When Lionel Messi left Barcelona for Paris Saint-Germain in 2021, it was because the La Liga side could not afford to keep him under Spanish football's strict financial rules. It was for much the same reason that Messi left microcap fashion house MGO Global for the much larger Centric Brands on March 30th. Due to the cold realities of corporate accounting, MGO could not afford to keep its star in-house.
Messi, one of the most popular athletes in the world, was created by Maximiliano Ojeda, an Argentinian businessman turned New York real estate agent, and creative director Ginny Hilfiger, former head of creative at the Fila brand. In 2018, we signed a licensing agreement with a new fashion company we founded. An executive in his brother Tommy's company.
Ojeda met fellow Argentine Messi 10 years ago through connections selling condos and co-ops in New York, and had Hilfiger design a line of outerwear and casual apparel for MGO, a business he started with Messi. I convinced them to sell through Global. as their foundational brand. MGO stated in its 2023 initial public offering prospectus that their goal is to “strategically leverage the fame, celebrity power, and global social media influence of world-class athletes, entertainers, and other cultural icons. The goal is to create a performance-driven lifestyle brand portfolio company focused on
Signing one of the world's most popular athletes seemed like a coup for a startup in the competitive fashion world. And the timing of the listing seemed ideal. Four weeks after Messi led Argentina to the 2022 World Cup, MGO raised $8.63 million in an IPO.
“Showing just how influential Messi's name is in the fashion industry, on the day that Messi's transfer from Barcelona to France was announced, 150,000 copies of Messi's soccer shirts were sold on the Paris Saint-Germain website. When the shirt went on sale, the shirt sold out in just seven minutes, according to Sportbible.com,'' MGO told investors in its prospectus.
But this points to one problem with Messi's brand. MGO had no rights to anything related to the sport, such as jerseys, cleats or anything bearing Messi's signature. Among other things, the right to reproduce his tattoo on a hoodie, the right to create a limited edition “bold” and “artistic” graphic T-shirt, and his two chest checks, “Messi's favorite casual dress shirt”. He had the right to reproduce the flannel pattern on his shirt. pocket.
Design aesthetics and garment quality have never been an issue for MGO Global, but sales of Messi-branded coats have never generated the same consumer frenzy as PSG jerseys.
The depth of the problem became clear last week when MGO filed its annual report with the Securities and Exchange Commission. Messi brand sales in 2023 were $1.69 million. This brings the total amount of Messi-branded clothing sold by MGO over the three-year period to $3.6 million. Still, there were signs that the brand was on track. In the fourth quarter of 2023, the Messi brand generated approximately $760,000 in sales, clearly the best quarter ever. The soccer star's unusual move to promote the brand on social media by posting two posts about his 1-year anniversary sale to his 500 million followers in December may have led to revenue leakage. be.
But it was too little, too late. Over the three-year period ending in 2023, MGO paid Messi just over $2 million in licensing fees and spent about $1.8 million manufacturing and selling costumes, resulting in company-wide losses of $11.4 million. The Inter Miami star is owed $1.6 million in royalties in November, plus $1.3 million in corporate debt and less than $1 million in cash on his books, making MGO the It was clear they couldn't afford to keep their star players.
Just as lower-league soccer teams sell their best players to top-tier teams in order to raise operating funds, MGO has decided to do the same. Last week, the company sold the star's Messi brand for $2 million in cash and future royalty payments. A spokesperson for MGO did not respond to a request for comment.
Buyer: Much larger Centric Brands. It's a licensing giant that produces about 150 brands, including Zac Posen jeans for women, Avirex coats for men, and Tommy Hilfiger children's clothing, which is bound to sting. Centric will have more influence and deeper funding to boost the Messi brand. Also, the deal proposed by MGO expires in December, so the favorite will probably be to sign a new license deal with Messi. A spokesperson for Centric Brands did not respond to a request for comment.
What's left of MGO? A little more than a year ago, the company purchased the rights to Stand Flagpoles. Stand Flagpoles focuses on right-wing consumers with blog posts such as “Top 5 Conservatives to Follow on Twitter'' and “Top 5 Conservatives to Follow on Twitter.'' This is a line of telescoping poles for vehicles. Embody your American spirit and conservative perspective. ”
Flagpole business is good business. In the nine months MGO owned the stand, the brand generated $3.7 million in revenue, more than the Messi brand sold in three years. MGO stock rose 18% in the two days following news of the sale of Centric, which was completed on March 30 under the terms of the transaction.
But that doesn't mean the breakup was easy. MGO stock has fallen 36% from its temporary trading high. And as of Thursday, MGO's website still featured multiple photos of Messi looking hopeful and determined in various stylish Hilfiger garments.
Editor's note: This article first appeared on Sportico, which, like WWD, is also owned by PMC.
