The Contract Dropout: Brands Scramble to Drop Ye Following His Embrace of Antisemitism

by Adam Drapcho, Associate Member, University of Cincinnati Law Review Vol. 91

 

I. Introduction

Ye, the artist formerly known as Kanye West, is no stranger to controversy.1Rachel Treisman, Kanye West Is Now Officially ‘Ye’, NPR (Oct. 19, 2021, 9:58 AM), https://www.npr.org/2021/10/19/1047263374/kanye-west-name-change-ye. Beginning with his infamous riff during a televised fundraiser for Hurricane Katrina victims, where he declared that “George Bush doesn’t care about black people”, Ye has never hesitated to invite criticism.2Jeremy Stahl, “This Is Not Going Well”: NBC Producers Look Back On The Concert For Katrina’s Kanye Moment, Slate (Aug. 27, 2015, 11:33 AM), https://slate.com/news-and-politics/2015/08/george-bush-doesnt-care-about-black-people-how-kanye-west-s-katrina-moment-went-down-in-the-nbc-control-room.html. Ye’s celebrity helped him build a fashion empire that became a juggernaut.3Julie Zerbo, As Adidas Severs Yeezy Deal With Kanye West, What Happens Next?, The Fashion Law (Oct. 25, 2022), https://www.thefashionlaw.com/as-adidas-severs-yeezy-deal-with-kanye-what-happens-next/ (listing multiple valuations of Ye’s business at over $3 billion). However, his recent antisemitic remarks have proved too controversial for his business partners to handle.4Remy Tumin, Kanye West Faces Costly Fallout: A Timeline, The New York Times (Nov. 1, 2022), https://www.nytimes.com/article/kanye-west-timeline.html. Companies such as Balenciaga, Vogue, and Adidas have decided to part ways with Ye after his string of remarks sharing antisemitic conspiracy theories.5Jenni Reid & Jessica Golden, Adidas Terminates Ye Partnership, Gap Removes Yeezy Items Over Rapper’s Antisemitic Remarks, CNBC (Oct. 25, 2022, 6:34 AM), https://www.cnbc.com/2022/10/25/adidas-terminates-partnership-with-ye-following-rappers-antisemitic-remarks.html.

Though the contracts with these companies are not public, it is widely believed that morals clauses will be the primary vehicle for companies, particularly Adidas, to cut ties with Ye.6Zerbo, supra note 3. Morals clauses can be messy depending on how vaguely, or narrowly, they are drafted and can lead to prolonged legal battles.7Patrick Coffee, How Brands Split With Celebrity Partners, The Wall Street Journal (Oct. 28, 2022, 6:30 AM), https://www.wsj.com/articles/how-brands-split-with-celebrity-partners-11666953002. This article argues that the risks facing companies terminating their agreements with Ye are worth taking, with a focus on his partnership with Adidas. Part II of this article will provide a summary of Ye’s actions and the resulting fallout, along with a brief overview of morals clauses. Part III argues that Adidas should continue to risk litigation and lost profits to avoid providing a platform for antisemitism. Part IV wraps up the article with a short conclusion.

II. Background

Ye and Adidas first partnered in 2013 to create products for Ye’s shoe and clothing brand, Yeezy.8Jian Deleon, Kanye West Announces Partnership With Adidas, GQ (Nov. 25, 2013), https://www.gq.com/story/kanye-west-adidas-collaboration-official. Ye, who was at the height of his musical career, was looking to break into the fashion industry. He had previously worked with other designers and wanted to dedicate himself to creating his own brand.9Id. In 2016, the parties came to a ten-year agreement that Adidas called “the most significant partnership ever created between a non-athlete and an athletic brand.”10Zerbo, supra note 3; Jan Runau & Katja Schreiber, Adidas and Kanye West Make History With Transformative New Partnership, Adidas (June 29, 2016), https://www.adidas-group.com/en/media/news-archive/press-releases/2016/adidas-and-kanye-west-make-history-transformative-new-partnershi/. This lofty statement ended up ringing true, with Ye’s shoe and clothing business recently receiving a valuation of over $3 billion.11Zerbo, supra note 3. However, Ye’s recent erratic behavior started derailing this profitable partnership.

Ye’s tirade began after Sean Combs, otherwise known as Diddy, criticized Ye’s impromptu fashion show in which he wore a shirt emblazoned with “White Lives Matter”.12Stuart A. Thompson, Kanye West’s Posts Land Him In Trouble On Social Media, The New York Times (Oct. 9, 2022), https://www.nytimes.com/2022/10/09/business/media/kanye-west-antisemitic-racist-twitter-instagram.html. Ye responded to the criticism by making an Instagram post insinuating that Combs was controlled by Jewish people.13Id. Two days later, Ye sent a tweet exclaiming that he was going to go “death con 3 On JEWISH PEOPLE.”14Id. This prompted Adidas to announce that its partnership was placed “under review.”15Tumin, supra note 4. The blowback to his comments did nothing to stop his conspiratorial spiral. Just a few days later, Ye falsely claimed that George Floyd died from fentanyl use instead of pressure from the knee of a police officer.16Id. The next day, he stated that he was able to continue making antisemitic comments and Adidas would not drop him.17Reid & Golden, supra note 5. He was proved wrong in the following week, as he was dropped by Adidas, Balenciaga, his booking agency, and more.18Tumin, supra note 4. Of these now-severed partnerships, Adidas was by far the most lucrative. The move by Adidas is speculated to cost the company nearly a quarter of a billion dollars in the short term, and the company is surely hoping to avoid a payout in any possible litigation with Ye over the deal’s termination.19Reid & Golden, supra note 5. With the termination likely being enforced through a morals clause, whether the company will be on the hook for any penalties for its termination may come down to how the clause was constructed.20Zerbo, supra note 3.

A morals clause is a section of a contract that allows a party to terminate a contract if the other party engages in harmful or otherwise unacceptable behavior.21Patricia Sanchez Abril & Nicholas Greene, Contracting Correctness: A Rubric for Analyzing Morality Clauses, 74 Wash & Lee L. Rev. 3, 5 (2017). Companies typically insert these into contracts with high-profile spokespeople or business partners to provide an escape hatch for companies when the high-profile partner becomes embroiled in controversy.22Id. Morals clauses may be broad, focusing on the public relations impact of the breaching party’s conduct, or narrowly tailored to cover only certain types of behavior.23Id. at 10-12. Broad morals clauses may allow companies a chance to flee a radioactive partner, but they also invite litigation due to the imprecise language that often plagues sweeping morals clauses meant to cover as much controversial conduct as possible.24Zerbo, supra note 3. If the contract between Adidas and Ye includes broad language, it is likely that Ye would fight the termination. Regardless of any legal action Ye may take against Adidas, the company has a moral imperative to stay the course and refuse to provide Ye a platform to continue spewing dangerous rhetoric.

III. Discussion

Ye’s influence does not come only from his musical success and scores of followers on social media, but also from the legitimacy he gains from being a central figure in fashion and pop culture. Ye’s fashion line provides stature that lifts his platform above others with similar success in the entertainment industry. Adidas clearly recognized this when it announced their partnership in 2016, stating that the partnership created “influence, success and global brand power.”25Runau & Schreiber, supra note 10. Ye has now hijacked the influence he built with Adidas and is using it to lend credence to antisemitic conspiracy theories at a time where antisemitism is on the rise.26William Brangham & Rachel Wellford, Antisemitic Incidents Hit A Record High In 2021. What’s Behind The Rise In Hate?, PBS News Hour (Apr. 29, 2022, 6:39 PM), https://www.pbs.org/newshour/show/antisemitic-incidents-hit-a-record-high-in-2021-whats-behind-the-rise-in-hate. According to The Anti-Defamation League, a leading group combating antisemitism, more antisemitic incidents were reported in 2021 than any year since they began tracking them in the 1970s.27Id. Ye is only fueling this trend. After his comments became news, an antisemitic group hung a banner over Interstate 405 in Los Angeles that read “Kanye is right about the Jews” while standing behind the banner giving the Nazi salute.28Chantal Da Silva & Diana Dasrath, Rise In Antisemitism Is Feared After Banner Saying ‘Kanye Is Right’ Is Hung Over Los Angeles Freeway, NBC News (Oct. 24, 2022, 10:27 AM), https://www.nbcnews.com/news/us-news/banner-kanye-right-los-angeles-freeway-antisemtic-group-rcna53653. With Ye’s words directly inspiring others to act on their hate, Adidas must stay the course regardless of whether the morals clause provides Ye an opportunity to successfully challenge the contract termination.

Separating from Ye also appears to be in Adidas’s best business interest. According to recent polling data, Adidas took a hit to its reputation by waiting two weeks to end its relationship with Ye.29Jennifer Faull, Adidas’s Kanye West PR Headache Takes A Toll On Its Reputation, The Drum (Nov. 3, 2022), https://www.thedrum.com/news/2022/11/03/adidas-s-kanye-west-pr-headache-takes-toll-its-reputation. Public opinion bounced back after Adidas finally announced that it was parting ways with the rapper, but about three in ten Adidas customers felt less favorable to the company because of its association with the artist.30Id. These polls, combined with Adidas stock falling twenty-three percent during the month leading up Adidas’s announcement, show that consumers do not want to support a brand associated with antisemitism.31Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Vivian Giang, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch & Ephrat Livni, Adidas Cuts Ties With Kanye West, The New York Times (Oct. 25, 2022), https://www.nytimes.com/2022/10/25/business/dealbook/adidas-kanye-west-antisemitism-terminates-partnership.html. Beyond a moral obligation, Adidas also has financial incentive to risk further short term losses through potential litigation to avoid permanent damage to its brand image.

IV. Conclusion

Adidas undoubtedly finds itself in a difficult position. The company’s splashiest designer and most recognizable spokesperson turned their relationship upside down when he went on an antisemitic tirade on social media. The short-term damage to the company nears a quarter of a billion dollars and exercising a morals clause invites significant risk of further litigation that could drain the company of more resources, keep the story in headlines, and still possibly end with an award of monetary damages to Ye.32Reid & Golden, supra note 5; Zerbo, supra note 3. Despite the risks, Adidas needs to stay the course and refuse to give legitimacy to antisemitism. Ye’s words have already inspired a wave of vitriol towards the Jewish community and he has shown no signs of slowing down.33Da Silva & Dasrath, supra note 28. Further, consumers have indicated a lack of interest in supporting a company that remains associated with Ye.34Faull, supra note 29. The risk may be significant, but Adidas needs to do everything it can to fight against the vitriolic views of its former headliner.

Cover Photo by Axel Antas-Bergkvist on Unsplash

Author

  • Adam Drapcho is an Associate Member for the 2022-2023 academic year. After working for the City of Cincinnati's Law Department this past summer, he is interested in government and employment law. In his free time, Adam likes to root on the Cleveland Guardians, Ohio State Buckeyes, and Cincinnati Bearcats.

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