Adidas was reportedly making over a billion dollars per year from its long-standing collaboration with Yeezy. But now the company is feeling the financial repercussions of cutting ties with Kanye West earlier this year amidst his controversial behavior.
According to reports, Adidas is struggling to sell $530 million in Yeezys. The company is apparently trying to sell the products as part of their own brand but is struggling to do so without the rapper’s name attached.
This is compounded by a variety of other financial losses Adidas has suffered, including a sales decline in China and the company’s decision to stop doing business in Russia.
Adidas expected to take a financial hit after ending its Yeezy collaboration. But if they can’t find a creative way to sell off remaining Yeezy products, it could be detrimental to the company.
Adidas originally cancelled the collaboration in October after facing backlash for not doing it sooner. The following month, the company confirmed it’ll continue to sell Yeezy products but without Ye’s involvement (since they own almost all of the trademarks).
"Adidas is the sole owner of all design rights registered to existing product," Harm Ohlmeyer, Adidas’ Chief Financial Officer, said. "We intend to make use of these rights as early as 2023."
However, he didn’t specify what this exactly means. "We are working through all the options," Harm continued. "When the time is right we will be more specific."
It’s not only Adidas that’s taken a financial hit since cutting ties with Kanye. The rapper, too, is facing serious financial fallout as a result of his controversial behavior.
Forbes reported that Ye lost his billionaire status after Adidas pulled the plug.
He’s also facing a number of lawsuits, including a $250 million defamation case filed by George Floyd’s family over untrue remarks Kanye made about his death.
Similarly, he’s facing lawsuits from former employees who alleged workplace discrimination and a toxic environment. Kanye is also navigating a lawsuit filed by his former business manager, who claims he ended their contract unfairly and is owed millions in unpaid wages as well as damages.
Even Kanye’s brand Yeezy is facing hardship. It was recently reported the brand was evicted from its headquarters after falling behind on rent.
In addition to Adidas, many brands have officially cut ties with Kanye, meaning his future prospects could be limited. Given that Ye was recently ordered to pay $200,000 in child support to his ex-wife Kim Kardashian, he better get his finances in order or he could dig himself into a deeper hole.
Sources: USA Today, Financial Times,