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Kanye made Adidas billions. Now it could cost the company its reputation.

For years, Adidas executives kept quiet when famed partner Ye, the musician and fashion designer formerly known as Kanye West, made headlines — they even remained silent when the entertainer publicly denigrated the CEO of the sports brand.

But the Germany-based company broke its silence last week, days after the artist sparked widespread outrage by wearing a “WHITE LIVES MATTER” t-shirt during his show at Paris Fashion Week. Adidas said Thursday it was reviewing its business deal with Ye and its Yeezy brand, which is expected to bring in billions of dollars in annual revenue.

The pressure on Adidas only increased in the days after that announcement, as Ye engaged in other bizarre behavior, including posting anti-Semitic tweets and an online video in which he called the “king of culture” while showing a pornographic film to Adidas executives. Now, Adidas executives must decide if maintaining ties with a partner that has earned the company billions is worth the continual public relations nightmares.

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Yeezy generates about $2 billion a year, or nearly 10% of the company’s annual revenue, said Morningstar analyst David Swartz.

“The adidas Yeezy partnership is one of the most successful collaborations in our industry’s history,” Adidas said. “We also recognize that all successful partnerships are rooted in mutual respect and shared values.”

Representatives for Ye and Adidas did not respond to requests for comment from The Washington Post.

Keeping silent has its own dangers, some experts have said.

“The problem is that if you go down the rabbit hole, and you accept, and accept, and accept, and look the other way, then you are, in a sense, implicitly co-signing the behavior,” said Americas Reed. , professor of marketing at the Wharton School of the University of Pennsylvania.

A polarizing “creative genius”

Ye’s chaotic behaviors are part of his mark, some pundits have said, and are often excused because fans think that’s what makes him a genius.

“If you’ve got a once in a generational force like Kanye West, you’re gonna try to do whatever you can to salvage the deal and make him happy, and kind of ignore some of the feedback and keep pushing product, which ‘they did,’ said Jared Goldstein, attorney and co-author of ‘sneaker law», a legal manual on the sneaker industry. “But I just think there’s not much [Adidas] can take. …Adidas was around long before Kanye West, so I think they’re concerned about their overall image in the eyes of the public.

Ye, who has won 24 Grammy Awards and released numerous critically acclaimed platinum records, has had a significant impact on the music industry over the past two decades as a rapper and producer. His break with fashion began in 2009, when he teamed up with Nike to release the Nike Air Yeezy 1. But Ye grew unhappy with his contract with Nike.

“He was kind of a free agent in the sneaker world,” Goldstein said.

Adidas partnered with the artist in 2013. The company announced a major expansion in 2015, moving hundreds of employees from its German headquarters to its US base near Portland.

In 2016, Ye and Adidas agreed to a royalty deal and increased inventory to make the product more accessible, Goldstein added. The partnership made Ye a billionaire and opened the doors of Adidas to a new clientele.

In the years since the deal, Adidas has improved its distribution, sales and gained market share in North America, Morningstar’s Swartz said. The company also broke into the resale market, a category dominated by the shoe line of Nike and Michael Jordan, and expanded its athleisure business.

“Their brand image in the minds of consumers has really increased,” Goldstein said. “Other deals with celebrities, athletes and designers have materialized, and Adidas has become very popular because of the ‘Kanye effect’.”

But as he had with his past partnerships, Ye aired his grievances with Adidas in public. In June he accused the company to steal his designs, calling out Adidas chief executive Kasper Rorsted by name in a tweet.

The claims almost certainly have no merit, according to Goldstein. Although the contract between Adidas and Ye was never made public, the industry standard is that Adidas owns the intellectual property of all designs created during the partnership.

Ye made similar tirades about Gap, which in 2020 signed a deal to sell clothes the artist designed with French fashion house Balenciaga and open standalone “Yeezy” stores. you break the partnership last month, and his attorney told the BBC that Ye would open the stores on his own.

Throughout the years of partnering with Adidas, Ye has made headlines for his comments. In 2018, he told TMZ that slavery was a choice; in 2020, following a campaign rally in North Charlotte, South Carolina, for his presidential run, he disparaged abolitionist Harriet Tubman and said he and his then-wife Kim Kardashian were considering to terminate their first pregnancy. He then went on social media rants exposing his strained relationship with his family.

Kardashian, a reality TV star and business executive in her own right, released a statement asking for “compassion and empathy” because Ye was struggling with mental health issues. In the years since, Ye has spoken ill of Kardashian, her family, and her then-boyfriend, comedian Pete Davidson.

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The events of the past few days have further threatened to tarnish Adidas’ reputation and identity as a brand, experts say. On Monday afternoon, Ye published a 30-minute article video on YouTube which includes a scene of him apparently showing porn to two Adidas executives. In what appeared to be a secret recording, Ye told them that they “did wrong by the company, by the company and by the partnership.”

On Sunday, Twitter and Meta restricted Ye’s accounts for violating company policies and removed posts containing anti-Semitic tropes.

Ye’s public anti-Semitic rant presents a particularly sensitive challenge for Adidas, given the company’s past.

For decades, Adidas distanced itself from certain elements of the past and its founders, brothers Adolf and Rudolf Dassler, who were members of the Nazi Party. Originally called Dassler Brothers Sports Shoe Factory, the company outfitted members of the Hitler Youth, wrote sneaker expert Jason Coles in his 2016 book, “Golden Kicks: The Shoes That Changed Sport.” The brothers went their separate ways after the war, with Rudolf turning his half of the business into the Puma company, while Adolf renamed the original Dassler company “Adidas”.

“There’s a dark chapter in the company’s history, which the company clearly doesn’t want people to talk about,” Swartz said. “And it could bring that back.”

If Adidas terminates its deal with Ye, the impact on the company’s business will not be immediate, experts said. The German company will still own the intellectual property for all Yeezy designs made since Ye signed the contract, and there’s likely inventory that’s been prepared for releases, Swartz said.

“You can’t just end it immediately – there’s going to be some lag,” he said. “It would be expensive to stop selling it.”

If Ye signed an industry standard agreement, Adidas would also have the right to reproduce previously released sneakers and make unreleased designs, Goldstein said. Although Adidas should avoid using Ye’s image and likeness and remove the Yeezy branding, it wouldn’t be noticeable since most of the branding is on the sneaker’s insole, where people can’t. to see her.

Bigger problems at Adidas

Ye’s latest tirade erupted with Adidas already facing trouble. Shares of the company traded in the United States have fallen more than 60% in the past year, as Adidas has seen business in its most profitable region, China, decline by double digits in the past year. past five quarters as stores and factories closed during the pandemic, Swartz said.

Adidas is also facing a change in direction. Rorsted, the managing director, is leaving next year.

“This Kanye controversy comes at the worst time ever,” Swartz said. “It really puts the company in an even more difficult position because they don’t want to make big changes to their strategy and then bring in a new CEO and then have to change them again.”

Sonia Rao contributed to this report.

Hazel J. Edmonds

The author Hazel J. Edmonds