When Lionel Messi left Barcelona for Paris Saint-Germain in 2021, it was because the LaLiga outfit could not afford to keep him under Spanish football’s strict financial rules. When Messi left micro-capital fashion house MGO Global for the much larger Centric Brands on March 30, it was for much the same reason: the cold reality of corporate accounting meant MGO could not afford to keep its star at home.
In 2018, Messi, one of the world’s most popular athletes, signed a licensing agreement with a fledgling fashion company founded by Maximiliano Ojeda, an Argentinian businessman who started a real estate business in New York, and Ginny Hilfiger, the former head of creative and creative at the Fila brand. He is an executive at his brother Tommy’s company.
Ojeda met Argentinian Messi through connections he had made selling condos and co-ops in New York over the past decade and convinced him to let Hilfiger design a line of outerwear and casual wear and sell it through MGO Global, the business he and Messi started . as their core brand. MGO said in its 2023 initial public offering prospectus that their goal is to “create a performance-focused lifestyle brand portfolio company focused on strategically leveraging the fame, power of celebrity and global social media influence of world-class athletes, artists and other cultural icons.”
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Signing a deal with one of the world’s most popular athletes seemed like a coup for a company just starting out in the fiercely competitive fashion world. The timing of going public also seemed ideal: MGO raised $8.63 million in its IPO, four weeks after Messi led Argentina to the 2022 World Cup.
“As a development that shows how influential the name Messi is in the fashion industry, when 150,000 Messi jerseys were put up for sale on Paris Saint-Germain’s website on the day his transfer from Barcelona to France was announced, it was noteworthy that the jerseys sold out in just seven minutes. sportbible.com’ a,” MGO said in its prospectus to investors.
But this points to a problem with the Messi Brand: MGO had no rights to anything sports-related, including jerseys, boots and anything bearing Messi’s signature. The company had the rights to reproduce his tattoos on hoodies, produce limited edition “bold” and “flashy” graphic T-shirts, and recreate the two-breasted plaid flannel shirt that was “Messi’s casual dress shirt of choice,” among other things. pockets.
Although the design aesthetics and quality of the garments have never been an issue for MGO Global, sales of Messi-branded coats have never generated as much consumer excitement as PSG jerseys.
The depth of the problem became apparent last week when MGO filed its annual report with the Securities and Exchange Commission. In 2023, sales of the Messi Brand reached 1.69 million dollars. This brings MGO’s publicly disclosed total of Messi Brand apparel sold over the three years to $3.6 million. Still, there were signs that the brand was on the rise: In the fourth quarter of 2023, Messi Brand sold nearly $760,000, making it its best quarter ever. The revenue was likely driven by the football star making a rare social media plug for the brand, posting two first-anniversary sale posts to his 500 million followers in December.
But it was too little, too late. In the three years to 2023, MGO paid Messi just over $2 million in licensing fees, spent around $1.8 million on the making and selling of the clothes, and tallied a company-wide loss of $11.4 million. With a $1.6 million royalty payment due to the Inter Miami star in November, another $1.3 million in corporate liabilities and less than $1 million in cash on its books, it was clear that MGO could not afford to keep its star.
Just like lower league football teams sell their best players to top-level heavyweights to finance their operations, MGO decided to do the same. Last week, the star sold his Messi Brand for $2 million in cash and the assumption of an upcoming royalty payment. A spokesperson for MGO did not respond to a request for comment.
The buyer: Centric Brands, a much larger licensing house that produces about 150 brands, including Zac Posen jeans for women, Avirex jackets for men and, in a somewhat annoying coincidence, Tommy Hilfiger clothes for kids. Centric will have more power and deeper pockets to advance the Messi brand. It is also speculated that Messi will be the favorite to sign a new licensing deal as the deal by MGO expires in December. A spokesperson for Centric Brands did not respond to a request for comment.
What’s left for MGO? A little more than a year ago, it bought the rights to Stand Flagpoles, a series of telescopic poles for homes and vehicles, focused on right-wing consumers with blog posts like “The 5 Best Conservatives to Follow on Twitter” and pitches for flags. Exemplify your American spirit and conservative perspectives.
The flagpole business is a good business. In the nine months that MGO owned the Stand, the brand generated $3.7 million in revenue; This is more than the Messi Brand has sold in three years. MGO shares gained 18 percent in value in two days following the news of the Centric sale, which closed on March 30 according to the terms of the agreement.
But that doesn’t mean the breakup was easy. MGO shares are down 36 percent from their short deal peak. As of Thursday, MGO’s website still featured multiple photos of Messi looking hopeful and determined in a variety of stylish Hilfiger outfits.
Editor’s Note: This article first appeared in Sportico, which, like WWD, is owned by PMC.
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