If track record and popularity predict success, MGO Global should be booming right now.
Co-founded by Ginny Hilfiger, the creative force behind the Fila brand and Tommy Jeans at her brother Tommy’s eponymous company, MGO inked one of the world’s most popular athletes, Lionel Messi, for a line of designer casual apparel and accessories. The soccer star cemented his claim as the greatest player of all time by captaining Argentina to a World Cup title in December, and he also set up MGO perfectly for an IPO less than four weeks later.
At first, the star power worked: Within two hours of its first day of trading on the Nasdaq, MGO shares more than tripled from their IPO price to $16.61. But from that peak, MGO shares have lost more than 93% of their value, trading recently at $1.10. MGO sold $335,000 of products in the first quarter, losing $1.2 million in the process.
“Figuring out the zeitgeist, figuring out consumer behavior and what is hot in the moment is impossible,” Catharine Weiss, a professor of fashion at Lasell University, said. “There are so many different companies that think they’ve got the answer, and then they launch something and it completely fails.”
MGO, which didn’t respond to requests for comment, isn’t a failure–first-quarter sales were triple what they tallied a year earlier, and the IPO has given the company lots of cash to sustain operations and grow business. But the market reception shows how tough it can be to translate sports celebrity into sales outside the stadium.
The five-year-old MGO is not alone in this problem; Adidas had massive success with Kanye West—before the company dropped him in the wake of his antisemitic comments last year—but flopped in its Ivy Park partnership with the more popular Beyoncé.
MGO’s plan was to use its platform for sourcing, marketing and selling “to create fresh, modern and compelling product and apparel brands aligned with and inspired by … our valued brand partners,” according to the MGO prospectus. Messi is MGO’s proof of concept for that plan.
The online Messi Brand store arguably should be doing better. Hilfiger has designed a Messi Brand line replete with stylish and eco-friendly hoodies, T-shirts and a puffy coat suitable for Argentine winters, plus Messi has more than 460 million Instagram followers to whom he can promote the line. MGO probably expected better sales, too, given MGO pays Messi a minimum guaranteed royalty of €500,000 (about $539,000) every five months. The royalty fee comes out to $1.29 million annually in guaranteed payments—that’s a quarter of a million dollars more than Messi Brand generated in all of 2022.
MGO Global says the company is just getting off the ground. “The capital raise in our IPO is the fuel we have needed to move our company from relatively startup phase to becoming a serious world-class [direct-to-consumer] digital commerce company with a portfolio of lifestyle brands that speak to and resonate with today’s digital-savvy consumers,” co-founder and CEO Maximiliano Ojeda said in a conference call with investors last week. “It is still very early days in the evolution of MGO; give us time and pay close attention to our progress.”
Messi’s licensing agreement, which ends in December 2024 with no guarantee of renewal, covers casual clothes, outwear, underwear, home textiles and accessories. It excludes sports-related clothing and gear, like cleats and baseball caps, as well as anything bearing a reproduction of Messi’s signature. Perhaps for that reason, MGO moved to diversify the business in March, veering from its stated celebrity apparel focus to acquiring the rights to sell telescoping flagpoles from a company called Stand. Stand markets its flagpoles to right-wing Christians and gun lovers, a market that probably has minimal overlap with Messi fans.
Setting the particulars of MGO’s business and its licensing deal aside, the apparent headwinds the Messi Brand faces may be symptomatic of a larger problem in fashion: Companies are flooding the market with athlete and celebrity collaborations.
“We’re seeing so many collabs with various apparel manufacturers and celebrities to promote clickbait and any other way to broaden to audiences. It’s a little much and we really feel it’s been overdone,” Weiss said in a phone call. “We’re in a collab nightmare.”
You don’t have to think hard to come up with a list: Brady (Tom Brady), S By Serena (Serena Williams), CR7 (Cristiano Ronaldo), Honor The Gift (Russell Westbrook), Big Baller (Lonzo Ball) and Greatness Wins (Derek Jeter and Wayne Gretzky) come to mind quickly.
When a co-brand works, it is tremendous. Michael Jordan vaulted Nike to the top of the athletic brand heap; last year the Jordan brand generated $5 billion in sales, and it still has “epic growth potential ahead,” Nike’s chief financial officer Matthew Friend told analysts in June.
Of course, when celebrity brands don’t work, or even worse, when the celebrity implodes, it creates a huge problem for manufacturers.
Yet there often seems little choice but to try and use a celebrity as a proxy to get noticed in the market. “We don’t have a choice in fashion, do we? Because everything is through social media in terms of any kind of attention that a brand is going to get,” Weiss said. “You’ve just got to make the biggest sound you can to try to appeal to your audience.”
The problem is, there’s little rhyme or reason as to why some people and brands tap into the zeitgeist and become cultural icons or marketplace success stories.
“There is no formula. No one can figure this out,” Weiss said. “If we could, we’d all be millionaires.”
