Connect with us

Hi, what are you looking for?

Football

Company Divests From the Contract With Lionel Messi That Nearly Led It to Bankruptcy

Photo: Wikimedia Commons

MGO Global closed 2023 with negative figures of 7.1 million dollars, according to BAE Negocios.

It seemed like a great business. Having the Messi brand to sell clothing. However, even with a world champion Lionel Messi and his signing with Inter Miami, the company MGO Global has not been able to capitalize on its exclusive contract. Losses have skyrocketed.

The company closed 2023 with red numbers of 7.1 million dollars and doubts about the viability of its business. The company has made a clean break: it has sold the contract with Messi for two million dollars and will focus on selling flagpoles, according to BAE Negocios.

MGO’s prospects did not seem very promising even at the time of its IPO, when with Messi’s name as a lure, it reached an outrageous valuation. The IPO price a year ago was 5 dollars per share, with which MGO Global was valued at about 58 million dollars despite doubts about its viability.

The value of the shares of the two main shareholders, Maximiliano Ojeda (executive chairman) and Virginia Hilfiger, (design director and Tommy Hilfiger’s younger sister) was about 20 million, more than tenfold the value of their investment, reports the newspaper El País.

When it started trading on January 13, 2023, the shares soared and reached a peak of 16.61 dollars, which meant a 232% increase over the placement price and an average return of 4,645% on the price at which the original shareholders invested.

However, the share price deflated as fast as it had inflated, and the shares closed at 4.65 dollars. After a year, the shares had lost 86% of their value and are trading near 0.41 dollars, 92% below the placement price.

The company closed 2023 in financial ruin, with a turnover of 5.4 million dollars and losses of 7.4 million dollars, more than doubling the red numbers from the previous year. In the business segment of the so-called Messi Store, sales were 1.7 million dollars, and losses were 1.9 million dollars.

The contract with the firm managing the Argentine star’s business, Leo Messi Management (LMM), to sell Messi brand clothing had a duration of three years, and the Argentine star was guaranteed minimum earnings of four million euros, in addition to a 12% royalty on sales. With less than a year left on the contract, MGO Global preferred to sell it.

On March 21, the company reached an agreement with Centric Brands by which it transferred all its rights and obligations under the license agreement for an amount of two million dollars.

Centric also assumed the minimum fee of 1.5 million euros that remained to be paid to LMM until the end of the year, as communicated by MGO Global to the Securities and Exchange Commission (SEC).

That sale may save the company from a worse situation. The company itself acknowledges its critical situation. MGO Global is evaluating strategies to obtain the additional financing needed for its future operations, including capital increases, issuing or restructuring debt, or other transactions.

“Any additional capital financing we obtain may dilute the participation of our current shareholders. The economic dilution to our shareholders will be significant,” it warns, also noting that it may not be able to achieve additional financing.

MGO Global purchased a company that sells flagpoles. With it, it has increased its turnover, but profitability remains elusive. The company now has a market value of only 6 million dollars and was warned of its possible exclusion from Nasdaq.

You May Also Like

Football

Ahead of a potential move, Victor Osimhen has subtly indicated his interest in joining Manchester United. Following Sir Jim Ratcliffe’s acquisition of a minority...

Football

In a shocking development that has rippled through the football world, Carlo Ancelotti, the esteemed head coach of Real Madrid, finds himself at the...

Football

Neymar has chosen to cover the bail expenses for his ex-teammate, enabling his release from imprisonment in Barcelona. Earlier this month, ex-Barcelona player Dani...

Boxing

Francis Ngannou feels he was ‘tricked’ mere hours before his devastating knockout defeat by Anthony Joshua. Francis Ngannou, the fighter from Cameroon, suffered a...