Michael Jordan was a favorite of well-known businesses at the height of his career. Due to his prominence and influence not only in the NBA, but across numerous spheres of endeavor, his autograph was the most sought after.
He inked a contract with Nike in 1984, which gave birth to Air Jordan. Before to signing with Nike, the brand was second fiddle to then-leading brands such as Adidas, Reebok, and Converse.
At the time, Adidas was 50 percent greater in terms of revenue, and Reebok was outperforming Nike in the market. According to Forbes, Converse was the brand of choice for many NBA stars, including Jordan, as well as emerging talents like Larry Bird and Julius Erving.
Jordan wore Converse at the University of North Carolina and was ready to join Adidas when he was picked by the Bulls. His agent, David Falk, pushed him to join Nike because of his tight relationship with the company.
“Adidas was really dysfunctional by that time. And they had just told me,” he told CNBC Made It. “We’d love to have Jordan. We just can’t make a shoe work at this point in time,” he continued, adding, “I wanted Michael to go with Nike because they were the upstart.”
However, Jordan told them that he was not interested. Falk then appealed to his mother, Deloris, to convince the then-21-year-old to join Nike.
“My mother said, ‘You’re going to go listen, you may not like it, but you’re going to go listen,’” Jordan recalled in an interview with Marie Claire. His father, on the other hand, reportedly told him he would have to be a fool not to take the offer.
Jordan eventually accepted Nike’s offer and began working on his own shoe company. This resulted in the creation of Air Jordan. Falk told Marie Claire how the name Air Jordan came to be.
“Nike had just come out with this new technology for their running shoes called air soles. And obviously, Michael played in the air, so I said, ‘I got it, we’re going to call it Air Jordan,’” he said.
According to Forbes, Nike first offered Jordan a five-year contract with a basic salary of $500,000 per year, which was treble the salary of any previous NBA sneaker agreement. The initial Air Jordan sneaker was an instant success, selling $126 million in the first year.
“Nike’s expectation when we signed the deal was, at the end of year 4, they hoped to sell $3 million worth of Air Jordans,” Falk recalled. “In year one, we sold $126 million.”
As the Jordan brand grew in popularity, so did his salary. Jordan reportedly received $130 million from Nike in 2020, which Forbes thinks was four times more than LeBron James earned.
According to Marie Claire, the NBA banned the initial edition of Air Jordan because it broke NBA rules that a sneaker must be predominantly white and represent the colors of the team’s uniform.
In addition, the NBA star was fined $5,000 for each game in which he wore the forbidden Air Jordan 1 sneakers. Nike not only paid the penalty for Jordan, but also profited from the issue. The shoes eventually became a must-have status symbol in the late 1980s and 1990s, and they continue to be so today.
Nike now dominates the sneaker industry, accounting for at least 80% of the market. It has signed stars such as (late) Kobe Bryant, Zion Williamson, and Luka Doncic since the 1990s.
Forbes stated that the Jordan brand made $3.1 billion in revenue in the fiscal year ending May 2019. According to Forbes, the brand is “worth north of $10 billion, in addition to the billions of dollars in revenues it has earned over the last 35 years and its halo effect on sales of other Nike-branded products.”
According to HowAfrica, Jordan’s 36-year collaboration with Nike has paid him $1.3 billion and counting. Forbes estimated his net worth to be $1.7 billion at the time of releasing this report.
This indicates that a substantial portion of his net worth is derived from his salary from Nike, his largest financial and marketing backer. Moreover, Nike’s partnership with Jordan has not only made him a billionaire, but also a cultural icon.
According to Forbes, it is the largest athlete endorsement agreement in history, but it is also perhaps the best value because Jordan helped Nike go from a relatively unknown brand to one of the most valued in the world today.