Adidas Sued by Shareholders Over Fallout From Kanye West Partnership
Written by djfrosty on May 1, 2023
A group of investors has filed a class action lawsuit against Adidas, alleging the sportswear giant knew about Kanye West‘s problematic “personal behavior” years prior to ending its partnership with the rapper but failed to warn them about it.
The complaint — representing people who acquired Adidas securities between May 3, 2018, and February 21, 2023 — also names Adidas’ former CEO, Kasper Rorsted, and CFO, Harm Ohlmeyer, as defendants, alleging the executives “employed devices, schemes and artifices to defraud” investors and that the company “failed to take meaningful precautionary measures to limit negative financial exposure” in the event the partnership was terminated as a result of West’s behavior.
West is not named as a defendant in the suit.
Filed Friday (April 28) in U.S. District Court in Oregon, the lawsuit’s “substantive allegations” cite comments made by West (now known as Ye) dating back to 2018, including a notorious TMZ interview in which the rapper called slavery “a choice.” The complaint goes on to point out that Adidas “stuck by” West following his comments and includes excerpts from Rorsted’s 2018 interview with Bloomberg in which he said, “We neither comment nor speculate on every single comment that our external creators are making.” It also includes various offensive comments West directed at the Jewish community as well as his quote, “I can say anti-Semitic things and Adidas can’t drop me,” made during the rapper’s October 2022 appearance on the podcast Drink Champs.
On October 25, 2022, just days after the Drink Champs episode aired, Adidas ended the partnership.
The suit also alleges that Adidas failed to make investors aware that the rapper made “offensive remarks at Company premises” and that the company’s publicly released reports between 2018 and 2021 did not acknowledge “serious issues affecting the partnership” in their “Business Partner Risk” sections. The sections did, however, acknowledge that “improper behavior” from entertainers and athletes representing the brand could have a “negative spill-over effect on the company’s reputation.”
Pushing back on the allegations, Adidas said in a statement to The Associated Press on Monday: “We outright reject these unfounded claims and will take all necessary measures to vigorously defend ourselves against them.”
The suit makes mention of the initial “positive impact” of West’s partnership with Adidas, and the $1 billion worth of sales Yeezy shoes hit by 2019. The Yeezy brand — owned by West and licensed to Adidas — became a streetwear pillar and ushered in a new era of popular style. However, West’s insensitive comments and actions eventually overshadowed his artistic talent.
After the partnership ended, Adidas reported a $540 million loss in the fourth quarter of 2022, partially due to unsold Yeezy clothing and shoes. The company has also projected a total loss of $1.3 billion in “full-year revenue” for 2023 resulting from the unsold products.