlando since the club began play in 2011, winning the regular season title in three of four seasons.
Nov 21, 2014, 2:20 PM EST
Whitecaps FC 2 will compete in metro Vancouver at Thunderbird Stadium inside of the University of British Columbia.
Nov 21, 2014, 1:35 PM EST
The quota request comes after the BBC conducted a “State of the Game” survey that dug into the international representation in the Premier League.
Nov 21, 2014, 12:50 PM EST
Can the Baggies improve on last year’s point at Stamford Bridge?
Nov 21, 2014, 12:40 PM EST
Where and how to watch every single PL game in Week 12.
Nov 21, 2014, 12:00 PM EST
I’m a fan of Batman, but seems to me “The Dark Knight” should consider rocking Valencia’s bat rather than his own. Looks slick.
Nov 21, 2014, 11:45 AM EST
Here’s how PST’s lead writer and editor sees things panning out this weekend.
Nov 21, 2014, 11:05 AM EST
So to the MLS players, coaches and “media members who regularly covered the league”, sit back and enjoy your biggest screw-ups.
Nov 21, 2014, 10:14 AM EST
Welbeck is used to being on the side of the favorites in this matchup, as Manchester United has dominated the series in recent years.
Nov 21, 2014, 9:25 AM EST
Danny Welbeck’s first Premier League game against his former team is just one subplot as the Gunners host the Red Devils.
Nov 21, 2014, 8:41 AM EST
All Americans plying their trade in the Premier League have a decent look at points, while two in the Championship will opening things up with Friday matches.
Nov 21, 2014, 7:49 AM EST
Paris Saint-Germain has claimed the last two Trophées with wins over Bordeaux and Guingamp, but this year’s table is clustered.
Nov 21, 2014, 12:17 AM EST
Swansea manager Garry Monk is hoping for the best as the Swans journey to play Manchester City at the Etihad this weekend.
Nov 20, 2014, 11:42 PM EST
Coupled with a breakout year from Lee Nguyen, Jermaine Jones’ skill and leadership have guided the New England Revolution to one of Major League Soccer’s most cohesive units.
Nov 20, 2014, 10:45 PM EST
Mascherano: “Messi didn’t say anything weird, he said what all football players are thinking.”
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