Kanye West broadcasts strained relationship with Adidas: An exit may not be far off

The strained relationship between adidas and Kanye West appears to be taking its toll on the business partnership, with the sportswear giant reportedly having offered a 1 billion dollar sum to buy out Mr West.

Ye, Mr West’s new moniker, stated in an Instagram post that adidas is releasing old models and that he has not been consulted in new SKU updates and releases. Mr West further posted photos of adidas’ board members and general management, citing he needs “to be head of the board and chief decision maker" in a future shoe company.

“The fact they felt they could color my shoes and name them without my approval is really wild. I really care about building something that changes the world and something I can leave to my kids. They tried to buy me out for 1 billion dollars. My royalties next year are 500 million dollars alone.”

The contract with adidas runs until 2026, after a 10-year deal was signed in 2016.

The music and fashion mogul has more than one strained relationship when it comes to current brand ventures. Mr West and Gap Inc. are also at loggerheads, publicly suggesting Gap used Yeezy designs for its own label.

Mr West has chosen to air his grievances on social media and in the public domain, while both adidas and Gap have kept silent, presumably due to contractual obligations and not wanting to damage any brand equity. Mr West, who is thought to be bipolar, often makes personal outburst on Instagram before deleting such posts.

Adidas holds the majority of design patents to the Yeezy sneakers, although the trademark for the brand is owned by Mr West’s holding company, Mascotte Holdings. Sales of adidas Yeezy is thought to be a revenue sharing model more than a licensing agreement, although adidas manufactures, sells and markets the Yeezy products.

Data from Sole Retriever suggest the collection took 1.5 billion dollars in revenue in 2020, compared to 1.3 billion collars in 2019. With a 15 percent royalty rate on wholesale for each sneaker sold, Mr West is thought to net 150 million dollars pre-tax annually. This figure does not appear to be in line with Mr West’s 500 million dollars royalty expectation for 2023.

Perhaps Mr West has his eyes set on a new partnership. In an Instagram post on Monday Mr West favourably alluded to Authentic Brands Group (ABG), parent to companies including Reebok, Barneys and Forever 21. “I need a shoe company like how Jamie Salter bought Reebok,” Mr West wrote.

The ultimate goal

“If you don’t understand why I will not back down on my businesses, my brands and my children then you’re the ones [sic] who are crazy.”