Michael Jordan's Insane Nike Deal
Nobody was rapping about Nike...
Good morning, everyone.
This week’s newsletter includes: why Michael Jordan chose Nike over Reebok, and the magic of profit share.
How To Make A High Conviction Bet
Nike gave Sonny Vaccaro $250,000 to sign three NBA stars - but he risked his job, reputation, and the entire budget on one rookie: Michael Jordan…
In 1984, Nike was losing the basketball war.
Converse sponsored superstars. Adidas had the cool factor.
Nike? They made running shoes.
So Nike’s executive team did something unusual. They handed responsibility to grow their basketball division to a maverick ex-coach with no formal title - Sonny Vaccaro.
He had a $250,000 budget and a simple mandate: spread it across three promising NBA rookies and hope to land a future icon. But after watching hours of tape, Sonny wanted to bet it all on just one player: 21-year-old rookie Michael Jordan.
There was one huge problem…
Michael didn’t want Nike.
Michael loved Adidas because it had swagger, street credibility, cultural momentum. Run-DMC wrote songs about Adidas.
Nobody was rapping about Nike.
Michael’s agent told Sonny not to bother as they would never sign with Nike, but Sonny reportedly flew to North Carolina anyway. Not to pitch Michael, but to win over his parents.
And it worked. The Jordan family agreed to visit Nike HQ in Oregon.
The pitch was on.
To differentiate Nike, Sonny needed to be innovative. So he pitched the idea that Michael could have his own branded shoe: the Air Jordan.
“We won’t just pay him to wear the shoe - we’ll build a shoe around him. The name. The line. The legacy. All of it”, Sonny said.
The Jordans were impressed, but requested a clause giving Michael profit share of every Air Jordan sold. Unprecedented in the shoe world.
Sonny convinced Nike founder & CEO Phil Knight to take the deal – and Michael signed.
Year one sales target for Air Jordan’s: $3 million.
Actual result: $126 million.
Today Air Jordan is a $5 billion brand.
And Sonny never spent a dime on the other two players. Reflecting years later, Sonny said:
“I didn’t see just a player. I saw a path that nobody else did.”
Recommendation’s
If you enjoyed the story, check out the 2023 movie “Air“, directed by Ben Affleck and starring Matt Damon. For some reason, not many business related movies are released anymore - this one is worth your time.
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Joseph Cass