Adidas says Kanye West misappropriated 75 million dollars of marketing funds
24 July, 2023
In April of this year, shareholders of Adidas turned to the courts, lodging a lawsuit against the renowned sportswear giant, citing its failure to implement precautionary measures concerning the well-publiciced problematic behaviour of Kanye West, also known as Ye. The shoe is now on the other foot, with Mr. West finding himself at the center of the lawsuit over a controversy of misappropriating funds.
Following the explosive situation that arose last October, where Ye openly criticized Adidas executives and made offensive remarks with anti-Semitic connotations, the artist has largely remained out of the spotlight. The scandal played out prominently on social media platforms and prompted the brand to terminate its association with the Yeezy label. Subsequently, a court case ensued, which has been ongoing since spring, with Adidas now suing Ye, its former partner, asserting that a substantial portion of the 100 million dollar annual marketing budget was mishandled, with 75 million dollars being diverted.
According to Adidas, marketing fees amounting to 50 million dollars were transferred into a Yeezy bank account located in Wyoming, which was then Ye's residence, while an additional 25 million dollars were deposited into Yeezy's JPMorgan Chase account in New York. These funds were designated for marketing purposes, but the sportswear giant alleges that they were instead transferred into a separate general account, where they were mixed with other Yeezy funds, a clear violation of their agreement, said Bloomberg.
The dispute between Adidas and Kanye West is currently undergoing arbitration, with the mismanagement of marketing funds being just one of the matters requiring resolution. The contractual agreement between Adidas and Ye is documented in a comprehensive 53-page licensing and endorsement agreement, signed in May 2016, along with a series of amendments, letter agreements, and payment confirmations that were later incorporated into the deal said Bloomberg. The contract also contains confidentiality clauses aimed at safeguarding the details of the agreement and the Yeezy business. One such provision mandates Ye's company to return any unused or improperly utilised marketing funds received from Adidas in the previous year, as stipulated by the shoemaker.
As the legal battle continues, both Adidas and Kanye West are navigating the complexities of this intricate contractual arrangement, seeking resolution on multiple fronts. The outcome of this case will undoubtedly have significant implications for both parties involved and could potentially reshape future business collaborations with celebrities.
Useful Links:
Source: fashionunited.uk