May 2023

Blood Money Is Better Than No Money Especially If Some Of It Goes To Charity

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After months of sitting on unsold inventory, Adidas has announced that it will begin selling Yeezys again.

The decision comes after the company cut ties with Kanye West in October 2022 following his controversial and offensive comments.

Adidas had originally planned to destroy the unsold Yeezys, but the company ultimately decided to sell them instead. The shoes will be sold at a discounted price and according to Rolling Stone the proceeds will be donated to charity.

The decision to sell Yeezys again is a risky one for Adidas. The shoes are still incredibly popular, especially on the reseller market due to creating the perfect scarcity scenario when they shut down the brand.

Adidas is claiming that by selling the shoes at a discounted price, it can recoup some of its losses while being committed to social justice and doing good for those harmed by Kanye's actions. Or are they?
This scenario is eerily similar to the tactic used by LeBron James when he televised "The Decison" and attempted to mitigate foreseeable backlash by donating proceeds to charity. It didn't work, but Adidas is somehow being held to a much lower standard.

It remains to be seen whether Yeezys will be able to regain their popularity without West's endorsement but it's doubtful because without the Jordan symbol they're just basic Nikes with no culture attached them. There's also no resale value or no ability to make anyone stretch their pockets to obtain them at a premium. The shoes were once seen as a status symbol, but they may now be seen as a symbol of West's controversial views.

Only time will tell whether Adidas will ultimately revive the Yeezy brand.

We believe they will and will try everything they can to softly and slowly reintroduce the brand, even if it takes years. Businesses are in the business of making money. Offensive histories are baked into the fabric of most companies that have been around for awhile. Even Adidas did business with the Nazis when it was commercially advantageous, so they are no stranger to controversy.

How Much Did Adidas Stand to Lose?

Adidas had an inventory of over 10 million unsold Yeezys at the time of the controversy. Which is interesting because they made sure to restrict supply in order to inflate demand. The company had originally planned to destroy the shoes, but it would have cost them an estimated $1 billion to do so. By selling the shoes at a discounted price, Adidas is hoping to mitigate some of their losses.

Adidas likely weighed a few options after ruling out the destruction of all of the merchandise and accepting a total loss:
  • Continue to sell Yeezys without West's endorsement. This would be a risky move, but it could also be a profitable one. If Adidas can sell the shoes at a discounted price, it could still make a profit because chances are they are marked up exponentially. This is likely the best purely economic decision.
  • End the Yeezy partnership and sell the rights to the brand to another company. This would allow Adidas to distance itself from West's controversy and focus on its own brands. They would have an extremely tough time finding a buyer, and shareholders are likely still clinging to hope that the brand can one day be revived.
  • Redesign the Yeezy line and relaunch it with a new name. This would allow Adidas to create a new brand that is not associated with West's controversy. They tried this, and it didn't work. The people don't want regular Adidas, they want Yeezys.

Will Adidas Continue to Market Yeezys?

Adidas owns the rights to the Yeezy brand, so it could continue to market the shoes even without West's endorsement. However, it is unclear whether the company will do so. The best case scenario for them would be Kanye rehabilitating his public image, things cool down and they get back to printing billions.

The company is facing a difficult decision. If Adidas does not do something with the Yeezy brand, they are leaving a mountain of money on the table which surely doesn't sit right with shareholders.

Adidas has a lot to con$ider.

Issa Hall, Esq

Issa has founded multiple ventures, is an author, and founding partner of Hall & Dixon law firm, with over a decade of experience in tech and law.

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