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MGO Global sheds its disastrous contract with Messi

The company has struggled to make the clothing marketing deal profitable

Maximiliano Ojeda y Ginny Hilfiger, fundadores de MGO
MGO Global founders Maximiliano Ojeda and Ginny Hilfiger debuted the company on Nasdaq in 2023.
Miguel Jiménez

It seemed like a surefire winner – use the Messi brand to sell clothes. However, even with world champion Lionel Messi on board, MGO Global has struggled to turn their exclusive contract into a profitable venture. Their losses surged to $7.1 million by the end of 2023, casting doubt on the sustainability of the business. MGO Global has now opted to sell the Messi contract for $2 million and shift its focus to selling flagpoles.

MGO’s future didn’t look promising even when it went public, leveraging Messi’s name for a high valuation. A year ago, its shares were priced at $5, putting MGO Global at a $58 million market capitalization despite concerns about its sustainability. The two main shareholders, Maximiliano Ojeda (chairman and CEO) and Virginia Hilfiger (design director and sister of Tommy Hilfiger), watched their company stakes soar to $20 million, a tenfold increase on their initial investment.

On January 13, 2023, trading started with shares peaking at $16.61, a 232% increase over the initial public offering (IPO) placement price and a 4,645% return for original investors. However, the share price swiftly dropped, closing at $4.65. A year later, shares had plummeted by 86% and now trade at $0.41, 92% below the placement price. The company ended a financially ruinous 2023 with $5.4 million in gross revenue and losses of $7.4 million, more than doubling the losses from 2022. MGO’s Messi Store had sales of $1.7 million with losses of $1.9 million.

MGO Global had a contract with Leo Messi Management (LMM) to sell Messi brand clothing for three years. Messi was guaranteed a minimum income of $4.3 million and a 12% royalty on sales. With less than a year left on the contract, MGO Global chose to sell it.

On March 21, the company agreed with Centric Brands to transfer all rights and duties under the license deal for $2 million. Centric also took on the remaining $1.6 million owed to LMM through year-end, as reported by MGO Global to the Securities and Exchange Commission (SEC).

The sale could rescue the company from dire straits. According to the audit report by Assurance Dimensions, MGO Global had a net loss of $7,370,465 and net cash used in operating activities of $6,978,788 for the year ended December 31, 2023. The company acknowledges its critical situation and is exploring strategies to finance future operations, such as fresh injections of capital, debt restructuring and other financial moves. The audit report warned that any additional equity financing the company obtains may significantly dilute the ownership of current shareholders, and that it may not be able to obtain additional financing at all. The audit report indicated that these financial results cast doubt on the company’s ability to continue as a going concern.

MGO Global acquired a company that sells flagpole stands and kits, providing a revenue boost. However, profitability remains a challenge. Currently valued at $6 million, the company was recently warned by Nasdaq that it may face delisting.

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