“Kanye West has one of the biggest hits of the decade – and it has nothing to do with music,” Forbes asserted this week. Sure, Kanye’s studio albums – from his 2004 debut The College Dropout to his most recent Ye – have made him one of the most famous musicians in the world. However, it is his Yeezy sneaker venture, a partnership with German sportswear giant adidas, which first dropped in February 2015, that has positioned the 42-year old as retail force to be reckoned with.
Not unlike Michael Jordan, who made his name in basketball before making a pretty penny by way of his eponymous tie-up with Nike beginning in the 1980’s, “The key to West’s wealth stems from sneakers,” Forbes Zack O’Malley Greenburg states.
While West’s ongoing partnership with adidas got its start in 2015, his footwear ambitions date back further. His Yeezy line first made headlines with the shoes he launched with Nike in 2009, which he then parlayed into a multi-year deal with adidas in 2013, noting that his 2012 Air Yeezy II “was the first shoe to have the same level of impact as an Air Jordan, and I wanted to do more.” He also wanted royalties (i.e., a percentage of gross or net revenues derived from the sale of the Yeezy sneakers), which Nike reportedly was not giving him (or any other athletes at the time).
It would not be long before Nike’s closest and longest-standing rival, the Herzogenaurach, Germany-based adidas stepped in and offered him a better deal. “With the help of [then-manager] Scooter Braun, [adidas offered West] what appears to be an unprecedented [licensing] deal” in furtherance of which adidas can use the Kanye west-owned Yeezy name, and make and market products. In return, West gets “a 15% royalty on wholesale, according to sources familiar with the deal, plus a marketing fee,” according to Forbes. That is more than the 5% royalty that the New York Times recently reported that West earns – the same percentage that Michael Jordan earns from his partnership with Nike.
Fast forward 6 years, and West and adidas have the $3 billion-earning Jordan empire “in [their] sights, in terms of both cultural clout and commercial prowess,” according to Forbes. The Yeezy venture – whose appeal, like most limited edition celebrity pairings, is largely based on product scarcity, according to New York-based market research company NPD Group’s vice president and senior industry advisor Matt Powell – is, according to Forbes’ calculations, “expected to top $1.5 billion in 2019” and is still “growing.” (Powell told TFL that he does not believe that the $1.5 billion number cited by Forbes is accurate).
A final fun takeaway from Forbes’ profile? Despite adidas holding the rights in the Yeezy footwear designs, themselves – adidas designers Nic Galway and Aurelien Longo are listed as inventors of design patents for the Yeezy 750 Boost; and Galway, alone, is listed as the inventor of the patent-protected classic Yeezy boost sneaker and variations thereof, with all of the patents being assigned to (i.e., owned by) adidas, “West still owns 100% of Yeezy.”
That ownership stake is directly tied to the wildly-valuable trademark rights at play. West’s Mascot Holdings is the sole holder of registrations for “Yeezy” and “YZY” for use on footwear and apparel, which West licenses to adidas for use on the footwear collection, enabling him to bring in royalties and still maintain complete ownership over the identity of the venture.