Billion-Dollar Hit: adidas Ends Pact With Kanye West, Joining Gap, CAA, MRC

By Barry Janoff

UPDATED November 10, 2022: Following the recent dissolution of the partnership between adidas and Kanye “Ye” West, adidas said it would continue to sell his products but without Kanye West branding.

“Adidas is the sole owner of all design rights registered to existing product,” adidas CFO Harm Ohlmeyer said during a financial earnings call on Wednesday (Nov. 9). “We intend to make use of these rights as early as 2023.”

"We are working through all the options, When the time is right we will be more specific . . . Going forward, we will leverage the existing inventory with the exact plans being developed as we speak.”

October 25, 2022: Stating that it “does not tolerate anti-Semitism and any other sort of hate speech,” global brand adidas today said it has ended its alliance with Kayne “Ye” West following antisemitic statements and posts he made on Podcasts and via social media.

Adidas joins brands including The Gap, Balenciaga, JP Morgan, Foot Locker, TJ Maxx and Vogue to end alliances with West.

In addition, worldwide talent agency CAA said it had dropped West as a client and MRC Entertainment said it would not distribute its recently completed documentary on West.

“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,” adidas posted today to its Web site and social media.

“After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. adidas will stop the adidas Yeezy business with immediate effect.”

Adidas said it said it would take a $246 million negative impact to its Q4 sales.

According to Forbes, the adidas-West deal was valued at $1.5 billion “calculated off of a multiple of annual earnings.”

The Gap’s alliance with West was severed in September when West said he was ending his relationship with the brand after two years.

According to The New York Times, the pact “was supposed to last ten years and generate $1 billion in annual sales.”

“(Adidas') decision is a very positive outcome,” Jonathan Greenblatt, Anti-Defamation League CEO, said today via the organization.

“It illustrates that anti-Semitism is unacceptable and creates consequences. Without a doubt, adidas has done the right thing by cutting ties with Ye after his vicious anti-Semitic rants."

"We were proud to see many joined ADL's campaign, #RunAwayfromHate, that pressured adidas toward this decision, including the thousands of people who sent e-mails, the dozens of celebrities who spoke up, and the prominent brands who cut ties.

“Taken together, all these elements sent an unambiguous signal that moved the company to take action.

“In the end, adidas’ action sends a powerful message that anti-Semitism and bigotry have no place in society.”

TJ Maxx' move to distance itself from West was in-line with that message.

“At TJM we do not tolerate discrimination, harassment, or hate of any kind," the retailer posted to social media.

"We have instructed our buying teams not to purchase (his) merchandise for sale in any of our stores globally.”

Also taking a major blow is West's Donda Sports marketing firm.

Los Angeles Rams All-Pro defensive tackle Aaron Donald and Boston Celtics All-Star forward Jaylen Brown both said via their social media platforms that they are no longer part of Donda Sports.

“Our family has made the decision to part ways with Donda Sports,” Donald and his wife, Erica, posted. “The recent comments and displays of hate and anti-Semitism are the exact opposite of how we choose to live our lives and raise our children.

"We find them to be irresponsible and go against everything we believe in as a family."

According to Brown, "I have always, and will always, continue to stand strongly against any anti-Semitism, hate speech, misrepresentation, and oppressive rhetoric of any kind."

West and adidas began their alliance in 2013 after West left Nike, which became more extensive in 2016 with the launch of “adidas + Kanye West, a Yeezy-branded entity creating footwear, apparel and accessories for all genders across street and sport.”

At the time, adidas said the "unprecedented new alliance makes history as the most significant partnership ever created between a non-athlete and an athletic brand.”

Adidas said today it is the “sole owner of all design rights to existing products as well as previous and new colorways under the partnership."

More information will be given "as part of the company’s upcoming Q3 earnings announcement on Nov. 9, 2022.”

On Monday (Oct. 24), according to MRC Entertainment’s Asif Satchu (CEO and co-founder), Modi Wiczyk (CEO and co-founder) and Scott Tenley (CBO) via the company’s Web site, “After discussion with our filmmakers and distribution partners, we made the decision not to proceed with any distribution for our recently completed documentary about Kanye West.

"We cannot support any content that amplifies his platform.

“Kanye is a producer and sampler of music. Last week he sampled and remixed a classic tune that has charted for over 3000 years — the lie that Jews are evil and conspire to control the world for their own gain."

(MRC Entertainment’s full statement here.)

Nicholas Gravante, a lawyer for West, told CNBC in September the move to leave The Gap was “due to Gap’s noncompliance with their agreement failed to meet its obligations in the companies’ agreement,” including distributing Yeezy products in its stores by the second half of 2021 and creating dedicated Yeezy Gap stores.

Today, according to The Gap via its Web site, “In September, Gap announced ending its Yeezy Gap partnership. Our former partner's recent remarks and behavior further underscore why. We are taking immediate steps to remove Yeezy Gap product from our stores and we have shut down Yeezygap.com. 

"Anti-Semitism, racism and hate in any form are inexcusable and not tolerated in accordance with our values. On behalf of our customers, employees and shareholders, we are partnering with organizations that combat hate and discrimination."

Last week, Kering, fashion firm Balenciaga’s parent company, said in a statement to WWD. “Balenciaga has no longer any relationship nor any plans for future projects related to this artist."

Photo; adidas

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