Adidas is on the hot seat to cut ties with Kanye West

CNN

By Jon Sarlin, CNN Business

“I can say antisemitic s*** and Adidas cannot drop me,” Kanye West said during his now infamous tirade against Jews during the Drink Champs Podcast earlier this month.

With a social media uproar focused on Adidas brewing, Ye’s theory is now being tested.

Here’s the deal: The list of brands distancing themselves from West is growing by the day. Balenciaga and Vogue publicly cut ties last week, and on Monday talent agency CAA dropped West as a client, and production company MRC said that it’s shelving a documentary on West. Now the scrutiny has shifted to the German sportswear giant and its long-standing partnership with the controversial artist.

Celebrities including Kat Dennings, Josh Gad and Meg Stalter condemned Adidas for sticking by West. Detlef Schrempf, former NBA sharpshooter and Adidas sponsoree wrote, “I represented the 3 stripes during my career & beyond. @adidas needs to make a statement NOW! Suspend any relationship w/ @kanyewest until he has received psychiatric help, but why wait? End it now. He won’t change #erasethehate.”

Jonathan Goldblatt of the ADL released a statement Monday aimed squarely at Adidas calling its failure to cut ties with West “pathetic.”

Pressure on Adidas increased this weekend after a group of Neo-Nazis placed banners on the 405 highway in Los Angeles saying “Kanye is right about the Jews.”

“Today on the 405 in Los Angeles. We are waiting @adidas,” read Shannon Watts’ tweet in response to the incident that received more than 100,000 likes.

Earlier this month after West wore a “White Lives Matter” shirt in public, Adidas said that it was reviewing its lucrative partnership with his Yeezy brand.

“After repeated efforts to privately resolve the situation, we have taken the decision to place the partnership under review,” the apparel maker said in a statement. “We will continue to co-manage the current product during this period.”

Bottom line: Since that statement, West has come out and targeted Jews explicitly in shocking public statements, becoming the most prominent openly anti-Semitic public figure in a generation.

With pressure mounting and West’s hate campaign against Jewish people continuing, it seems the question is when, not if, Adidas will cut ties.

Big Number

£730 million

Incoming British PM Rishi Sunak’s net worth is approaching the three comma club. The former banking exec and his wife, Akshata Murty, the daughter of an Indian billionaire, are worth a combined £730 million, or roughly $824 million, according to the Sunday Times Rich List. “Richer than Royals” is how the Washington Post describes the couple’s massive fortune.

Zuckerberg’s Meta-headache

Altimeter Capital Chair and CEO Brad Gerstner published an open letter to Meta and Mark Zuckerberg calling for the company to “streamline and focus its path forward.” In other words: limit the gigantic piles of cash being used in service of Zuckerberg’s flailing metaverse vision.

“Like many other companies in a zero rate world — Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,” Gerstner wrote. “This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”

Gerstner’s prescription for Meta, which he says has “lost the confidence of investors,” is a three step plan.

1. Layoffs
2. Cut capital expenditure from $30 billion to $25 billion
3. Limit metaverse investment to “no more than $5 [billion] a year.”

Gerstner is not alone in being Meta-skeptical. Bank Of America downgraded the company from buy to neutral Monday citing in part Zuckerberg’s metaverse investment (which the bank called “overhang.”)

Let’s step back: In an interview with Alex Heath of the Verge earlier this month, Zuckerberg acknowledged that the once rock bottom interest rates — remember those? — made his 2021 strategic shift possible in a way that might not have worked in 2022.

“There’s a part of me that thinks that it actually would’ve been a lot harder, and probably wouldn’t have been received as well, to have announced this vision this year than last year given where the world is,” Zuckerberg said.

Zuckerberg isn’t wrong, the economy of 2021 is now a distant memory. Although burning through huge piles of cash was long the go-to move in Silicon Valley c-suites, that simply isn’t sustainable anymore in a world with high inflation, high interest rates and slumping tech valuations.

So how long can Zuckerberg keep pumping money into the metaverse with little-to-no results to show for it?

Meta will report its third-quarter results Wednesday. Expect investors to look closely at any metaverse related numbers in the report.

What else is going on?

Railroad strike: not dead yet. The labor deal that the Biden administration brokered last month is on thin ice over a dispute about paid time off with rank and file members of a handful of key unions. Results of the final round of ratifying votes are due in mid-November.

Chick-Fil-A is Gen Z’s most popular restaurant, according to the annual Piper Sandler survey of not-quite-16-year olds. Starbucks ranked second, followed by Chipotle and McDonald’s.

The WSJ takes a look into Lego’s controversial packaging change, which makes it difficult for would-be collectors to identify what pieces are inside. Some hip terminology: AFOL – adult fans of Lego and TFOL – teen fans of Lego.

“What would a nation of sports gamblers look like?” Jay Caspian Kang examines America’s booming new (old) industry. As a Californian, I can tell you that Prop 27 ads are currently inescapable.

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