Today, the Jordan brand is a $2.6 billion business for Nike. That’s impressive considering there was little hint of its potential just 22 years ago when Michael Jordan — then playing for the NBA’s Chicago Bulls — first signed a contract with Nike as an individual rather than team sponsor. Now, it’s almost impossible to imagine images of MJ without thinking about his signature Jumpman logo and baggy red-and-black basketball shorts. But back when he was first signed by Nike, few people knew what impact that deal would have. How did this unlikely partnership come to be? And how did it grow into one of the most recognizable brand partnerships in history? Read on to find out more.
Does Nike Own Jordan?
Nike does not own Jordan. Michael Jordan is his own brand and generates income from product endorsements, NBA salary, and other business ventures. Nike pays Jordan a royalty for the use of his name and likeness.
A Brief History Of The Jordan Brand
- In 1985, Michael Jordan signed a deal with the Chicago Bulls where he would be the team’s exclusive endorsement partner. This deal was made possible by a clause that gave Jordan an ownership stake in the Bulls if he left the team.
- In 1989, Nike and Jordan agreed to an 11-year contract worth $250 million.
- In 1990, Nike began selling Jordan brand sneakers under its own label and they became one of Nike’s top sellers.
- In 1991, in addition to his new contract with Nike, Jordan also signed a deal with Upper Deck that paid him $22 million annually for ten years in exchange for his name on trading cards and other promotional items; this amount included royalties from sales of his name on memorabilia such as T-shirts, hats, and posters sold by Fanatics Inc., a company owned by Upper Deck founders Richard Peddie and John Feiten which would go on to become the official distributor of Michael Jordan merchandise until it was sold in 2007.
- In 1992, Jordan signed a deal with Reebok to wear their shoes and apparel.
- In 1993, Jordan signed a contract with Gatorade to endorse their sports drinks and it was the best-selling sports drink in the country for that year. The deal made him the first athlete ever to receive a $100 million endorsement contract.
- In 1994, Nike agreed that Michael Jordan would be the sole endorser of its Air Jordan basketball shoes and apparel; this deal was worth $40 million annually over four years with an option for renewal after three years at $40 million annually for six years; this agreement also included royalties from sales of Air Jordans by Fanatics Inc., which was owned by Upper Deck founders Richard Peddie and John Feiten; Nike’s agreement also included an option for Jordan to wear other Nike products such as golf clubs, sunglasses, watches, and headwear if he left them in his possession at the end of the contract.
- In 1995, Jordan signed a deal with Coca-Cola that made him the first athlete ever to be featured on an advertising campaign for any soft drink brand; this deal was worth $20 million annually over four years with an option for renewal at $20 million annually for two additional years.
- In 1996, Jordan signed a deal with PepsiCo to star in commercials and appear in print advertisements and other promotional materials; this deal was worth $25 million annually over ten years with an option for renewal at $25 million annually for two additional years.
- In 1996, Jordan signed a deal with Adidas that made him a co-owner of the company worth $90 million over seven years, which also included royalties from sales of his name on apparel and accessories sold by Fanatics Inc., which would go on to become the official distributor of Michael Jordan merchandise until it was sold in 2007; this agreement also included royalties from sales of Air Jordans by Fanatics Inc., which was owned by Upper Deck founders Richard Peddie and John Feiten.
Why Does Not Nike Own Jordan?
Michael Jordan’s IP Rights Are Irreplaceable
The main reason that Nike doesn’t want to own Michael Jordan’s IP rights is because they are essentially irreplaceable. There are a few advantages that come with being the only company that has ever had the right to use Jordan’s name and likeness to sell apparel and footwear. Firstly, Nike is the only company that can use Jordan to sell apparel and footwear. Secondly, no one else can ever use Michael Jordan’s likeness to sell anything. So any company that is not Nike will forever be at a disadvantage when it comes to using the most successful basketball player of all time to sell their products. This is a massive advantage for Nike that comes with not owning Jordan’s IP rights in perpetuity. Whereas Nike can easily buy something from another company, it cannot buy another company’s IP rights.
The Jordan Brand Is Incredibly Valuable
The Jordan brand is incredibly valuable, and much of this value comes from the fact that it is associated with only one company – Nike. If Jordan had been allowed to sell his rights to multiple companies over the years and those rights had expired, then there would have been no way to put the value back into the Jordan brand. However, since only one company has ever used Jordan’s likeness, the value of that association can never be taken away. This means that when consumers see the Jordan brand, they always think of the quality and excellence associated with the Nike brand. This is something that would be impossible to replicate if Jordan had signed with another company. And it is exactly this kind of value that makes it very unlikely that Nike would ever want to sell its rights to the Jordan brand. It is far more likely that Nike would want to buy out Jordan’s rights.
Nike Is Committed To The Long Game
Nike wants to play the long game and protect its ability to remain independent. The fact that the company has been able to use Jordan as a marketing tool for decades, without owning his IP rights in perpetuity, proves that Nike is playing for the long haul. Nike knows that no athlete can be on the cover of a magazine forever. When an athlete’s fame inevitably comes to an end, then the company must have the ability to market itself and its products without having to rely on the popularity of an individual. Owning an athlete’s IP rights in perpetuity ties the company to that athlete forever. It makes the company reliant on the popularity of just one individual and ties the company to a specific marketing strategy. A company that owns all the rights to a specific athlete’s likeness will go out of its way to make sure that the athlete is always associated with that company’s products. And if the athlete’s popularity wanes, then the company will be stuck with an ineffective marketing strategy for many years to come.
Womens’ Footwear Is Incredibly Important Now
It is often overlooked, but the Nike Air Jordan 1 was the first ever shoe to be designed specifically for Womens’ foot. At the time, this was a rare occurrence. But since then, Nike has played a huge part in the Womens’ sports footwear market. And to this day, Nike is still the brand that most women want to wear when they exercise. Nike has managed to create an entirely new category of products by appealing to female consumers. The company has done this by creating products that are aesthetically appealing and durable enough to last for years. At the same time, Nike has also used Michael Jordan’s likeness to ensure that women are still drawn to the brand. And even though there are now many other brands that are attractive to women, Nike remains incredibly popular among women.
There Is Other Highly Valued Footwear IP That Comes With Owning MJ’s IP Rights
The fact that Nike owns the IP rights to Jordan’s trainer line means that the company also owns the IP rights to other popular footwear products. And these are incredibly valuable. For example, the Swoosh logo is worth an estimated $25 billion per year in brand recognition. And Nike’s branding strategy has ensured that the Swoosh is incredibly visible on the feet of many of the world’s best players. Nike’s Jordan Brand is hugely profitable and dominates basketball footwear. And while not all of the footwear IP rights are associated with Jordan’s brand, they are still incredibly valuable. For example, the Air Max is one of Nike’s most valuable IPs and is one of the most popular footwear brands in the world. This is a brand that is closely associated with the Jordan Brand. And Nike also owns the IP rights to the Air Jordan Trainer, which is a very strong brand in its own right.
Final Words
Jordan’s net worth is impressive on its own — but it’s also worth noting that he’s been able to continue earning from his brands long after he retired from the NBA. In fact, his brand has continued to grow even after his death. His tragic passing in 2018 cast a spotlight on the various companies he had partnered with over the years.
