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 22, 2014, 11:04 PM EDT
How did the Galatasaray supporters pull off this Tifo before Wednesday’s match against Borussia Dortmund? How?!?
Oct 22, 2014, 10:10 PM EDT
The pair of Premier League clubs remaining in the competition face quite different tests on Thursday.
Oct 22, 2014, 9:25 PM EDT
Perhaps it isn’t the sexiest year for rookies in Major League Soccer, but there’s a quartet of names set to stick around for a while.
Oct 22, 2014, 8:30 PM EDT
“I had hope, it maybe didn’t look like it, but it happened,” Wenger said.
Oct 22, 2014, 7:23 PM EDT
“So overall, it’s a squad with a lot of experience playing at the highest level, and this will be another great benchmark for us,” Klinsmann said.
Oct 22, 2014, 6:30 PM EDT
Of course many are claiming this “is the beginning of end” for Balotelli on Merseyside. That seems a bit much.
Oct 22, 2014, 5:40 PM EDT
Here’s the bar, Week 33 of Major League Soccer: Please feel free to raise it.
Oct 22, 2014, 4:47 PM EDT
We are at the halfway point in Groups A-D, and some English clubs are concerned about their fortunes to be sure.
Oct 22, 2014, 4:41 PM EDT
It was a night to forget for the home side, as Real ruled at Anfield. Here’s what we learned.
Oct 22, 2014, 4:36 PM EDT
The 21-year-old Honduran international did what a dangerous Alexis Sanchez couldn’t, but Arsenal was rescued late.
Oct 22, 2014, 4:34 PM EDT
Ronaldo, Benzema and co. put on a clinic at Anfield, as Liverpool are taught a lesson.
Oct 22, 2014, 2:54 PM EDT
The CAF claimed Platini said something he didn’t, and it hurt his feelings.
Oct 22, 2014, 2:14 PM EDT
Here’s what it’s like at Anfield, as Liverpool host Real Madrid in the UEFA Champions League.
Oct 22, 2014, 1:58 PM EDT
With yesterday’s goal frenzy, will today give us the same excitement?
Oct 22, 2014, 1:34 PM EDT
This is the second time Robinho is under investigation for such an alleged incident.
Oct 22, 2014, 12:17 PM EDT
NYCFC’s first Designated Player will be returning to the United States to fulfill commercial and marketing obligations, and it’s unclear whether he will make his way back to Australia to finish out his loan.
Oct 22, 2014, 11:36 AM EDT
Now that he’s back from a hernia problem, the American told Stoke’s YouTube channel that he is no longer a right-back and the club is aware of where he wants to play.
Oct 22, 2014, 10:51 AM EDT
Rog and Davo gain whiplash from QPR-Liverpool, and the Jurgen Klinsmann-Don Garber saga.
Oct 22, 2014, 10:28 AM EDT
After 10 years with the club, Gourlay has stepped down.
Oct 22, 2014, 9:20 AM EDT
The MLS side was eliminated from group stage play on an away goals tiebreaker as Honduran side Olimpia goes through.
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