Ye's antisemitic comments show the risks companies face when they hook up with big-name celebs

• Many business partners dropped Ye, formerly known as Kanye West, following his antisemitic rants.
• The rapper and designer is one of the many celebrities who have become the public image of a brand.

For brands, the power of a high-wattage endorsement is undeniable. But so is the pain of the celebrity breakup.

Adidas is the latest to feel the hurt. The apparel company's decision to end its partnership with designer Ye, formerly known as Kanye West, shows the perils companies can face when they hand over the keys to impossible-to-control celebs.

The woulda, coulda, shoulda for Adidas will cost a projected $246 million in lost sales. The company on Tuesday followed other brands in dumping Ye after his antisemitic rhetoric: The rapper posted on Twitter a message that read, "going death con 3 on JEWISH PEOPLE," before his account was locked. In the wake of West's comments, antisemites displayed signs over a Los Angeles freeway reading "Kanye is right about the Jews." And earlier this month Ye stirred controversy when he wore a shirt stating, "White Lives Matter."

Brand partnerships are designed to attract fans of the celebrity to a company and vice versa, Kyle Monson, a founding partner of the PR company Codeword Agency, said. These types of partnerships, specifically in the influencer-marketing industry, are growing, but they pose a risk to businesses, he added.

In some cases — such as in Ye's partnership with Adidas — the payoff of a relationship might not exceed the eventual cost.

"We're talking about athletes, actors, comedians, artists, folks that tend to be a little more volatile than normal human beings and are facing new levels of scrutiny for their behavior," Monson said. "A brand can spend hundreds of millions of marketing dollars building its brand and then see it all undone with a bad celebrity partnership."

The scrapped Adidas deal wasn't the first high-profile split for Ye. The talent agency CAA, the fashion house Balenciaga, and the couture bible Vogue all cut ties with the designer over the past month.

Gap said in September that Ye and the retailer would end what was to be a 10-year collaboration, but this week Gap executives said the brand would remove Yeezy Gap merchandise from shelves and shut down the YeezyGap.com website. When it announced the deal in 2020, Gap said the partnership might generate more than $1 billion in annual sales.

Sometimes taking the gamble is what a company needs

Every partnership between a celebrity or influencer and a brand is different, Monson said. And sometimes to see big rewards, companies have to take risks.

For example, Ye was always a "wild card," but when Adidas began working with him, it was a deal that paid off – with the Yeezy brand drawing in an estimated $1 billion to $2 billion in annual sales, ABC News reported.

"The world was treating Ye a lot differently when the Yeezy deal was signed," said Monson. "He was one of the biggest, if not the most respected hip-hop artist at the time, a polymath, a producer, a rapper, a fashion designer. He was doing everything and was he a safe choice? No. But he brought some of the allure and some of the danger with him that he infused into the Yeezy brand."

When brands find celebrities that share their values, it can lead to greater exposure and business success, Martha Sullivan, the president of Provenance Hill Consulting and a consultant for The Family Business Consulting Group, told Insider.

"By working with a celebrity or a high-profile influencer, you're going be able to tap into their channel, their audience, their following, and the vibe that they have," Sullivan said. "And so that gives you the opportunity for the growth of your client or customer base."

But it takes time to cut ties even with a strong contract

If a business is entering into a relationship with a celebrity or influencer, they need to ensure they have strong legal counsel and a thorough contract, Sullivan said. If the celebrity starts making public comments that are "inconsistent with the brand," a strong contract will have provisions that allow for the termination of the deal, she added.

But, Monson said, even with the best contract, when a relationship is associated with a product and accounts for a huge portion of a company's business — the way Yeezy does for Adidas — cutting ties is not easy.

When Ye's former sister-in-law Kendall Jenner was embroiled in controversy over a video advertisement for Pepsi, it was simple for the beverage brand to pull the ad, Monson said. "When it's a product line, that's hard because now you've got factories, you've got contracts, you've got retail outlets," he said.

"Companies have the challenge of balancing their commitment to doing the right thing against making decisions that could potentially affect their bottom line," Angela J. Reddock-Wright, an employment and labor-law attorney and expert in diversity, equity, and inclusion issues, previously told Insider.