Kanye West’s antisemitism cost him Adidas and most of his empire

The Washington Post / Jaclyn Peiser, Jacob Bogage

15:48 JST, October 26, 2022

The consequences of repeated, brazen antisemitic attacks over the past few weeks have unraveled the empire of Ye, the musician and fashion designer better known as Kanye West, and tarnished his goodwill with financial institutions and celebrity footholds.

Ye saw his sprawling multibillion-dollar business cleaved Tuesday from its largest backer, sportswear giant Adidas. After weeks of silence and mounting public pressure, the German company – the last major holdout among Ye’s business partners – announced it would immediately “end production of Yeezy branded products and stop all payments to Ye and his companies.”

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.”

Yeezy generated an estimated $2 billion a year, close to 10 percent of the company’s annual revenue, Morningstar analyst David Swartz said. Adidas said the split will cost the company 250 million euros ($248 million) this year.

Adidas can recover from that short-term impact, but the financial hit to Ye has been instantaneous. Ye once bragged he was “the richest Black man in history,” but Forbes estimates that $1.5 billion of his net worth was tied to the Adidas deal, while $400 million comes from real estate, cash, his music catalogue and a 5 percent stake in ex-wife Kim Kardashian’s shapewear firm, Skims.

In recent weeks, several companies – including French fashion house Balenciaga, JPMorgan Chase, talent agency CAA, and Hollywood financier and producer MRC – have ended relationships with the performer. On Monday, Gap, which ended its partnership with Ye last month, announced it was pulling all Yeezy Gap inventory from stores and shutting down the line’s website.

Doubling down on hate speech

The first sign of an impending financial fallout began earlier this month, when Adidas announced a review of its collaboration with Ye and his Yeezy brand after he sparked outrage by wearing a “WHITE LIVES MATTER” T-shirt at his Paris Fashion Week show.

In the days that followed, he made antisemitic comments on Instagram and Twitter, triggering restrictions of his accounts on those platforms and inspiring him to buy Parler, a right-leaning social media site, for an undisclosed amount.

In the weeks since, he has doubled down on antisemitic rhetoric. Ye, who has said some of his previous erratic behaviors were a result of bipolar disorder, unleashed a 10-minute diatribe on the podcast “Drink Champs,” where he ranted about Jewish people and repeated antisemitic tropes. In that same interview, he also falsely claimed that George Floyd, a Black man killed by Minneapolis police, had died from a fentanyl injection.

Ye also called out Adidas’s delay in ending the partnership.

“The thing about it being Adidas – I can say antisemitic things and Adidas can’t drop me. Now what?”

Leaked video earlier this month also captured him using antisemitic language during an interview with Fox News host Tucker Carlson, released by Motherboard. In it, he suggested his children should learn about Hanukkah and not Kwanzaa because “at least it would come with some financial engineering.”

Ye’s commentary presented a particularly sensitive challenge for Adidas, whose founder, Adolf Dassler, joined the Nazi Party and outfitted the Hitler Youth. Ye’s actions also coincide with a broader rise in antisemitism across the country, experts say. Research from the Anti-Defamation League identified 2,717 antisemitic incidents in 2021, a 34 percent increase from the year before, making it “the highest number on record since ADL began tracking antisemitic incidents in 1979.” Researchers say 2022 is on track to exceed previous years’ numbers after a Muslim extremist held congregants hostage at a Texas synagogue in January.

The fallout and outrage

A swell of fresh outrage and pressure toward Adidas emerged over the weekend, when hate groups appeared to use his celebrity to advance their agendas. On Saturday, an anti-Jewish group displayed a banner over a Los Angeles highway overpass that read, “Honk if you know Kanye is right about the Jews,” while offering Nazi salutes to oncoming traffic. A picture of the incident went viral.

In Beverly Hills, Calif., law enforcement officials scrambled to find individuals who distributed antisemitic leaflets that claimed covid-19 was a Jewish plot.

Celebrities, political leaders and Jewish organizations condemned the artist and called out Adidas for continuing to do business with him.

Kardashian, Ye’s ex-wife, tweeted on Monday: “Hate speech is never OK or excusable. I stand together with the Jewish community and call on the terrible violence and hateful rhetoric toward them to come to an immediate end.”

Anti-hate groups had also pressed Adidas to end its partnership with Yeezy. Anti-Defamation League chief executive Jonathan Greenblatt held calls over the weekend with company executives and shareholders to encourage them to drop Ye.

In a statement Tuesday, Greenblatt said Adidas’s decision was “a very positive outcome.”

“Adidas’ action sends a powerful message that antisemitism and bigotry have no place in society,” he said.

A doomed partnership

Ye, who has won 24 Grammy Awards and released numerous critically acclaimed platinum records, began working with Adidas in 2013. The partnership eventually made Ye a billionaire and provided Adidas with a new customer base.

Ye began airing his grievances with Adidas this summer, when he falsely accused the company of stealing his designs, calling out chief executive Kasper Rorsted by name in a tweet. He went after the company again in early October, releasing a 30-minute online video of a bizarre meeting with Adidas executives, whom he accused of doing “wrong by the company, by the business and by the partnership.”

Inside Adidas, the Ye partnership has been fraught for years, current and former employees told The Washington Post. They spoke on the condition of anonymity out of fear of retribution in the workplace and from Ye’s fan base. The company also circulated a memo to employees Tuesday afternoon advising them not to speak with journalists.

Ye’s previous outbursts, such as his short-lived run for president and derogatory comments about enslaved Americans, led staffers on Yeezy projects to question their loyalty to the company. His erratic boardroom behavior – he bragged in 2018 that Adidas provided him a private 747 dubbed “Yeezy’s floating office” – made it difficult to get work done, staffers said.

A rebuild of the Adidas-supported yeezysupply.com website, which sells Ye-designed apparel, lasted more than 10 months, according to one employee who was part of the project, because the artist frequently interrupted work with new ideas. At one point, Ye demanded developers replace the models who wore merchandise on the website with renderings of himself.

“We were building this with the understanding that Kanye could come in tomorrow and say something and we would have to drop everything and we’d have to do his creative vision of the day,” the person said.

The work, combined with Ye’s public outbursts, engendered resentment among employees, the person said. While posters and promotional material of other Adidas partners, such as David Beckham, Pharrell Williams, and Run DMC, adorned the Yeezy team’s office space, Ye was conspicuously absent, the employee said.

Adidas employees also grew frustrated recently by the company’s silence on the latest Ye situation.

Staffers told managers on internal message boards that there would be small acts of resistance until Adidas disciplined Ye, according to one employee with access to the messages who described the posts. One employee said she would respond to messages with an out-of-office reply. Others said they would no longer wear Adidas clothing while the Ye partnership persisted.

Employees said they believed the company would eventually “do the right thing,” but some of that hope faded on Oct. 19, when Vanessa Abrahams-John, senior vice president for diversity, equity and inclusion, took part in an event during the company’s “global week of inclusion.” She referred to “an unpredictable brand partner” in passing, but the program otherwise did not mention Ye, according to an employee at the event. Neither Adidas nor Abrahams-John immediately responded to requests for comment.

The future of Adidas

Adidas, like all major retailers, is dealing with overstocked inventory. Its business in China is also rapidly declining, leading the company to announce on Oct. 20 that it had lowered its profitability outlook for 2022. Since Oct. 6, when the Ye scandal began, Adidas’s U.S.-traded shares have fallen nearly 16 percent.

Swartz, the analyst at Morningstar, said he expects Adidas’s business to rebound, noting in his written assessment that the company’s rating “has never been dependent on Yeezy.”

Neil Saunders, managing director of analytics company GlobalData, said Adidas’ decision to end the relationship was in part a move to “protect its reputation and show customers it is on the right side of morality.”

“[W]hile the line has been popular, sales would likely have taken a hit anyway as groups of consumers shunned Yeezy because of its association with Ye,” he said.

Adidas owns the intellectual property of all designs created during the partnership and has the right to reproduce already released sneakers and manufacture unreleased designs. Though Adidas would have to avoid using Ye’s image and likeness and strip the Yeezy branding, it wouldn’t be noticeable since most of the branding is on the sneaker insole, where people can’t see it, said Jared Goldstein, an attorney and co-author of “Sneaker Law,” a legal textbook about the sneaker industry.

Goldstein and his co-author, Kenneth Anand, noted that it is common for sneaker brands to continue making shoes from past endorsement deals.

“It’s quite possible that there will still be a market for these shoes, even though they’re no longer affiliated with Kanye West,” said Anand, who was head of business development and general counsel of Yeezy Apparel from 2017 to 2019. “The fact that he made them famous, people may still love purchasing and wearing those silhouettes, even if he’s not affiliated.”

Will Ye recover?

Not only has Ye lost his billionaire status, he has also lost significant cultural cachet. Once known as a creative genius whose art transcended his occasional off-color comments, Ye has essentially been ostracized from major cultural touchstones.

Last week, a spokesperson for Vogue told Page Six that the magazine and editor in chief Anna Wintour would no longer work with him. The magazine has a history of working closely with the artist, putting him and Kardashian on the cover when they got married and including his line with Balenciaga in its pages.

It is unclear if Ye plans to continue his brand elsewhere. But without the assistance of major retailers who can help bankroll and operationally support the manufacturing and distribution of his fashion line, Ye will run into major hurdles. And his offensive remarks and unpredictable behavior will be a deterrent for future partners, Goldstein said.

“I think [Ye is] going to have a tough time navigating through the space,” he added. “I think he will also have a tough time finding employees who will want to work for him.”

Other possible fallout could be to Ye’s music career, which as of now has been untouched by his controversies. YouTube, Apple Music, Amazon Music and Spotify did not respond to The Post’s questions about the future of Ye’s music on the platforms.

“It’s now time for Apple Music and Spotify to reject antisemitism and drop Ye from their music libraries,” said Liora Rez, executive director of watchdog organization StopAntisemitism.org. “We want to set a precedent here – hate speech has consequences, and this is what happens when you spout antisemitism freely with no regard for the individuals you’re hurting.”