Sportswear giant Adidas is currently engaged in a legal battle with Kanye West, now known as Ye, in an arbitration over a marketing fund. According to court documents seen by Insider, the fund was worth a staggering $100 million annually.
Adidas claims that $75 million was deposited into two Yeezy bank accounts, but alleges that both Ye and his companies “mishandled virtually all of the marketing funds.” The mishandling is said to have occurred when the funds were not kept separate and were used for unauthorized purposes, as reported by Bloomberg.
The contractual agreement signed by both parties explicitly stated that the marketing fund should not be “commingled,” and if any funds were misused, Yeezy would be obligated to repay Adidas. However, the specifics of what constitutes appropriate marketing purposes have been redacted in the court filing.
In a 2020 interview on Nick Cannon’s podcast, Ye disclosed that he had used $50 million of the Yeezy marketing funds for his gospel choir tour called Sunday Service, which even included flights to Jamaica for 120 people. He justified this move by stating that Yeezys were selling well on their own, and the investment was better directed towards his church-oriented initiative. It was not explicitly mentioned whether this money was sourced from Adidas.
Adidas had previously attempted to freeze the eight-figure sum, but their request was denied by US District Judge Valerie Caproni in May. Despite this setback, the judge believed that Adidas would likely recover the funds through arbitration, Bloomberg reported.
The case documents contain several redactions and sealed information, but some new details accidentally surfaced when a reporter entered the courtroom unnoticed by the lawyers, despite the judge’s warnings.
Following the collapse of the Adidas-Ye partnership, the sportswear company found itself holding $1.3 billion worth of Yeezy stock. In an effort to address the fallout from Ye’s anti-Semitic comments, Adidas announced in May that it would sell the shoes and donate the profits to organizations supporting those impacted by his remarks.
As of now, neither Adidas nor Kanye West’s legal representation has provided an official comment on the ongoing matter.
Source: Business Insider
