Adidas has successfully defeated an appeal brought by shareholders who claimed the company concealed warning signs about its troubled collaboration with rapper and entrepreneur Kanye West, also known as Ye, prior to their split in 2022.
In a decision released in San Francisco, the 9th US Circuit Court of Appeals ruled that the sportswear company did not mislead investors. The shareholders alleged they suffered financial losses when Adidas’ stock dropped sharply following the termination of the Yeezy partnership.
A Once-Booming Collaboration That Imploded
The Yeezy line had long been one of Adidas’ most profitable ventures, generating huge global demand. But the relationship unraveled after a series of antisemitic outbursts and conspiracy-driven remarks from West in 2022. The backlash cost Adidas hundreds of millions of dollars and forced the company to freeze Yeezy production.
The BBC says it reached out to Adidas, the investor group leading the class-action effort, and West’s representatives, but received no immediate response.
Controversy Surrounding West
Though West himself was not a defendant in the case, he remained at the center of the dispute. His behavior attracted widespread condemnation for repeatedly posting antisemitic statements and amplifying extremist slogans.
Tensions escalated when West showcased a “White Lives Matter” T-shirt design at a 2022 fashion show. Soon after, he doubled down with inflammatory online comments. Within weeks, Adidas shut down the Yeezy business and removed all products from stores.
Several major brands — including Gap and JP Morgan — also cut ties with him around the same period.
Shareholder Allegations vs. Court Decision
According to newly filed court documents, the investor group HLSA-ILA Funds argued that Adidas knew about West’s problematic conduct for years but chose to keep the partnership alive. The filing said Adidas “internally grappled” with the risks, but failed to disclose them in its public reports.
The appeals court disagreed, stating that any reasonable investor would understand that celebrity partnerships naturally carry reputational risks, especially when linked to unpredictable public figures.
The case had already been dismissed once at the district court level, and this latest ruling affirms that decision.
Financial Fallout
The collapse of the collaboration in 2023 dealt a heavy financial blow to Adidas. The company’s share price tumbled, and it was left with more than €1 billion worth of unsold Yeezy shoes piled up in storage.
At its peak in 2021, the Yeezy line generated roughly €1.5 billion in annual revenue — making the fallout even more significant.
In 2023, Adidas announced it would sell off remaining Yeezy inventory and donate part of the proceeds to organizations dedicated to fighting hate and discrimination.
