A Price to Pay

Ye, the musician, designer, and entrepreneur formerly known as Kanye West, is demonstrating the risks for marketers involved with celebrity licensing, as many of his licensing deals and collaborative ventures have fallen apart in the last two weeks in the wake of his antisemitic comments:

• Adidas was the latest partner to sever ties, ending its nearly decade-long partnership with Ye after days of criticism from the public. The company said the move, coming in the fourth quarter, would have a short-term negative impact on its 2022 net income of $246 million; analysts estimate the line generated $2 billion in sales annually. The company’s stock fell 4% on the day of the announcement.

• Gap said it would remove all of its Yeezy fashion from its stores and shut down its dedicated website for that product line. Gap and Ye had already terminated their deal in September 2022, but had planned to continue selling new items through the first half of 2023, including a holiday collection this year. Signed in 2020, the Gap-Yeezy partnership was reportedly meant to be a 10-year deal, with hopes of $1 billion in annual retail sales.

• Balenciaga, the luxury brand owned by Kering, stopped working with Ye last week. It was a collaborator in the Yeezy Gap Engineered by Balenciaga line sold through Gap stores.

• Universal Music Group, whose Def Jam label released Ye’s last album, denounced the singer’s remarks and stressed that its deal with him ended in 2021. That included his merchandising agreement with another UMG subsidiary, music merchandiser and licensing agency Bravado.

• Two athletes, Aaron Donald of the NFL’s Los Angeles Rams and Jaylen Brown of the NBA’s Boston Celtics, both cut ties with Donda Sports, Ye’s sports marketing agency.

• Footlocker, which is not a Yeezy licensee but is a partner of Adidas and a key seller of its Yeezy footwear and apparel, removed from its stores all of the merchandise tied to that pairing.

Additional marketers, representatives, media brands, and other partners have also stopped working with Ye, although a few of his ventures are still in place. For example, he recently said he was buying the conservative social media platform Parler, a deal that still seems to be in place so far, and he reportedly still has an investment in his ex-wife Kim Kardashian’s Skims shapewear brand.

It should be noted that while the antisemitic remarks were the last straw for most of his partners, Ye has had a long history of stirring up controversy, without much effect on his business enterprises until now. Just in recent months his behavior has ranged from making racist comments to criticizing and directing accusations at his corporate partners.

As a rule, controversy does not necessarily mean a permanent end to a celebrity’s merchandising efforts. Research conducted by Raugust Communications in 2019 showed that bad behavior by celebrities fully killed a licensing program only 29.9% of the time (a number that may well have decreased since then), versus 36.7% of the time when bad behavior had virtually no impact at all. In another 21.8% of cases, a celebrity’s behavior harmed but did not end the licensing program, and in 9.2% of cases, the program ended up recovering (at least to a significant degree) over time after temporarily ending or being grievously damaged.

Factors that play into consumers’ decision of whether to continue or return to supporting a celebrity include: the type of infraction (with racist and antisemitic remarks typically causing a big hit); the nature of the celebrity’s fan base, with some having followers who are largely not bothered by controversy or are like-minded in their beliefs; expectations for the celebrity, with those having more clean-cut reputations tending to suffer more for bad behavior; how closely connected the controversy is to the celebrity’s core area of expertise, with closely related infractions (e.g. an athlete cheating on a sport or a fitness guru secretly smoking and eating fatty foods) tending to damage the licensing program’s reason for being; and when and how often the behavior occurred. Only time will tell what the ultimate impact of Ye’s behavior will be on his long-term prospects for licensing and other commercial activities.