Adidas finally ends its lucrative partnership with Kanye’s Yeezy, exposing the flip side of collabs

Yeezy out… After 19 days and a storm of backlash, Adidas has cut ties with Kanye West, ending his billionaire status. The rapper and Yeezy founder has faced public criticism (even from his ex Kim K) after making antisemitic comments, among other offensive statements. Over the weekend in LA, West’s outbursts emboldened neo-Nazi activists to stage anti-Jewish protests. Now Adidas is ending production of Yeezy products and stopping all payments to Ye.

• Going back: Since launching in 2013, Adidas’ Yeezy partnership has raked in $2B in annual sales (about 10% of Adidas’ revenue).
• Going forward: This year alone Adidas expects to lose $246M — and next year could lose $400M.

Ye’s corporate catastrophe… As West’s reputation grows increasingly unstable, other partners are cutting ties too. This month, luxe fashion house Balenciaga ended its collab with West, and talent agency CAA also dropped him. Last month, West's lawyers sent a letter to Gap with plans to terminate his 10-year deal (which had been on track to become a billion-dollar brand). It’s not the first time businesses have been burned by celeb ties:

• In 2009, Tiger Woods lost $50M in sponsorship deals after his extramarital-affairs scandal.
• Last year, mega beauty influencer James Charles reportedly lost millions in sales after cosmetics brand Morphe dropped him over sexual-misconduct allegations.

THE TAKEAWAY

You are who you’re linked to… Bad news for celebrities often means bad news for the companies that profit off them. While lots of A-list partnerships have helped sales skyrocket, there’s always the risk a celeb could burn their reputations. Kanye’s fallout is another example of how having close ties to celebrities isn’t always a stable biz model.