Know your oligarch: Jorge Vergara’s Omnilife money has Chivas on track for the second division

Jorge Vergara is a name well known to soccer fans on both sides of the border. In fact, you might call him “notorious.” In the business world, lots of myths and accusations about his health and nutrient company, Omnilife, circle around the enterprise. Both his Chivas clubs (the gigantic Liga MX version and the now defunct Major League Soccer variety) have found themselves defendants in lawsuits during the last two years. Still, as a closer look shows, most of the dirt doesn’t really stick. To the contrary, one thing becomes clear: in any endeavor, be it nutrients or sports clubs, only Vergara can ever emerge the winner.

First, some words about Omnilife. According to that bastion of truth, Wikipedia, Vergara got his start in the nutrient industry by “illegally” smuggling Herbalife into Mexico from the United States and selling it. However, a note of legalese: Vergara only brought Herbalife into Mexico and sold it without obtaining prior authorization from Mexican authorities to do so. Thus, it’s in the nether region of legality. Also, Vergara’s claim to early fame was helping to get Herbalife approved for sale in Mexico. How did he help? We don’t know, but we do know WalMex used gestores to grease government wheels. And by “grease,” we mean “paid bribes.”

Shady and mysterious only begets further mystery and further shadiness. Vergara soon started his own rival company Omnitrition, now Omnilife. And here’s where two common complaints emerge: (1) Omnilife sells bogus supplements and nutrients, and (2) the company is a pyramid scheme. In regards to the first one, Omnilife definitely does not produce scientifically-backed treatments to specific ailments. It is not medicine. However, the murky world of “feel better” can’t serve as a backdrop to an accusation of fraud. Lots of folks who use Omnilife claim to feel better; many don’t.

In regards to the second claim, Omnilife clearly thrives based on the back of a big sales team. Is that any different from any other company looking to sell products? The novelty to Omnilife’s approach is that sellers also get compensated based on recruiting new salespeople. If you speak Spanish, the comments in this blog post from 2008 written by a flustered ex-Omni salesperson shed light on both sides of the debate. Omnilife gives discounts on products to salespeople, but they have to meet certain quotas to get better discounts. Thus, it’s clearly not a job-on-the-side and requires a serious time investment. However, like any other sales job, if you move more products, you get better compensation.

Thus, Vergara is clearly not committing any fraud in his product line or his sales team structure, but you get the impression he’s a type of kingpin, or a hustler. He pedals products that lack objectively quantifiable benefits on the backs of people who get paid in part by recruiting others to sell the product. Thus, there’s a cult atmosphere in which fervent Omnilife believers spread the good word (and make a buck). Who is the savior that also coincidentally is at the top and gets a nice slice of profits? Jorge Vergara. Allegedly, he’s worth $1.5 billion.

Chivas Training Session

Looking at Vergara’s sports ownership, the same “me me me” rule applies: he invests a minimal amount and always comes out on top. A look at Chivas’ signings during the Vergara era by ESPN showed that the team bought a lot of duds. This combined with the belief that Vergara only wanted to use Chivas to promote Omnilife, a claim bolstered by his acquisition of soccer clubs in China and the U.S., shows a failed experiment in marketing. Chivas succeeded at the start thanks to players like Adolfo “Bofo” Bautista and Francisco Palencia, but, unlike Omnlife, a soccer club requires continual investment with very little profit. Vergara was and is unwilling to double-down. Owning a losing team simply does not bug him. Hence, Chivas is super close to relegation.

And then there’s the legal troubles. Recently, Jorge Vergara and Chivas were sued by Argentina coach Ricardo La Volpe for breach if contract. He was fired last summer. ESPN has pointed out that Vergara grows impatient with (and fires) coaches like child with ADHD. However, the La Volpe firing was different: the coach oddly got a massage from one of the club’s female trainers (guess he got physically exhausted from coaching) and touched her inappropriately. Thus, Vergara is on the right side of that fence. His business ethics may make your skin crawl, but he’s not entirely amoral.

Where he was on the wrong side of the fence, though, was Chivas USA. CNN reported that shortly after taking over Chivas USA, he gave a speech to staff only in Spanish and remarked that folks who spoke English should go work for the Galaxy. Two youth coaches alleged they were fired for not being Hispanic. And here’s the problem: to adopt the Chivas “Mexican only” approach in the U.S. is arguably, probably, most likely racism. You can’t be Hispanic-only and fire or not hire whites, blacks, Asians, etc. And in the U.S., we have anti-discrimination laws for jobs. You can’t hire or fire somebody based on their nationality, race, or ethnicity. Bottom line: he got sued, and rightly so.

San Jose Earthquakes v Chivas USA

The funny part is how Vergara claimed that, after a year or so, the lawsuit “got dismissed.” The L.A. county website disagrees, saying the judge did not dismiss the case; rather, the attorney for the plaintiffs did. 99.99 percent of the time, a plaintiffs’ attorney only dismisses a case after it’s settled out of court, for money or something else. In this case, the plaintiffs only asked for money. Bottom line: Vergara probably paid out the nose to make the case go away.

The even bigger bottom line is that Chivas USA, like Chivas in its first years under Vergara, started off okay but then sucked royally for years. Vergara refused to renew his initial investment in the club. However, he still managed to sell Chivas USA back to MLS for a handsome profit. Then it ceased to exist. If somehow Chivas de Guadalajara drops, expect them to cease operations rather than play in the Liga de Ascenso.

And don’t count on Vegara buying a recently promoted club and relocating them to Guadalajara to replace Chivas. Why? Because his branding experiment has proven too costly. In a nutshell: Vergara does not care about the team you root for, which he happens to own. On both sides of the border, soccer fans are crying in solidarity, but they should be shouting.

 

Photo credits, from top-to-bottom: Simon Barber/Chivas/LatinContent/Getty Images; Stephen Dunn/Getty Images.

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