Nike’s Secrets: From Selling Others’ Shoes in the Trunk of a Car to the Incredible Deal Magic Johnson Refused

What Tiger Woods, Rafael Nadal, Serena Williams, LeBron James do, Chloe KimMegan Rapinoe, Giannis Antetokounmpo, Kenenisa BekeleKylian Mbappé, Cristiano Ronaldo and Brown sky? In addition to being great stars of world sport, who fill the stadiums and are a guarantee of entertainment in every competition or tournament in which they perform, they are all part of the immense universe of athletes of Nikethe American sportswear giant that is celebrating its 50th anniversary and that, despite having suffered severe blows along the way, continues to position itself as the leading brand when it comes to sports sponsorship.

when Bill Bowermanan athletics coach at the University of Oregon, and his former student Filippo Cavaliere they created the company, they had just $ 1,200 in the bank. Today the company has a net worth of almost 16 billion dollars and, with about 300 active contracts – according to data at the end of 2020 – with athletes, former athletes, clubs, teams and selections from different sports and even entire sports championships, it is responsible for approximately 40 percent of the total value of the apparel sponsorship market, with a big advantage over Adidas e Pumaits big competitors on the field.

Bowerman, obsessed with improving the condition of competition shoes to elevate the performance of his athletes, collaborated with Knight in 1964 and created Blue ribbon sporta small company that has been distributing sports shoes of the Japanese brand for years Onitsuka tiger from the trunk of a car during track races. Although it wasn’t long before they decided to innovate and create their own models.

The small company broke away from the Japanese company in 1971 and soon became Nike, a name borrowed from the Greek goddess of victory. And he adopted his classic “pipe” (in English, called flutter) as a logo. Since then, it hasn’t stopped growing.

In 1972 he signed his first contract with a professional athlete, the Romanian tennis player Ilie Nastase. In 1980 he debuted on the New York Stock Exchange, with his shares worth 18 cents. And in 1990 it began its expansion: it opened more and more stores until it became a real emporium, with a presence in all corners of the world.

Nike’s first major success in the sponsorship market came in 1984 when he signed a brilliant American basketball prospect that would become the greatest player of all time, Michael Jordan.

The 21-year-old, who recently joined the Chicago Bulls, had also been tempted by reebok Y converse, then the NBA’s most popular brand. And he didn’t want to choose Nike, because he didn’t even like shoes, as his representative once said. But he ended up accepting the offer of the Oregon brand, still unknown in the world of the orange ball. The deal was for $ 500,000 a year and the promise of a whole line of him. so he was born Air Jordan, perhaps the most iconic line of the company. The first model, the Air Jordan 1, went on sale in 1985 and generated a profit of $ 100 million that year.

Sometime later, when MJ was already an NBA legend, Knight recognized that going in search of him was “the best decision” he had made in his life, as the six-time champion with the Bulls became the first athlete to transcend sport and transform your name into your brand.

The relationship – which catapulted Nike’s popularity and stock – is still alive and continues to pay dividends for both sides. Nearly two decades after Jordan’s retirement from the NBA, more shoes and apparel are still being sold from his line than any current player in the league combined.

“In fiscal 2021, Air Jordan experienced 31% growth, bringing the company to nearly $ 5 billion in revenue,” said John Donahoe, Nike’s president and chief executive officer in June last year. Meanwhile, according to Forbes magazine, Nike had paid MJ about $ 1.3 billion by mid-2020. The former player bills around 60 million a year for royalties.

Signing the legend of the Bulls was a relief for Nike, who had tried unsuccessfully a few years earlier to seduce another future American basketball star, Earvin “Magic” Johnson.

In 1979, at the age of 19 and after winning the title of the NCAA (university league) with Michigan State, Johnson decided to make the leap to the NBA and offers from the big brands began to rain on him, dazzled by his talent. Nike, which was still a small company trying to make its way into a difficult market, made him an offer that didn’t convince him.

“When I left Michigan, all the shoe brands showed up, Adidas, Converse and a guy named Phil Knight, who was starting a business called Nike at the time. But while all the brands were offering me money, Phil Knight he told me I could only offer myself Nike stock, ”Magic recalled a while ago.

“Stocks? I didn’t know anything about stocks, I was 19 … So I took the money. At that age, I thought, I have to take the money … God, I’d be a billionaire by now. I think it was 1979, they gave me of the shares at the time and how much they are worth today … It kills me every time I think about it. Michael Jordan would have made me so much money … “, he added with great humor.

Magic, who signed a $ 100,000 deal with Converse in 1979, later became a Lakers legend, with whom he won five titles during the golden age of the Los Angeles franchise and amassed his fortune. But, How much did he let go of refusing Nike? If the pipe brand’s offer had been for a similar amount to what it ended up accepting, and considering that the shares of the Oregon company were then worth 18 cents, it would have taken about 500,000. And at current prices (around $ 103), that package would be worth $ 52.5 billion today.

A winning strategy

One of the reasons for Nike’s success was probably its ability to spot future stars and “block” them before they became the stars of their sports. Michael Jordan’s “signature” was the first. And it opened up to the Oregon company – based in Beaverton, 11 kilometers west of Portland and about 172 north of Eugene, where the World Athletics Championships will be held on Friday – the way to go to learn more.

In 1996 he broke into the world of golf by signing a contract with a young Tiger Woods, who had just started his professional career at the age of 21. At the time, the company was questioned for agreeing to pay $ 40 million for four years to a rookie. But time has proved him right.

Nike was one of the few sponsors who didn’t abandon Woods amidst his scandals and personal problems; and got the prize of him. When Tiger took his 15th Major in Augusta in 2019, to be three of the records of Jack Nicklaus, the company pocketed $ 22.54 million on tournament days alone, due to the large exposure. In 2018, in that same amount of time and with the Florida player no chance to fight for the title, he had earned “just” 12.1 million.

With the same strategy, the company added LeBron James to its “ambassador” ranks in 2003, when striker Akron was 18 and just preparing to make the leap to the NBA. The $ 90 million seven-year deal was the largest endorsement deal for a rookie in the league’s history. Currently, LeBron earns Nike around $ 600 million annually.

The company also proved to be visionary when it began sponsoring Roger Federer in 1994, when the Swiss was just 13, and Rafael Nadal, in 2003, when the Spaniard was not even 17. And footballer Neymar Jr, who signed his first second to the pipe brand when he was also 13 and took his first steps in the lower ranks of Santos in Brazil. The Swiss and the Brazilian are no longer “Nike athletes”; but the Majorcan, who a month ago in Paris won his 22nd Grand Slam, yes.

Likewise, the company has not limited itself to the search for promising young people. Serena Williams, for example, began her collaboration with Nike in 2004, when she had six Grand Slam titles behind her and had already reached number one in the world. Kobe Bryant signed in June 2003, a year after celebrating his third consecutive title with the Lakers.

In recent seasons, the club has suffered severe blows. After the departures of Federer in 2018 and Neymar in 2020, in April 2021 he lost two millionaire deals within a week. The one he had since 2016 with Simone Biles, the most decorated gymnast in history, who has collaborated with the sports brand of Gap Athleta. And shortly thereafter, the still-in-force contract with Kobe Bryant’s family, who passed away in early 2020. The company’s idea was to renew that bond, but vanessa bryantKobe’s widow, was not convinced by the offer.

The departures of some of its biggest stars haven’t affected Nike too much, which continues to dominate the market in most sports. Adidas steals importance in football; but the Oregon giant – which has some big clubs among its sponsors, such as Barcelona – is the main sponsor of the three major American leagues (NFL, NBA and MLB), a field in which it has no competitors.

Depending on the site StatisticalLast year the company recorded an annual turnover of 44,538 million dollars, against the 37,403 it had pocketed in 2020, a “weak” year due to the pandemic.

From that small business of distributing foreign shoes to an empire that generates millions every year and that has as ambassadors some of the greatest athletes of today and of the past; In 50 years Nike has revolutionized the world of sponsorship and is also part of the history of the sport, as much as the stars who wear the pipe brand every time they go out to compete.