💸 How Nike Created the World's Richest Athlete
Everyone has heard of Air Jordans but here's the story how the shoes created a billionaire.
The year was 1984.
A young athlete, who had just stepped into the big leagues, was forced to make an unwilling deal with a then-not-so-famous shoe company.
This unwilling deal changed both their lives.
The company was Nike.
And the athlete? Michael Jordan.
🏀 The World's Richest Athlete
What comes to mind when you think of the world's richest athlete?
Probably Lionel Messi, Cristiano Ronaldo or Virat Kohli, right?
No offense to Michael Jordan, but the popularity of their sports (football and cricket) is more universal than basketball.
But thanks to his deal with Nike, he is the richest athlete there is. And people who don't even know anything about basketball have heard of him or at least of his Air Jordans.
Air Jordans have played a major part in making him a rarity in the sports world: a billionaire.
Very few athletes like Tiger Woods and Michael Jordan have managed to achieve this status.
Jordan achieved this status even before Woods, with his net worth climbing to $2.1 billion in 2020.
Of this, his professional career as a player only earned him $93 million.
Like any other athlete, the major portion of his current net worth comes from brand deals, with Nike alone contributing an insane $1.3 billion!
But why did Nike agree to pay him so much?
🤝 The Famed Nike Deal
From 1982-84, just years after Nike's IPO, the company's stock fell 66%! Its earnings also fell from over $40 million to just $10 million. This was all a result of changing trends.
Nike was creating athletic shoes at the time but customers suddenly wanted more fashionable sneakers, causing the company to be out of style.
It needed a major rebranding.
And to achieve it, it took a huge risk: betting on a rookie.
Yes, Michael Jordan was a great athlete but he wasn't even a year old in the NBA (National Basketball Association) yet.
But Nike saw his potential and wanted him to wear its shoes.
At that time, Nike had a reputation of being a runner's shoe. So, not many basketball players were interested in it, including Jordan.
Most players wore Converse and Jordan wanted to get an exclusive deal with the shoe company.
However, Converse couldn't imagine giving that much spotlight to a newbie. So, Jordan headed to Adidas.
Adidas was going through a leadership change and couldn't make him an offer. Some claim they didn't want athletes that were shorter than 7 feet.
The only option left? Nike.
But he was still unwilling to take it. Until his mom got involved (mothers truly know best!).
She forced him to at least meet Nike.
And Nike offered him a completely insane deal: $500,000 per year for 5 years, stock options and his own shoe line!
Even veteran players working for Converse hadn't gotten such a deal. They were getting paid $100,000 at best.
And the best part? Jordan would get a 5% royalty on every Air Jordan sold.
This clause made him $130 million in 2019 and 2020, without putting in any work.
What happened after this deal was history.
Nike had anticipated only $3 million in sales for Air Jordans for the first year.
But given Jordan's rising popularity and the shoe's design, it sold shoes worth $126 million in the first year alone!
And this money didn't come easy.
The first-ever red and black Air Jordans broke NBA's rules of wearing mostly white sneakers (the NBA was way ahead of its times predicting how white sneakers would become the pinnacle of fashion).
So, every time Jordan wore them, he was fined $5,000 - money that Nike was happy to pay as it created buzz around the shoes.
Now, some say this story about the fine is a clever marketing strategy by Nike to promote the shoe.
Whatever it may be, the story has worked.
The Jordan brand is worth around $10 billion now and has become a style and status symbol.
In fact, it has given rise to the sneaker culture. Most well-known brands, celebrities and athletes have now partnered with Air Jordans, making the shoe a must-have for any sneakerhead!
💰 Jordan's Business Deals
While Nike may have given Jordan most of his money, it is not the only brand behind his success. Jordan has also invested in lots of sports companies like the sports betting company DraftKings and NBA Top Shot.
His documentary 'The Last Dance' also earned him $10 million.
The NBA team he bought after retirement, the Charlotte Hornets, has also played a major role in his billionaire status.
But he couldn't have gotten where he is without Nike.
Jordan's life and the world could have been much different today, if he had not listened to his mother and gone down to meet Nike.
Lesson of the story: Always listen to your mom, and explore every option that you get. You never know which one can change your life.
⚡ In a line: Nike created the richest athlete in the world and gave birth to sneaker culture all with just one deal.
💡 Quick question: Do you think Nike offered Jordan too handsome a deal just because they were desperate.
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