The Adidas controversy…
Should it have been controversial at all? I mean, “Ye” was not only blatantly anti-semitic – not something new for him – but he outright defied Adidas to part ways with him, doubling down on the anti-semitism. Should be an easy call. Yes, you can point to Adidas’ founding history with its founders having been members of the Nazi party. But who cares? That was August 1949, not August 2022. Every German corporation that was founded in that era had ties to the Nazi party. Many American and other nationality companies had ties to the Nazi Party. Want to get upset about that? Go read IBM and the Holocaust: The Strategic Alliance Between Nazi Germany and America’s Most Powerful Corporation. This finger-pointing is just an iteration of Godwin’s Law, and irrelevant to the discussion.
So, why not just “part ways” with Ye, call him on his bluff? It should be as simple as “choose a side” to be remembered in history for. And sure, that’s my gut level reaction. Any rational person would do that, right?
And that’s the issue. Adidas took “days” to respond to Ye’s statements with anything more than that they were reviewing their partnership with him. Because Adidas isn’t a person. Adidas doesn’t have a gut reaction. I’d bet that most of the people who’ve been screaming for Adidas to cut ties with Ye immediately are against, say, the Citizens United decision. They’ve probably been railing for years against treating corporations like people.
When it comes down to it, Adidas was facing losing 20% of their gross profits. That’s going to affect a whole lot of people, not just Adidas’ bottom line, which was already on a downward trend. The likelihood is that a large number of people will lose their jobs. Dozens? Hundreds? More? And, despite it being the “right thing” to do, the markets won’t care. Adidas’ 125,000 stockholders are going to take a hit, and probably a huge one. I’m betting that the opening of the stock exchange today is going to see a massive sell off and plunge in price. [It did – a 5% drop at the opening bell, though surprisingly, by end of day it had recovered most of that to close at only 1% down.]
Also, who knows what their contract with Ye involves as penalties for breaking ties with him? It could be even more costly in the short run.
Even if Adidas were a person and not a corporation, who among us would make an immediate ethical decision knowing that it would cost us 20% of our annual income and destroy the income of various friends and family? Ethical or not, I’d bet most of us would want to take a beat and figure things out. We might well know our ultimate decision, but we’d want time to plan how to lessen the impact on ourselves and others.
So Adidas took four or five days to make a decision. No doubt there were a lot of people involved in making it. I’d guess no more than a handful, if any, were not in favor on a gut level of ending their relationship with him. But Adidas is a corporation, not a person, and the board and executives and shareholder groups had to consider not just being on the right side of history in the long run, but the health and survivability of the company in the short run.
I’m glad they did the moral thing in the end. And while on that gut level I wish they’d done it faster, I hope they figured out a responsible approach for themselves, their employees, their contractors, and their investors.
