Adidas cuts ties with Kanye West, but has the brand damage already been done?
Sports giant has ended partnership following musician’s antisemitic comments. It will cost company $246m, but brand damage could be much higher.
Ye pictured with Adidas brand president Eric Liedtke
Adidas faced mounting pressure both from consumers and its own staff to end its lucrative tie-up with Ye, the musician formerly known as Kanye West, after he made a series of offensive and antisemitic comments earlier this month.
Almost two weeks after the comments were made, the company finally said in a statement: “Adidas does not tolerate antisemitism and any other sort of hate speech. Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.
“After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect.”
Adidas was put under the spotlight after failing to take action sooner. Its silence on Ye’s comments was all the more deafening when brands including JP Morgan Chase, Balenciaga and Gap all immediately severed commercial ties with him after he hit the headlines for antisemitic remarks. Even when social platforms Twitter and Instagram blocked him, Adidas still didn’t budge.
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The inaction not only led to #boycottadidas trending on social, but drew the fury of its own staff. The brand’s trade marketing manager Sarah Camhi said on LinkedIn: ”As a member of the Jewish community, I can no longer stay silent on behalf of the brand that employs me. Not saying anything is saying everything. It’s been 14 days since Kanye started spewing antisemitic rhetoric and Adidas has remained quiet; both internally to employees as well as externally to our customers.
”We have dropped Adidas athletes for using steroids and being difficult to work with, but are unwilling to denounce hate speech, the perpetuation of dangerous stereotypes and blatant racism by one of our top brand partners.
”We need to do better as a brand. We need to do better for our employees and we need to do better for our communities. Until Adidas takes a stand, I will not stand with Adidas.”
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The Wall Street Journal estimates that the Yeezy line accounted for as much as 8% of Adidas’s total sales, with the company’s bosses having said just a few weeks ago that the partnership is “one of the most successful collaborations in our industry’s history.”
Adidas admitted the termination of the deal would cost it up to $246m (€250m) in net income this year. Its share price fell 4% on the statement.
Matt Readman, the chief strategy officer at sports marketing agency Dark Horses, says Adidas “undoubtedly“ should have moved faster to make this decision, “which was always inevitable.“
He explains: “One reason it might have lagged behind Ye’s other brand partners is the depth of their relationship. This wasn’t a badging exercise, it was a collaboration.
“Ever since Michael Jordan, we’ve seen sportswear companies co-create brands with influential ambassadors. As Nike found with Tiger Woods, the risks of doing this are higher than a traditional sponsorship because they’re that much harder to divorce yourself from.
“Millions of Adidas Yeezy trainers are in production, in-store and most importantly already on people’s feet. How do you tell millions of customers that what they’ve bought into is no longer valid? It’s a painful thing to do and you can understand why it resisted it for as long as it could.”
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Shareholders will hope the damage to the bottom line is short-lived, but will the hit on brand reputation among consumers take longer to recover?
Aaron Kwittken, founder of agency KWT Global, says the problem Adidas seems to have overlooked is that this was not a “run-of-the-mill case study involving a celebrity at risk of being canceled for making an insensitive remark or off-handed gaffe for which they try to apologize after they are told to do so.“
In Kwittken’s column for The Drum, he says: “Ye is an unapologetic, serial defamer, racist and antisemite. He’s dangerous.“
Adidas, then, may find consumers are not as quick to forget how it stayed silent even as Ye taunted that he could say what he liked as he was too big for the company “to drop.“
Sarah Owen, founder and CEO at PR agency Pumpkin, says the delayed response opened Adidas up to negative scrutiny: “It clearly had said nothing internally or externally, so when your employees start to speak for you as a brand – you know you have reached a critical danger point.“
She adds that Adidas’s work to build a reputation of sports excellence and strong ESG values, surpassing Nike in customer satisfaction last year, means the brand stating the partnership as ‘under review’ while others ended deals was a “contentious choice.“
Owen continues: “Instances as serious as these require immediate and clear action, and Adidas ought to have been at the forefront of the industry response. It now needs to continue to distance itself from Ye to avoid any further long-term damage, plus make real amends with the Jewish community in some shape or form. But gauging social media, I think that collateral damage has already been done.“