Adidas has successfully defended itself against an appeal from shareholders who alleged the company concealed damaging information about its long-running partnership with rapper and entrepreneur Kanye West—also known as Ye—before the relationship abruptly collapsed in 2022.
The ruling, issued by the 9th US Circuit Court of Appeals in San Francisco, found that the company did not mislead investors, rejecting claims that Adidas had failed to disclose the risks associated with working with West.
A High-Profile Partnership That Turned Volatile
For years, the Yeezy collaboration had been one of Adidas’ most profitable ventures, generating enormous global demand and contributing significantly to the sportswear giant’s revenue. By 2021, the Yeezy line brought in around €1.5bn (£870m; $1.17bn) in sales.
But this highly profitable relationship deteriorated rapidly following West’s increasingly controversial public behaviour. Throughout 2022, West made a series of antisemitic remarks and amplified conspiracy theories—incidents that drew widespread condemnation and intense media scrutiny.
Adidas launched an internal review after West appeared at a Paris fashion show in a “White Lives Matter” shirt, a choice that sparked immediate backlash. Days later, the rapper posted further antisemitic content online. The company ultimately severed ties with him, pulling Yeezy products from shelves and halting production.
Shareholder Allegations and Court Findings
The firm representing investors, HLSA-ILA Funds, accused Adidas of continuing its partnership despite internally recognising West’s problematic conduct for years. Investors claimed that Adidas’ failure to disclose these risks misled them, and that they suffered financial losses when the company’s stock price plummeted after the partnership ended.
But the appeals court rejected these arguments. In its decision, the court stated that a “reasonable investor” would understand that collaborations with high-profile celebrities carry inherent behavioural risks. The judges upheld an earlier district court ruling that had dismissed the case.
The BBC reported that Adidas could not be reached for comment, nor could the firm leading the class action or West’s representatives.
Financial Fallout for Adidas
The collapse of the Yeezy partnership dealt a significant financial blow. Adidas’ share price tanked in 2023, and the company was left with more than €1bn worth of unsold Yeezy shoes stored in warehouses.
In 2023, Adidas announced that it would begin selling remaining Yeezy inventory and donate portions of the proceeds to charities focused on fighting hate, including organisations combatting antisemitism and discrimination.
The fallout also extended to West personally: following his comments, multiple companies—including Gap and JP Morgan—ended their business relationships with him.
Looking Forward
Despite the controversy, Adidas has largely stabilised after restructuring its operations and offloading remaining Yeezy stock. The legal victory provides further certainty for the company as it moves past one of the most turbulent chapters in its modern history.
For background on Adidas and its corporate governance:
🔗 https://www.adidas-group.com/en/
For US court filings and appeals information:
🔗 https://www.ca9.uscourts.gov/