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Adidas cuts its partnership with Kanye West following his comments on social networks

Adidas announced the end of its partnership with Ye, formerly known as Kanye Westfollowing comments from the rapper on social media.

Ye (his legal name), one of the most famous and successful black American entrepreneurs in history, has an estimated net worth of $2 billion.

The controversial artist and fashion designer has made a series of comments and appearances in recent months that have been called offensive and anti-Semitic.

The German sporting goods maker said it reviewed its partnership with Ye earlier this month under public pressure.

The once strong relationship between the two parties immediately came to an end on October 25.

“Adidas does not tolerate anti-Semitism and any other type of hate speech. Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the values ​​of diversity and inclusion, mutual respect and corporate equity,” the German shoe company said in a press release.

“After careful consideration, the company has made the decision to immediately end the partnership with Ye, end production of Yeezy-branded products, and halt all payments to Ye and its companies. Adidas will halt the Adidas Yeezy activity with immediate effect.

This was less than a month after Ye ended his partnership with clothing company Gap Inc.

Film and TV studio MRC and French fashion line Balenciaga have also distanced themselves from Ye in recent weeks.

“Balenciaga no longer has any relationship or plans for future projects related to this artist,” said parent company Kering. told WWD last week.

The German sportswear giant said the end of the contract would only have a short-term net negative impact of up to $246 million for 2022, due to strong seasonal sales in the fourth quarter.

However, Adidas’ annual sales have reportedly increased by just 1% on average since 2017, compared to 3% under the Ye partnership, UBS reported.

Company executives told CNBC it will provide more information when it announces its third-quarter results on Nov. 9.

Adidas claimed that it was the “sole owner of all design rights to existing products as well as previous and new colorways under the partnership.”

Massive public backlash

Adidas faced immense pressure from the public, advocacy groups and its own employees to eventually cut ties with Ye.

The artist said in an October 16 podcast, “I can say anti-Semitic things, and Adidas can’t let me go. Now what?”

This final statement prompted an escalation of demands on Adidas from organizations such as the Anti-Defamation League, StopAntisemitismand the International Legal Forumwho all denounced Ye on Twitter and applauded the company’s decision today.

“Ultimately, Adidas’ action sends a powerful message that anti-Semitism and bigotry have NO place in society,” the ADL said.

A petition has also been launched by the Campaign Against Anti-Semitism, which had collected at least 169,100 signatures by the morning of October 25.

Ye’s talent agency, Creative Artists Agency (CAA), confirmed that it dropped him as a client on October 24.

“I can confirm that Kanye is not a client,” CAA rep told CNBC.

Financial giant JPMorgan Chase has also cut ties with the rapper.

Twitter and Meta also locked his social media accounts over his offensive remarks.

Ye’s Twitter account was restricted after he said he would go “death con 3 on JEWISH PEOPLE”. (Ye probably meant “defcon”, or defense readiness, a particular state of alert.)

Elon Musk, who is considering buying Twitter, posted a tweet which he discussed with his friend Ye/West and “expressed my concerns about his recent tweet, which I think he took to heart.”

In response to blocking, Ye told Bloomberg that he had signed a deal to buy the social media platform Parler.

“In a world where conservative views are considered controversial, we must ensure that we have the right to express ourselves freely,” Ye said in a statement.

Formerly profitable relationship

Ye’s relationship with Adidas dates back to 2013 and had been mutually beneficial, earning the company about $2 billion a year, or about 10% of its revenue. according David Swartz, analyst at Morningstar.

In 2016, the two formed a partnership to manufacture and distribute items for West’s Yeezy clothing line.

Adidas previously boasted that their partnership had had a “tremendous impact” on its business and was one of the most successful collaborations in its history.

“This has been an important product line for Adidas and has helped restore relevance to its business in North America. It made Adidas relevant in the collector market and probably allows it to reach a demo it missed,” Swartz told CNBC.

Ye grants the rights to its Yeezy brand to Adidas in exchange for royalties of approximately 15% of product sales.

The company in turn designs and manufactures the products, while retaining ownership of the designs, according to the Wall Street Journal

“Adidas is struggling to compete with Nike for top sponsors, so Yeezy was a big plus,” he continued.

West had a previous relationship with Nike, which released the Nike Air Yeezy II, including the famous Red Octobers, but that partnership ended in 2013.

However, Ye told CNBC that Adidas allegedly “copied” his ideas and attacked CEO Kasper Rorsted and other Adidas board members on social media.

The loss of the contract with Ye is another major headache for Adidas, which is struggling with the key Chinese market, supply chain issues and the loss of its Russian operations.

Rorsted said in August he would step down next year over his failure to expand in China, forcing the company to search for a new CEO, reports the Wall Street Journal.

Adidas’ share price fell 3.8% in morning trading in Frankfurt after the announcement.

The total turnover of the German company has fallen by 60% this year.


Bryan S. Jung is a New York native and resident with a background in politics and the legal industry. He graduated from Binghamton University.