The Staggering Nike Deal Jordan Didn't Even Want

Hello! This is Deep Pockets #29.

As I have teased for three weeks at this point, today we are talking about Michael Jordan.

To set this story up, let me give you some context.

If you recall from our previous story, Ty Cobb earned an absolutely enormous fortune during his lifetime thanks to shrewd real estate investments and a stunning stock portfolio (notably, very early shares of Coca-Cola and General Motors).

At the time of his death in 1961, Ty Cobb’s inflation-adjusted net worth was $340 million. That inflation-adjusted net worth made him the richest athlete of all time during his life and for many decades after his death.

Michael Jordan retired from the NBA two decades ago. And yet, MJ earned more than Ty Cobb’s entire inflation-adjusted net worth just from Nike royalties… JUST LAST YEAR!

Over the decades, Michael has earned BILLIONS from his revolutionary Nike endorsement deal. A deal he ABSOLUTELY DID NOT want to sign…

Deep Dive: The Unwanted Deal That Made Michael Jordan Billions

Michael Jordan needs no introduction, so I’m not going to give you a detailed biographical history.

I will tell you that he was born in Brooklyn, New York, in 1963. When he was five, the family moved to Wilmington, North Carolina.

Standing at 5 foot 11 during his sophomore year of high school, he did not make the varsity basketball team because he was considered too short. The following summer, he grew four inches (eventually topping off at 6 foot 6) and finally made the varsity cut.

In his two seasons of high school basketball, Michael averaged 25 points per game. He had a dozen scholarship offers for college and, in the end, chose to stay local and attend the University of North Carolina.

In his freshman year, UNC made it all the way to the 1982 NCAA Championship game, where it faced off against Georgetown (led by a senior named Patrick Ewing). Down 62-61 with 15 seconds left in the game, UNC’s coach called a play that gave the ball not to one of the team’s senior players but to a 19-year-old no-name freshman.

With ice seemingly pouring out of his veins, Michael patiently waited for the ball to come his way, then drained the go-ahead shot that ultimately allowed the Tarheels to win 63 to 62.

What shoe brand was Michael wearing when he made that shot?

During his time at UNC, Michael was required to wear Converse during games thanks to a team endorsement contract. He did not like Converse. He liked Adidas. Michael would wear Adidas during warm-ups, change into Converse for the game, and then put his Adidas right back on when the game was over.

Michael left UNC after three seasons so he could join the 1984 NBA draft where he was famously selected THIRD (behind Sam Bowie and Akeem Olajuwon) by the Chicago Bulls.

On September 12, 1984, Michael signed his first NBA contract, a seven-year, $6.3 million deal with the Bulls. The contract included a $255,000 signing bonus and paid $455,000 in the first season.

When it came time for Michael to choose a shoe endorsement, there were three options:

1. Converse

2. Adidas

3. New Balance

To be clear, Nike wasn’t even in the conversation. Michael had never worn a pair of Nikes in his life up to that point. He viewed the company strictly as making running shoes, and he wasn’t even open to taking their meeting.

He also wasn’t really interested in New Balance, but funnily enough, they were actually the highest-paying company at the time. James Worthy was the highest-paid shoe endorser in the NBA thanks to his New Balance deal that paid a whopping $150,000 per year.

So that left Converse and Adidas.

Michael’s #1 choice was Adidas. He loved Adidas. His dream was to get paid to wear Adidas.

Wherever he landed, two things would be true:

• 1) If Michael was really, really, really lucky, he would make around $100k a year from his shoe contract. That’s how much the league’s reigning superstars Larry Bird and Magic Johnson were making to wear Converse.

• 2) Michael would wear a generic shoe. In 1984, there was no such thing as a “signature shoe.” Both Larry and Magic wore the exact same shoes: Converse Weapons. Kareem Abdul-Jabar and all the other Adidas players wore Adidas Forums.

The Offers

Unfortunately for Michael, Adidas did not want him. Adidas did indicate that they’d be happy to provide him with free pairs of Forums for the upcoming season, but no money.

Converse did give Michael an offer. A generous one, too!

Converse offered Michael $100k a year to wear Converse Weapons.

Unclear if New Balance ever threw its hat into the mix.

As it turned out, Nike was interested. Very interested.

After talking to his college and Olympic coaches, Nike executives had (correctly) become convinced that Michael Jordan was secretly a one-in-a-thousand talent (he was more like one-in-a-billion). Unfortunately for Nike, Michael didn’t even want to hear their offer. He literally did not want to get on the plane to visit with Nike execs in Oregon. His mom made him go.

As Michael would later recall:

"My mother said, 'You're gonna go listen. You may not like it, but you're gonna go listen. She made me get on that plane and go listen."

Here’s what Nike offered:

$500,000 a year for five years.

That’s not all.

$4.5 million worth of stock options.

That’s not all.

A 5% cut of the gross sales generated by his shoes

That’s not all.

In 1983, Nike sold 400,000 pairs of basketball shoes. Nike would pay Michael a cut of any net increase in its overall basketball shoe sales.

That’s not all.

Michael wouldn’t wear generic Nike basketball shoes. Nike would build him a signature shoe.

This was completely unprecedented.

In total, Nike’s offer was worth:

$7 MILLION

How could Michael say no?

Well… he tried!!!

Michael took this offer to Adidas and begged them just to come somewhere close to what Nike had put on the table.

Adidas declined.

So, despite all of his efforts, hopes, and dreams to the contrary, on October 26, 1984, Michael Jordan signed with Nike.

In November 1985, Nike released the very first signature shoe in sports history. They called it the “Air Jordan.”

FYI, these game-worn, autographed Air Jordan 1s from his rookie season sold at auction in 2020 for $560,000:

Just to be safe, Nike gave itself an out if Michael Jordan turned out to be a bust.

If Nike didn’t sell $3 million worth of Air Jordans in the first three years, it could cancel the deal.

Care to guess how much Air Jordan revenue Nike generated in year one?

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.

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$130 million

As a reminder, Michael made $455,000 to play in the NBA in his rookie season as part of his 7-year $6.3 million Bulls contract.

His 5% Nike royalty check that same season was $6.5 million.

And this would prove to be the first of MANY increasingly… increasing… annual Nike royalty checks for Michael Jordan.

His checks got even bigger in 1997 when Nike and Michael launched the Jordan Brand as its own separate entity. The Jordan Brand (which was actually originally called “Brand Jordan”) would sell all forms of apparel for all kinds of sports, not just basketball. The Jordan Brand would also soon sign its own athlete endorsement deals. For example, today, players like Zion Williamson, Luka Doncic, Jayson Tatum, and Russell Westbrook (just to name a few) are not signed to Nike, they are signed to the Jordan Brand.

Between 2002 and 2012, Michael made $480 million from Nike royalties alone. This exact number was revealed as part of a 2015 lawsuit when Michael sued a supermarket chain for using his name and likeness without his permission in a steak promotion. In addition to the $480 million number, the trial also revealed that Michael will not even consider an endorsement deal unless the minimum upfront value is $10 million and he has made up to $80 million from several non-Nike deals. But, obviously, Nike was and remains Michael’s largest source of endorsement income.

In 2024, the Jordan Brand generated $7 BILLION in revenue, constituting 15% of Nike’s overall $50 billion in revenue. Michael’s 5% royalty check for 2024 performance was…

$350 million

That makes him the highest-paid athlete in the world today BY A MILE. He retired in 2003!

And please recall that Ty Cobb’s record-setting inflation-adjusted net worth that made him the richest athlete of all time for decades… was $340 million.

Michael has likely earned around $2 billion in royalties from Nike since 1984 and will go on to earn $7-10 billion over his lifetime.

Obviously, Nike has not been Michael’s only endorsement deal! He’s earned another roughly $500 million thanks to endorsement deals with companies like:

• Wheaties

• McDonald's

• Coca-Cola

• Chevrolet

• Ball Park Franks

• Rayovac

• Hanes

• MCI

• Gatorade

Speaking of Gatorade and huge royalty checks… in next week’s Deep Pockets, we are going to tell you the story of how four very unlikely people made a MASSIVE FORTUNE in royalties thanks to Gatorade. An invention they initially attempted to sell to their employer for $10,000.

But back to Michael.

All of these incredible endorsement deals didn’t actually make Michael Jordan a billionaire.

How Michael Jordan Became A Billionaire

When you combine a divorce that cost him around $170 million and various other lifestyle expenses (taxes, lawyers, agents, mortgages, gambling, partying, private jet fuel, etc), Michael’s net worth in 2006 was $450 million.

That same year, he purchased a minority stake in the NBA’s Charlotte Bobcats franchise.

In 2010, he paid $175 million to increase his take to 80%. Additional share purchases brought his stake to 89.5% in 2014.

Ahead of the 2014-2015 season, the Bobcats rebranded as the Charlotte Hornets.

In May 2014, Steve Ballmer stunned the world when he offered a then-record $2 billion to buy the LA Clippers from disgraced real estate mogul Donald Sterling. That eye-popping purchase price raised the tide of all NBA team valuations.

On June 12, 2014, Michael Jordan officially became a billionaire for the first time after the Bobcats’ valuation increased from $600 million to $1 billion. Michael was a billionaire on paper because his Bobcats stake after team debt was worth around $400 million, and his non-NBA net worth was around $600 million.

In 2019, Michael sold a minority stake in the team to a pair of hedge fund managers at a $1.5 billion valuation. That deal reduced his stake to 80%.

In 2023, Michael sold 70% of the Hornets to those same hedge fund managers at a $3 billion valuation (reducing his stake to 10%). Between the various sales, Michael cashed out around $1.4 billion. And that doesn’t include his remaining 10% stake, which is worth around $300 million!

Not a bad return for a roughly $200 million investment!

The Richest Athlete of All Time

When you total it all up, today, Michael Jordan’s net worth is $3.6 BILLION.

He is by far the richest athlete in the world and the richest athlete in history, a title he will likely hold forever.

And it was all built off that original 1984 Nike deal… a deal he had absolutely ZERO interest in signing 🤣 

FINAL WORD

On the next edition of “Deep Pockets,” we’re going to talk about one of Michael Jordan’s other most famous endorsement companies… Gatorade. And how inventing Gatorade generated billions in royalties for four very unlikely people.

Thanks for reading! Deep Pockets is brand new, and I appreciate you being part of it. I want it to be the best newsletter you’ve ever read.

So, hit Reply and let me know if there’s anything you like, hate, or otherwise just want to say. Thanks!

Go Deeper: Debunking The Movie “Air”

You may have seen the 2023 Ben Affleck-directed movie, “Air.”

“Air” attempted to tell the story of how Nike landed Michael Jordan in 1984. I say “attempted” because, while it’s a very fun movie with a great cast, some of the key plot points are entirely made up.

There are four key facts that “Air” gets totally wrong. These four errors were exposed in a series of LinkedIn posts by Nike’s corporate Historian, Scott Reames, right after the film was released:

• 1) Sonny Vaccaro, Matt Damon’s character, never went to North Carolina to meet with the Jordans.

• 2) Michael’s mother was not involved in the negotiations AT ALL other than by encouraging Michael to “get on the plane” to hear them out.

• 3) Sonny Vaccaro (Matt Damon) did not have much to do with the negotiations. Most of the negotiations were handled by Rob Strasser (Jason Bateman’s character) and Michael’s agent, David Falk.

• 3) Nike wasn’t going to pull the plug on its basketball division if they did not sign Jordan. As the Jordan negotiations were happening, Nike signed Charles Barkley and John Stockton. Clearly, signing Jordan would have been a huge win (and obviously was), but the tension about killing the entire division was totally made up.