Thirty-six years ago today, Chicago Bulls rookie – Michael Jordan – inadvertently changed the sneaker game (in more ways than one) by signing a Nike contract after Converse failed to meet his demands.
As of last financial year’s end, estimates placed the entire Nike Air Jordan brand at approximately US$3 billion in value – with MJ himself having pocketed over US$1.3 billion since that fateful day in 1984. And as Forbes notes, despite the Michael Jordan Nike contract irrefutably establishing the richest athlete endorsement deal in history… it should also be considered the biggest endorsement bargain in sports, period.
While Nike is essentially synonymous with some of the world’s greatest athletes and commercial success in the present era, that wasn’t always the case. Back in the 80s, it was nothing more than a fledgling company that simply couldn’t compete with the more established likes of Converse – the NBA’s staple footwear at the time – or Adidas, who were stronger in every regard from revenue to branding. After some negotiations, Nike welcomed His Airness to the family with an upfront commitment of US$250,000 and, of course, his own sneaker line.
Nike initially projected a reasonable US$3 million worth of Air Jordan sneaker sales at the end of the four-year term. In the first year alone, Nike would sell US$126 million worth of units – almost solely because of Jordan’s name, reputation, and sheer star power. This was, however, just the tip of the iceberg.
Once again referring to analysis courtesy of Forbes, Michael Jordan “paved the way” for Nike to leave its competitors for dead:
- Nike now has a “virtual monopoly” in the once-competitive basketball sneaker business
- Nike and the Air Jordan brand’s share of the performance basketball market was 86% last year (according to market research firm NPD)
- Dominance was even more prevalent in the lifestyle basketball category with a total 96% share
- 77% of NBA players wore Nike / Jordan shoes during the 2019-20 season, with the top nine models produced by Nike (according to database site Baller Shoes DB)
- Nike’s US$40 billion in revenue over the last 12 months was 60% more than Adidas – and 43x times what it was pre-Jordan
- Nike’s market cap: US$201.5 billion (over 3x the size of Adidas)
The cherry on top? In 2003, Nike acquired Converse for just US$309 million; and Reebok for US$3.8 billion two years later.
That’s the MJ effect, baby.
Now watch 4 minutes of Michael Jordan taking it personal here.