The legal battle between Adidas and Kanye West has reached its next high point, which is said to be about misappropriation of marketing funds.
In April this year, Adidas shareholders sued the Herzogenaurach-based sportswear giant for failing to take precautionary measures in relation to the reported problematic behavior of Kanye West, also known as Ye. Now West is at the center of a lawsuit alleging he embezzled funds.
After the explosive situation in October last year, when Ye openly criticized Adidas executives and made insulting remarks with anti-Semitic overtones, the artist has largely withdrawn from the spotlight. The scandal spread across social media platforms, prompting the brand to end its collaboration with the Yeezy label. As a result, court proceedings ensued that have been ongoing since the spring. Adidas is now suing its former partner Ye, alleging that a significant portion of its $100 million annual marketing budget was misused, of which $75 million was diverted.
According to Adidas, $50 million in marketing funds were transferred to a Yeezy bank account in Wyoming, where Ye lived at the time, while an additional $25 million was deposited into Yeezy’s ‘JPMorgan Chase’ account in New York. Those funds were intended for marketing purposes, but the sportswear giant claims they instead went to a separate general account, where they were mixed with other Yeezy funds in a clear breach of their agreement, according to news outlet Bloomberg.
The dispute between Adidas and West is currently the subject of arbitration, which involves, among other things, the mismanagement of marketing funds. 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 number of amendments, letter agreements and payment confirmations that were later incorporated into the contract, according to Bloomberg. The contract also includes confidentiality clauses aimed at protecting the details of the agreement and the Yeezy business. One of those clauses stipulates that Ye’s company must pay back any unused or improperly used marketing monies it received from Adidas in the previous year, as requested by the sportswear company.
As the litigation rages on, both Adidas and West are attempting to navigate the complexities of this complicated contractual arrangement and seek resolution on multiple fronts. The outcome of this case will undoubtedly have significant repercussions for both parties and could have a major impact on future celebrity collaborations.
This translated and edited post previously appeared on FashionUnited.uk.