How Michael Jordan made $90 million in 2013
By Kurt Badenhausen | Forbes
Nike released the Air Jordan 10 “Powder Blue” retro sneaker on Saturday, 20 years after the first Jordan 10s hit shelves. Like all the Jordan retro releases, this one was highly anticipated and first-day sales hit $35 million. For perspective, in all of 2013, Adidas sold $40 million in the U.S. of the signature shoes of its top star, Derrick Rose. The Bulls' current star guard isn’t the only one operating in the shadow of Jordan. Reigning MVP LeBron James is the top seller among current NBA players with $300 million at retail last year for his Nike shoes, according to data tracker SportsOneSource. Jordan crushed those numbers with $2.25 billion in U.S. retail basketball sales in 2013. It has been more than a decade since Michael Jordan last appeared in an NBA uniform, but MJ most certainly has still got it.
Jordan made an estimated $90 million last year thanks to the rich partnership he enjoys with Nike. His 2013 earnings eclipsed those of all other retired or current athletes save boxer Floyd Mayweather. It marked Jordan’s biggest earnings year yet in a career paved with monster paydays, which peaked in Jordan’s last season with the Bulls (1997-98) at $80 million.
Jordan entered the NBA three decades ago after three years at North Carolina, where he announced himself to the country his freshman year with the game-winning shot in the 1982 National Championship game. Nike saw the marketing potential of Jordan, drafted third overall by the Bulls, and offered him a five-year contract worth $500,000 annually plus royalties. It was a huge sum at the time for a shoe deal, but it was a partnership that would lead both parties to unprecedented heights.
Jordan took the court his rookie year in 1984 in a pair of red and black Air Jordans, which matched the Bulls’ uniforms, but did not feature any white per NBA protocol. The league banned the shoes and fined Michael $5,000 every game for wearing them. Nike covered the fines and capitalized on the attention with a commercial with the following voiceover: "On September 15th, Nike created a revolutionary new basketball shoe. On October 18th, the NBA threw them out of the game. Fortunately, the NBA can't stop you from wearing them." A marketing juggernaut was born.
New Air Jordans followed annually in assorted colors and there have been a myriad of special releases along the way. The retro business makes up about half of the Jordan shoe business today. “Nike has made an art form of unrequited demand,” says SportsOneSource analyst Matt Powell regarding the retro releases. “Making sure that there is supply well below demand keeps things fresh.”
Retail shoe sales for the Jordan Brand in the U.S. grew 11% last year to $2.7 billion, with basketball making up 84% of that, according to Powell. Roughly 50% to 55% of that goes to Nike. If you factor in sales of Jordan apparel, the international Jordan business and sales at Nike stores, the Jordan brand is contributing roughly $2 billion of revenue to Nike, which posted sales of $26 billion over the last 12 months. Jordan, the man, gets a cut of every shoe, hoodie or pair of shorts sold by Nike under the Jordan Brand. We estimate MJ’s take from Nike was at least $75 million last year. “Given that he is the name that launched the brand, you could argue that he deserves more,” says Phil de Picciotto, founder and president of Octagon. “Jordan is the perfect athlete.”
One of every two basketball shoes sold in the U.S. last year carried the Jordan brand. Factor in Nike-branded shoe sales into the mix, and Nike has a near monopoly in basketball with market share of 92%, according to SportsOneSource. Adidas (5.5% market share), Reebok (1.4%) and Under Armour (0.7%) are still searching for answers to Jordan.
The Jordan Brand isn’t sitting still. It opened its first Jordan-specific store, Flight 23, this month in New York City, outside of Madison Square Garden where No. 23 tortured Knicks fans for so many years with moments like this legendary dunk or his double nickel return to MSG.
MJ still weighs in on designs of new Jordan shoes and suggests players he thinks would be a good fit for Nike’s Jordan endorsement roster, which counts roughly 20 current NBA players, including All-Stars Carmelo Anthony, Chris Paul and Blake Griffin. The Jordan Brand also taps players outside of basketball like baseball’s Derek Jeter, Nascar’s Denny Hamlin, boxing’s Andre Ward and football’s Andre Johnson.
Baby should make some contributions when he's on court. Big banger and tough lumber when he stands in the paint. Yes, much better than Hollins who was a Celtic himself. Tough to see Jamaal leave court like that. Injuries...they're a killer. Blake has turned in full force, no hesitation. A few games ago, I saw him even dribbled to the outside and made a tough turn around jumper, it went in. I must say this is a new Blake.
