German sportswear giant Adidas has withdrawn its federal court case seeking to freeze a $75-million marketing payment to Kanye West’s Yeezy brand.
The legal action was taken in response to the termination of their multi-year partnership contract following West’s controversial remarks, which Adidas claims violated their agreement.
The decision to drop the lawsuit was announced following an agreement reached by the general counsels for Adidas and Yeezy.
The move came shortly after U.S. District Judge Valerie Caproni in Manhattan denied Adidas’ request for an emergency order to re-freeze the $75 million held by Yeezy, stating that the company had provided insufficient evidence to support their claims.
While this marks a victory for West, who now prefers to be called Ye, the dispute is far from over.
Adidas and Yeezy will now proceed with private arbitration, where Adidas is expected to argue that West’s “offensive conduct” was responsible for the dissolution of their long-standing partnership.
The fallout from the terminated collaboration has had significant financial implications for both parties involved.
Ye’s net worth has plummeted by $1.6 billion since the split, while Adidas reported a net loss of €39 million ($43 million) in the first quarter of its fiscal year 2023.
This represents a stark contrast to the €482 million ($531.2 million) profit recorded during the same period last year.
The group’s operating profit has fallen by more than 85 percent to €60 million ($66.2 million), with the loss of revenue from the popular sneaker line impacting sales across North America, Greater China, and EMEA regions.
Despite the setbacks, Adidas CEO Bjorn Gulden remains optimistic about the company’s future and has referred to 2023 as a “transition year” for the brand.
As Adidas and Yeezy prepare for arbitration, the outcome of their legal battle will have far-reaching implications for both the sneaker industry and the reputations of the parties involved.
