Desperate Adidas Turns Back to Kanye After Cutting Ties Causes Revenue Projections to Plunge
Adidas may have cut ties with Kanye West over an anti-Semitic tweet, but it’s hoping that doesn’t mean the company can’t still profit from the controversial rapper’s designs.
Adidas severed its business relationship with West, who now goes simply by Ye, on Oct. 25 over unspecified “disputes,” which apparently came to a head after the entertainer’s Twitter account was suspended for a tweet that violated the platform’s guidelines.
West had tweeted on Oct. 8 that he was “going death con 3 on JEWISH PEOPLE,” according to Insider. Gap and Balenciaga also dropped their agreements with West after the tweet, as did the talent agency that had represented him.
Adidas, however, still hopes to profit from West’s designs, even if his name will no longer be attached to them.
“We own all the IP, we own all the designs, we own all the versions and new colorways, so it’s our IP, it’s our product,” the German sporting-goods giant’s CFO Harm Ohlmeyer told The Wall Street Journal. “We believe there are interesting things coming to fruition in ‘23, that’s what we’re working through.”
Ohlmeyer said the company didn’t have the rights to the Yeezy name, but planned to profit from what it did own — which was pretty much everything else related to the deal.
The company still had some Yeezy-branded merchandise, but hadn’t yet decided what to do with it, he said.
In a news release Wednesday, Adidas predicted that its total net revenue for 2022 would be about half of what it had estimated only three years earlier. In those three weeks, however, the deal with West ended, which cut about $250 million from their expected income.
“This amount differs from the preliminary figure published on October 20, 2022, due to negative tax implications in the third quarter related to the company’s decision to terminate the adidas Yeezy partnership,” the company’s statement said.
The Journal reported that Adidas had lowered its revenue predictions four times this year alone. It pulled out of Russia, has struggled to adjust to supply chain issues related to the pandemic, and is seeing lower sales overall from inflation-squeezed consumers.
“The market environment shifted at the beginning of September as consumer demand in Western markets slowed and traffic trends in Greater China further deteriorated. As a result, we saw a significant inventory buildup across the industry, leading to higher promotional activity during the remainder of the year which will increasingly weigh on our earnings,” Ohlmeyer was quoted as saying in the news release.
“We are encouraged by the enthusiasm for the upcoming FIFA World Cup which is already noticeable in our Football revenue growth. And in North America we are gearing up for an exciting upcoming basketball launch.”
West, a self-described Christian, has claimed that he cannot be anti-Semitic because he’s Jewish.
“The funny thing is I actually can’t be Anti Semitic because black people are actually Jew also,” he said. “You guys have toyed with me and tried to black ball anyone, whoever opposes your agenda.”
In the subsequent backlash, numerous businesses and individuals — including celebrity trainer Harley Pasternak — cut ties with the rap and fashion mogul. The loss of his relationship with Adidas alone reportedly cost him $1.5 billion.
Many Twitter users expressed sympathy and support for Ye’s struggles before his account was suspended.
West said in mid-October, after being censored by both Twitter and Instagram, that he planned to acquire the social media platform Parler.
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