Kanye West, an American rapper, record producer and a fashion designer, was born in Atlanta and raised in Chicago.
In 2007, Kanye found himself on a flight with then Nike CEO, Mark Parker. Sensing an opportunity, he drew some shoe designs for Parker to review. By the time they landed, Kanye had Parker’s word that they would design a shoe together. Within no time, Parker introduced Kanye to Tinker Hatfield, lead designer of Air Jordan. This was the beginning of the Nike Air Yeezy.
Nike Air Yeezy was launched in 2009. Everything seemed like a smooth sail following different iterations in 2012 and 2014 but Kanye wasn’t too happy about it. He wanted royalty for the Air Yeezy line much like what Nike’s deal with Michael Jordan was for the Air Jordan range. However, Nike was unwilling to grant any kind of royalty.
In no time, Kanye scheduled a meet with Nike’s competitor, Adidas, in Germany. Adidas had nothing to lose and they entered in a milestone deal where Kanye retained the Yeezy brand, 15% royalty on total sales and an annual marketing fee while Adidas became an exclusive distributor of Yeezy shoes. Since the deal, Yeezy brand has seen a significant growth in sales. In 2018, Yeezy sales were at USD 1.0 billion and in 2019, they sold approx. USD 1.5 billion worth of shoes (50% up from 2018).
Sales 2019
Yeezy — USD 1.5 billion
Air Jordan — USD 3.0 billion
Time to reach this number
Yeezy — 6 years
Air Jordan — ~25 years
Royalty
Yeezy - USD 140 million to Kanye West
Air Jordan — USD 130 million to Michael Jordan (5% of Sales)
Marketing Fee
Yeezy — Yes
Air Jordan — No
With a bit of confidence and the negotiated deal with Adidas, Kanye now generates USD ~100+ million annually in royalty alone which he did not earn via Nike. Not only did he repay his debt of USD 50+ million but he also made it to the Forbes list of billionaires published in 2020.
Let us never negotiate out of fear. But let us never fear to negotiate.
- John F Kennedy
