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.
Sep 1, 2014, 7:26 PM EDT
Nantes, Nottingham Forest and Aston Villa are all surprising early-season teams, and Americans are playing big roles in each club’s success.
Sep 1, 2014, 7:13 PM EDT
The biggest confirmed transfers on Deadline Day including Premier League teams.
Sep 1, 2014, 6:40 PM EDT
If Andre Villas-Boas thought Emmanuel Adebayor was hard to handle, wait til he gets a load of this American character.
Sep 1, 2014, 6:33 PM EDT
Alderweireld arrives on loan, as Mane deal agreed.
Sep 1, 2014, 6:23 PM EDT
Negredo leaves City, heads back to Spain to play for Valencia.
Sep 1, 2014, 5:55 PM EDT
Watch live online, right here.
Sep 1, 2014, 5:42 PM EDT
Hull busy on Deadline Day as Ramirez join on loan, Ben Arfa could follow, late on Deadline Day.
Sep 1, 2014, 5:37 PM EDT
In the words of NHL commentator Rick Jeanneret, roll the highlight reel for Ibra, Cavani and PSG, and the lowlight reel for one poor keeper.
Sep 1, 2014, 4:40 PM EDT
Not a huge risk for Arsenal, but certainly a good bit of business for United. Could Welbeck become the next Daniel Sturridge?
Sep 1, 2014, 4:18 PM EDT
Jermain Defoe, Danny Welbeck and Hatem Ben Arfa all make one last run through the rumor mill as the deadline draws near.
Sep 1, 2014, 4:11 PM EDT
McArthur and Fryers arrive at Selhurst Park.
Sep 1, 2014, 3:49 PM EDT
The Dutch international rejoins his World Cup boss for four seasons at “the biggest club in the world.”
Sep 1, 2014, 3:32 PM EDT
What originally was thought to be a steal is turning out to be quite a hit to Manchester United’s wallet.
Sep 1, 2014, 3:07 PM EDT
AC Milan made the terrible mistake of confirming a deal before it was complete, and now they’re forced to rescind their confirmation.
Sep 1, 2014, 2:50 PM EDT
Time running out for U.S. national team star to seal his move away from Stoke.
Sep 1, 2014, 2:40 PM EDT
Spurs could be back in for Rodriguez, as third bid made for England international.
Sep 1, 2014, 1:45 PM EDT
The biggest deals of the summer listed here.
Sep 1, 2014, 1:27 PM EDT
Reports are exploding that Welbeck’s location lends itself to a shock move to Arsenal, but we’re not so sure.
Sep 1, 2014, 1:02 PM EDT
It’s the fourth loan spell for Chalobah, who will get his first taste of Premier League play.
Sep 1, 2014, 12:25 PM EDT
A fee of around $15 million breaks Hull City’s transfer record for a player.
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