What to Know About the Yeezy Battle Between Kanye West and Adidas

Fans of Kanye "Ye" West's Yeezy sneaker brand have been given the opportunity to snap up the coveted footwear from Adidas in recent days, several months after the sportswear giant officially cut ties with the embattled star.

Back in October, Adidas announced that it would no longer produce Yeezy products amid controversy over his recent string of antisemitic comments, including writing on Twitter on October 3 that he was "going death con 3 on Jewish people."

In a statement last October, Adidas told Newsweek that it "does not tolerate antisemitism and any other sort of hate speech. Ye's recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company's values of diversity and inclusion, mutual respect and fairness.

"After a thorough review, the company has taken the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies," the statement continued. "Adidas will stop the Adidas Yeezy business with immediate effect."

While West, who has legally changed his name to Ye, still officially owns the company's trademark, Adidas said in its statement that it was "the sole owner of all design rights to existing products as well as previous and new colorways under the partnership." At the time, Adidas was one of a number of companies to cut ties with West.

Adidas' decision quickly prompted questions about what would happen to the $1.3 billion worth of unsold Yeezys, which have accounted for between $1 billion and $2 billion in annual sales for the world's second-largest sportswear brand.

Those questions were answered at the end of May, when Adidas' CEO Bjorn Gulden announced that it would be selling the shoes, with a "significant amount" of proceeds going to "the organizations that help us and were harmed by what Ye said."

However, while Yeezy fans unbox their fresh footwear, West continues to face a legal battle behind the scenes with Adidas. Newsweek has looked into the details.

The $75 Million Battle

Last week, Adidas dropped a federal court case in which it had sought to freeze $75 million held by Yeezy following the breakdown of the entities' partnership. Instead, the fight will continue through private arbitration.

Citing recently unsealed court records, Billboard reports that days after Adidas announced its severing of ties with West, the company demanded that the star's company return the $75 million allegedly deposited into Yeezy's accounts. This demand, per the records, was refused by Yeezy, prompting Adidas to quietly file its case in federal court, seeking an "attachment" order to freeze the funds.

According to the report, while Adidas had planned to deal with the bulk of its business divorce from Yeezy in arbitration, executives at the company were keen to ensure that the $75 million didn't vanish during proceedings.

Adidas' request to freeze the assets was granted by Judge Valerie E. Caproni back in November, per the records. The move was not only done in secret but on an "ex parte" basis, meaning that neither West nor his company was given the opportunity to challenge the filing. Adidas and the judge agreed that there was a risk of Yeezy moving the money had there been advanced notice, per the records.

After several months of the assets remaining frozen, attorneys for Yeezy challenged the order and the judge lifted it. In the ruling, the judge said that Adidas had infringed upon the procedural requirements that would have granted Yeezy a fair chance at mounting a challenge.

Adidas fought back by attempting to have the asset freeze reimposed, alleging that Yeezy "has no legal right" to the $75 million it is holding.

"Yeezy is likely to comingle the funds with an unknown balance of funds in its possession at other financial institutions, such that it would be more difficult if not impracticable to audit those accounts and determine which monies are owned by Adidas," wrote Adidas' legal team. "In addition, Ye faces a clear risk of insolvency, giving rise to a risk of irreparable harm."

However, while Judge Caproni expressed a belief that Adidas would emerge the victor in its arbitration case against Yeezy, it was ruled that the sportswear giant did not meet the challenging legal requirements to secure a new temporary restraining order. As such, the request was denied.

Federal Case Dropped

Instead of pursuing a more conventional order over its failed emergency motion, Adidas moved to drop its federal case just hours after the ruling, per the report.

While the specifics of what is being disputed in the arbitration case have not been publicly disclosed, Adidas has blamed West's "racist, antisemitic, and other offensive public statements and conduct" for causing "considerable damage" to its brand.

Forbes previously reported that the end of the longstanding business relationship caused West's net worth to immediately plummet from $2 billion to a comparatively humble $400 million. Away from money and assets, it is yet to be seen how Ye's recent behavior will affect his own reputation in the long term.

On September 7, AllHipHop reported that Ye, who has previously hinted at the prospect of opening his own retail stores, shared a since-deleted Instagram post in which he discussed wanting more control of his Yeezy footwear brand.

In October, Chris Lambert, co-host and co-founder of the now-defunct West-themed podcast Watching the Throne, told Newsweek that it was only a matter of time before things came to a head with Adidas, which debuted its partnership with the star in 2015.

"Ye wanted to end the relationship with Adidas, by, I think, any means necessary. He said as much himself," said Lambert. "They should have just cut ties back in September when he first asked. But, at this point, hate speech that's doubled down on, tripled down on, quadrupled down on, is definitely a legitimate reason to cut ties."

Newsweek has reached out to representatives of Yeezy and Adidas via email for comment.