In 2013, Kanye West signed a contract with Adidas that would make him wealthier than music ever did. Adidas offered a groundbreaking 15% of royalties off of Yeezy sales, which was enough to catapult Ye to billionaire status in the years that followed.
But when negotiating an extension to that contract in 2016, Adidas added a morals clause that could terminate the contract based on specified behaviors: felony conviction, bankruptcy, or anything that brings “disrepute, contempt, scandal’ to him or tarnishes Adidas,” according to a new report from the New York Times.
Those clauses were typical of a brand protecting its reputation—especially when entering a partnership with a celebrity who from the start of the collaboration had made anti-Semitic comments and subjected employees to obscenities and porn, according to multiple reports.
But another termination clause Adidas added was not typical: “30 consecutive days of mental health or substance abuse treatment.” In other words, if Ye spent a month receiving care for significant aspects of his health and well-being, he could be forced to give up his significant piece of what was then the greatest shoe empire of the modern era. He could literally lose billions.
Following a rash of public, anti-Semitic comments in 2022, he eventually did. Adidas dropped Ye while keeping ownership of many popular Yeezy shoes.
Adidas was within its legal rights to end the deal. And by most accounts, the company stuck by the artist far longer than it ever should have—Ye’s comments eventually snowballed to include outright Holocaust denial and sparked a wave of vandalism, harassment, and bigotry tagged “Ye is right”). And notably, Adidas never terminated the contract because Ye sought out mental health or substance abuse services.
Yet none of that legal reality excuses the seemingly uncommon terms of this particular clause applied to someone facing clear mental illness. Agreed to in May 2016, Ye would then air his diagnosis of bipolar disorder in November of that year. (And in 2020, Ye would share issues with alcoholism.)
“Mental health counseling? I don’t have empirical data on this, but…I don’t think I’ve seen it [in a contract] before,” says Alexandra Roberts, professor of law and media at Northeastern University School of Law. “It feels like Adidas was defining its morales clause in part based upon what they already knew about Ye.”
What Adidas already knew about Ye has been widely reported at this point, and was just recounted with new details by the New York Times investigative reporter Megan Twohey. While Ye was helping Adidas’s business turnaround publicly, he behaved erratically privately, and regularly subjected employees to pornography and platitudes about Hitler.
At the time, what Adidas knew internally about Ye didn’t match up with perception externally. I still remember former Adidas Global Creative Director Paul Gaudio bristling when I mentioned the name “Kanye West” in 2017 before seeming to grit his teeth through our interview and minimize the artist’s impact on the company.
“The discomfort [of collaboration with Ye] is really great,” he said at the time. “There’s definitely a letting go when you start a process like that…[but] I love the provocative challenges you get from taking the reins off and letting other people riff on your brand. To me that’s the excitement.”
Problematic situations are what morals clause are all about, Roberts says. These special conditions to cancel or liquidate a contract are a common piece of celebrity endorsements, and even contracts in high-level white collar work. On one hand, you have a big business that believes it can profit from a relationship with a celebrity or businessperson. On the other, that business needs an emergency release so that a personal scandal doesn’t bring down the brand.
“The morals clause is in large part about public perception: ‘This is a relationship we believe will be beneficial to us, worth our money and investment, and anchoring our reputation to your reputation,’” summarizes Roberts. “‘And if that changes because of your support of a political candidate, or your stance on abortion..it gives the company a chance to break off the relationship when it’s no longer good optics.”
There’s technically no limit within the legal system as to what these clauses could be, in part because all sorts of things might damage any company’s reputation. While hunting with a permit is legal, PETA naturally wouldn’t want its spokesperson killing animals. So one might imagine a morals clause with PETA banning such behavior, lest they break ties.
As awkward as these behavioral guidelines can be, companies can certainly regret not having them in place. Amazon famously had second thoughts on signing Woody Allen to a $68 million deal after his #MeToo scandal, right around the time he began speaking out against Dylan Farrow and in support of Harvey Weinstein. A sharp morals clause could have easily ended the deal with Allen, but instead, Amazon was forced to settle when breaking the agreement because it lacked such protections.
In the case of Adidas and Ye, however, it’s still unclear to me how Ye’s mental health treatment could have hurt Adidas’s reputation, given his track record of anti-Semitic comments and erratic behavior. (Adidas has not responded to our request for comment.) By 2016, Ye had already been subject of several public scandals and criminally investigated for assault on a photographer. And internally, Adidas had learned even earlier in their partnership how troubling Ye’s behavior could be—the New York Times reported that in 2013 Ye drew a swastika on a shoe to make a point, and later displayed pornography to executives.
Adidas had also learned—as I think all of us had in the public by that point—that Ye wrestled with some core mental instability, and it was a subject of Ye’s own increased reference. In 2016, Ye dropped the line “name one genius that ain’t crazy” on his album Life of Pablo. That’s the same year Adidas penned this new contract ostensibly banning Ye’s access to extended mental health services.
The Centers for Disease Control and Prevention cites that 37% of people report feeling anxious or depressed—a figure that’s up from 11% pre-pandemic. Perhaps that’s a reason why 42% of people with access to mental health benefits say they’re likely to stay with their employer, whereas that figure drops to 27% for people without them. Mental health matters to us today because so many us are dealing with our mental health every day.
I have no idea if the morals clause ever impacted Ye’s decision to pursue treatment of any sort, but that doesn’t make the very existence of that clause any less concerning. And truthfully, celebrities like Ye are largely an exception to the rule: many people working in the U.S. don’t live with restrictions like this.
“We can’t tell all our employees they can’t get health care…that violates a traditional employment agreement, that’s barred by law,” says Roberts. “But when you’re a celebrity endorsement, a face of a brand, I think those protections don’t apply in the same way.”
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