Adidas Ends Partnership With Kanye West at a Considerable Cost

 

Adidas Ends Partnership With Kanye West at a Considerable Cost

 

The German sportswear giant is the latest company to cut ties with Mr. West, now known as Ye, after his antisemitic remarks. Ending the partnership is expected to hurt company profits.

 

Melissa EddyVanessa FriedmanMichael J. de la Merced

By Melissa Eddy, Vanessa Friedman and Michael J. de la Merced

Oct. 25, 2022

https://www.nytimes.com/2022/10/25/business/adidas-kanye-west.html

 

For more than two weeks, as Kanye West made a series of antisemitic remarks and embraced a slogan associated with white supremacists, Adidas, the most important partner in his fashion empire, said only that its relationship with the rapper and designer was “under review.”

 

But as Ye, as Mr. West is now known, continued his offensive behavior, and with the condemnation of his remarks growing more widespread, Adidas announced Tuesday that it would cut ties with him — a move the company said would cost it 250 million euros ($246 million) this year.

 

The end of their nearly decade-long partnership — which one estimate said was worth close to $100 million annually to Ye — raised questions of what would come next for Ye, who has been one of the most influential pop stars of recent decades but has become increasingly polarizing and unreliable. CAA, Ye’s former talent agency, no longer represents him and Def Jam, his longtime record company, said that his contract had expired last year.

 

“Adidas does not tolerate antisemitism and any other sort of hate speech,” the company said in a statement. “Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.”

 

The company, based in Herzogenaurach, Germany, said it would terminate the partnership immediately, end production of Yeezy-branded products and stop payments to Ye and his companies.

 

Over the past month, Ye tested the boundaries of acceptable behavior even for a noted provocateur. At his YZYSZN9 Paris Fashion Week show, he wore a shirt with the slogan “White Lives Matter,” which the Anti-Defamation League has identified as hate speech and has been adopted by the white supremacist movement. He made antisemitic remarks on social media and in interviews shortly after, including a post on Twitter that said he would go “death con 3 ON JEWISH PEOPLE.”

 

Blowback quickly followed.

 

Instagram and Twitter suspended Ye’s accounts. Ari Emanuel of Endeavor, the parent company of the talent agency WME, called on entertainment companies to stop working with Ye. Balenciaga, the fashion house that had partnered with Ye in his Yeezy Gap project (which came to an end in September) and opened its runway show in Paris this month with a modeling stint by Ye, deleted him from its pictures and videos of the show.

 

Similar images disappeared from Vogue Runway, the platform of record for fashion shows, and the magazine stated it “had no intention” of working with Ye in the future. Vogue magazine said it would no longer work with Ye, who had appeared on its cover with his ex-wife, Kim Kardashian, and often attended the Met Gala.

 

On Monday, the studio MRC said it was shelving a documentary on him. Gap, which had a partnership with Ye that ended last month, said on Tuesday that it was taking “immediate steps” to remove Yeezy Gap products from its stores and had shut down an affiliated website. Also on Tuesday, Aaron Donald of the Los Angeles Rams and Jaylen Brown of the Boston Celtics said on Twitter that they were cutting ties with Donda Sports, Ye’s marketing agency, because of the antisemitic remarks.

 

Though Adidas was among the first of Yeezy’s corporate partners to announce publicly — on Oct. 6 — that it had placed the relationship under “review,” the fact that the company did not move faster to officially sever the ties began to take a toll. The Anti-Defamation League shot back, “What more do you need to review?”

 

Like many of Ye’s other fashion connections, Adidas seemed to be dragging its feet, perhaps hoping for a public apology that could turn things around. Unlike Ye’s other fashion relationships, which were largely unofficial and based on mutually advantageous appearances, untangling the deal between Yeezy and Adidas would have major contractual and long-term implications; the two brands were intertwined not just publicly, but financially and logistically as well. For Adidas, the partnership was worth more than 10 percent of the more than $2 billion it made in profit last year.

 

The Anti-Defamation League stepped up its pressure on Adidas this week, after members of a hate group hung a banner reading “Kanye is right about the Jews” over a Los Angeles freeway.

 

In Germany, the Central Council of Jews called on the company to cut ties to Ye. “The historical responsibility of Adidas lays not only in the German roots of the company, but also in its entanglement with the Nazi regime,” Josef Schuster, the head of the council, said. “I simply expect such a company to take a strict position regarding antisemitism.”

 

The founder of Adidas, Adi Dassler, belonged to the Nazi Party, and his factory was forced to produce munitions in the final years of the war. It was only thanks to the sworn statement of a Jewish friend that he was allowed to found the present-day company after World War II ended. Antisemitic statements made online can lead to prosecution in Germany, and companies with ties to the Nazi era are expected to act to prevent the return of such sentiment.

 

As pressure on the company mounted in the United States in recent days, its leadership remained largely silent, frustrating even its own executives. “Coming off of the Adidas global week of inclusion, I am feeling anything but included,” Sarah Camhi, a director for trade marketing at Adidas in the United States, wrote in a post on LinkedIn on Monday.

 

She pointed out that while Adidas had severed ties with athletes who failed drug tests, or were “difficult to work with,” it was “unwilling to denounce hate speech, the perpetuation of dangerous stereotypes and blatant racism by one of our top brand partners,” she wrote.

 

“As a member of the Jewish community, I can no longer stay silent on behalf of the brand that employs me,” Ms. Camhi wrote. “Not saying anything, is saying everything.”

 

Shares of Adidas ended the day down 2.4 percent on Tuesday. The company’s stock has fallen over 20 percent in the past month, as Ye embarked on his latest bout of outrageous behavior.

 

Adidas, which began collaborating with Ye after he left Nike, has long weathered public barbs from the rapper. The value of its partnership with Yeezy, Ye’s company, which encompasses sneakers and clothing, has never been disclosed, but in a recent report David Swartz of the research firm Morningstar estimated it to be worth about €1.5 billion to €2 billion. Royalty payments to Ye are also undisclosed, but are “likely to exceed €100 million per year,” Mr. Swartz said.

 

For Adidas, working with Ye gave the company a boost of creative cool and credibility that helped attract high-fashion collaborators like Gucci and Balenciaga.

 

The company said it expected the move to have a “short-term negative impact of up to €250 million” on its profit this year.

 

“Even without Yeezy, Adidas ships more than 300 million shoes per year,” which brings in nearly $20 billion a year for the company, Mr. Swartz said. Adidas also makes the uniforms for the German, Spanish and Argentine soccer teams that will be playing in the World Cup championship, which will be played in November and December this year, during the Christmas holiday shopping season.

 

Ted Deutch, the chief executive of the American Jewish Committee, said he welcomed “this decisive if belated action by Adidas.”

 

“He believed that as long as the money kept rolling in he could speak with impunity,” Mr. Deutch said of Ye. “Other companies that profit from associating with West must also disabuse him of that notion.”

 

The end of Ye’s partnership with Adidas also comes as his most recent musical ventures have fallen short of previous efforts. His last album, for instance, did not come out on streaming services, but a proprietary $200 speaker device. Longtime fans have criticized his increasing dalliances with right-wing figures, including more frequent associations with Candace Owens and Tucker Carlson and an agreement to buy the right-leaning social network Parler.

 

Ye has stated that he plans to open his own retail stores, as part of his rejection of the corporate world and creation of what he has reportedly called the “Yecosystem.”

 

But the future of the Yeezy brand is unclear. Ye still owns the Yeezy trademark. However, Adidas said in its statement that it was the “sole owner” of all design rights to existing products that came out of the partnership, as well as previous and new colorways arising from the collaboration.

 

What the sneakerheads who made the last release of Adidas Yeezy shoes, on Oct. 17, a sell-out product, will do next remains to be seen.

 

Melissa Eddy is a correspondent based in Berlin who covers German politics, social issues and culture. She came to Germany as a Fulbright scholar in 1996, and previously worked for The Associated Press in Frankfurt, Vienna and the Balkans. @meddynyt • Facebook

 

Vanessa Friedman was named the fashion director and chief fashion critic in March 2014. In this role she leads global fashion coverage for both The New York Times and International New York Times. @VVFriedman

 

Michael de la Merced joined The Times as a reporter in 2006, covering Wall Street and finance. Among his main coverage areas are mergers and acquisitions, bankruptcies and the private equity industry. @m_delamerced • Facebook