How Michael Jordan and Nike Redefined Athlete Endorsements.
The story of how Jordan scored the most lucrative shoe deal ever was explored in the Last Dance. However, the story runs much, much deeper than Michael wanting to go with Adidas, being coaxed to go to the Nike meeting, and being won over by the boys from Beaverton.
In February 1984, Nike had reported its first-ever quarterly loss. After a decade of growing nearly ten-fold, sales had plateaued. Even Carl Lewis winning 4 gold medals at the Olympics wasn’t enough to get them out of their slump.
Nike needed a catalyst not to rise above Converse and Adidas, but just to stay in the game. It was time to take a risk that was bigger than anything that their competitors had the appetite for. Luckily, 1984 was also the year when the greatest basketball player of all time made his NBA debut.
Of course, at that point, the name Michael Jordan didn’t have the aura it has today. Still, after leading NC State to the NCAA title as a freshman and a stellar performance for Team USA in the Olympics, Jordan’s talent was undeniable and Nike was among the first to recognize his greatness.
However, to understand how Michael Jordan was able to secure the biggest endorsement deal in sports, we must first go back to the late 60s and understand how the pieces were put in place for MJ to succeed in the way he did.
MJ stood on the shoulders of giants.
In the 60s, the inherent racism in American society had seamlessly percolated into basketball. Bill Russell, the 11-time NBA champion for Boston Celtics, and perhaps the greatest player of all time, couldn’t sell out the Boston Garden despite his historic performances. This wasn’t the case with any of the other Boston sports teams.
Of course, the main reason behind this was the fact that Boston was an incredibly racist city in the 60s, and Bill Russell was one of the figureheads of the Civil Rights Movement.
In fact, when Dr. King gave the ‘I Have a Dream’ speech, Bill Russell was just a few feet away in the first row. Bill’s bold stance was one of the main catalysts behind the NBA’s decision to adopt a far more inclusive approach in the decades that followed.
By the time Michael Jordan showed up about 15 years later in 1984, it was a completely different league to the one that Bill Russell competed in. MJ was now the next big thing after Russell, Magic, Kareem, and Bird. The opportunity to achieve the kind of success that Michael Jordan achieved was perhaps what Bill Russell wanted for black athletes everywhere, and thanks to his efforts, sportsmen could focus more on performing.
Nike understood the value of a top athlete.
In 1984, the highest-paid athlete was James Worthy, the Los Angeles Lakers Small Forward who had a deal with New Balance that would net him $150,000 a year for 7 years. Magic Johnson, Larry Bird, and Dr. J, three of the greatest players to ever play ball made $100,000 a year with Converse, the biggest shoe supplier to the league’s athletes at the time.
With those figures in mind, the 5-year, $500,000 a year deal that Nike extended to Jordan in just his rookie year was just plain bonkers. It more than 3 times what three of the greatest basketball players of all time were making.
But Nike went a step further.
In the 80s, players had to use whatever shoe was given to them. They didn’t really have much of a say in the design and construction of the shoe. So, when Jordan said that he wanted shoes that were lower to the ground, Nike’s designer, Peter Moore said he could tailor the shoes to suit Jordan’s requirements.
In hindsight, it seems clear that Nike recognized the value that Michael Jordan could potentially bring to the brand and the sport itself, and they seemed to be aware of this before anyone else. Sure, people knew he was going to be a great player, but the number of stops Nike pulled out in its pursuit of MJ illustrated their belief in Jordan. They knew that the deal could be worth the risk of a $500,000-a-year deal.
MJ’s agent really, really gave a Falk.
Today, David Falk is a celebrated name in sports. In 1984, he was an agent who’d made a living by signing rookies. He was James Worthy’s agent and had played a key role in helping Worthy get the most lucrative shoe deal at the time.
Falk then went on to find gold on two occasions that would go on to redefine his stature in sport: he forged a relationship with Nike and he started repping Jordan.
When MJ said he wouldn’t sign for anyone other than Adidas, what did Falk do? He called Jordan’s parents on him, leaving him with no option but to fly to Beaverton to listen to Nike’s pitch.
When Nike said that if Jordan didn’t win Rookie of the Year or become an All-Star or average 20 ppg in his first three years, they’d sever the contract, what did Falk do? He made Nike add another condition: if Jordan sold at least $4 Million worth of shoes, he’d get to ride out his deal, and oh, he’d get a 25% royalty too.
Falk went even further. He convinced Nike to invest $1 Million into marketing the shoes for the first six months of their existence.
But most importantly, Falk came up with the name: Air Jordan.
David Falk built the foundation that was needed to make Michael Jordan the highest-paid athlete in sports history. The rest was up to his Airness.
The most memorable ad campaigns of the 80s? Nike Just Did It.
Nike recognized the value of signing Jordan to a $500,000 a year deal, but there’s no way anyone could’ve predicted just how many shoes would sell in just the first year. Remember how Nike wanted to protect themselves and said that they’d cut ties if MJ didn’t win Rookie of the Year, become an All-Star, average 20 ppg, or sell $4 Million worth of Air Jordans in his first three NBA seasons?
Well, one month into the release, Nike had sold Air Jordans worth $70 Million. By the end of the year, they’d moved $100 Million of product.
How did this happen? Well, the Air Jordans had a striking red, black and white design that complemented the Bulls’ jersey. However, at the time, regulations stated that basketball shoes had to be predominantly white. In response, the NBA fined Jordan $5000 every time Jordan took to the court with his new shoes. This was probably the biggest blessing Nike and MJ could’ve asked for. It led to an unbelievable amount of publicity for sum total of $0.
Of course, Nike gladly paid the $5000 fine each time. They went further and made what was perhaps the most memorable Air Jordan campaign. The copy read, “On September 15, Nike created a revolutionary new basketball shoe. On October 18, the NBA threw them out of the game. Fortunately, the NBA can’t stop you from wearing them. Air Jordans. From Nike.”
The response was instant.
This kind of gutsy, reactive, and youthful advertising is what Nike is known for today, but in the early 80s, it was a style of advertising that wasn’t all that common.
Every subsequent Air Jordan campaign went on to be a major part of basketball culture. This extended success was a result of the fact that basketball was unlike any other sport. The court was the place where street culture met sport, and Nike understood that the people who would buy the Air Jordans were not the suited bigwigs in the VIP box, but the people who’d play pick up games after watching matches.
Just like his 6 NBA championships, Jordan’s Nike deal demanded massive effort from the team around him. His commercial success was made possible because of the groundwork laid around him by Nike and his management. Thanks to them, MJ could just focus on owning 80s and 90s basketball.
The success of the Air Jordans grew and by 2012, they accounted for 58% of all basketball shoes bought in the US, and 77% of all children’s basketball shoes. Air went on to be a brand in and of itself and generated $3.1 billion in sales for Nike in 2019 alone.
Most of the people who wear Air Jordans are people that never saw him play, and yet, the legend lingers.
Yes, it could be because Michael Jordan won 6 championships and established the archetype of the modern-day basketball superstar. However, his legacy is more enduring than any other basketball player, and a lot of that is down to Nike’s incredible marketing and design.
