Originally published November 10, 2014 on BlackPressUSA.com from NNPA, the National Newspaper Publishers Association.
By Everett L. Glenn
NNPA Guest Columnist
There’s a runninng debate in basketball that Michael Jordan made winners out of the players around him in Chicago, while LeBron James had to go join other winners in Miami to become a winner. The debate rages on, and the question will not be answered definitively until LeBron hangs up his sneakers.
We can agree on the impact that MJ, and now LeBron, have had on the company that was originally known as Blue Ribbon Sports (BRS) and initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS).
With sales of $26 billion over the last year, Nike has leveraged the Jordan name to become the world’s most famous sports brand. 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 percent, according to SportsOneSource. Beyond sales of basketball shoes, MJ and King James also drive sales of apparel and other non-basketball shoe items for Nike, according to industry sources.
When he entered the NBA in 1984, Jordan signed a five-year, $2.5 million contract with Nike. The U.S. Jordan brand now generates more than $1.75 billion globally, including apparel. The U.S. Jordan brand alone had $2.25 billion in U.S. retail basketball sales in 2013, according to Sports One Source. If you factor in sales of Jordan apparel, the international Jordan business and sales at Nike stores, the Jordan brand is contributing roughly $3 billion of annual revenue to Nike.
Hard to argue with MJ’s decision to sell his name to Nike. While the terms of Jordan’s deal with Nike are a closely guarded secret, royalties generate approximately $75 million annually for MJ according to sources. That’s a lot of cheddar!
Nineteen years after MJ’s first deal, LeBron signed a 7-year, $90 million endorsement contract out of high school. LeBron re-upped with Nike in 2010 and while terms were not disclosed, Forbes estimates that the deal brings in $20 million annually, including royalties. Not Jordan money, but with his return to Cleveland and a nice rebound in the court of public opinion, I would not be surprised if the new deal that Kevin Durant recently struck with Nike that is reportedly worth up to $300 million does not prompt a late night call from LeBron. After all, LeBron’s signature shoe raked in a reported $300 million in revenue per year compared to Durant’s $175 million and Nike’s CEO Mark Parker is on record that it is possible for James to be on a MJ-level for Nike and its business.
On the relationship between Nike and LeBron, Carter said “our relationship with Nike is more than a shoe deal. It’s more like a joint venture — meaning we are working to build a business.” When you build a business, you employ people, right? Well, Nike employs more than 56,000 people. Not sure how many people LeBron, MJ or Kobe employ but a lot less than 56,000 for sure.
According to Forbes, Jordan’s net worth is about $750 million. According to published reports, LeBron’s net worth has jumped to $120 million. Based on his Nike holdings along, Phil Knight is ranked as the 43rd richest person in the world, with an estimated net worth of US$18.4 billion.
Between the two of them, MJ and King James are raking in more than $100 million including royalties. Big dough, no doubt, until you do the math. MJ’s $75 million is less than 3 percent of what the Jordan brand contributes to Nike revenue. While LeBron’s $20 million is more on a percentage (of revenue) basis, it still represents about 6 percent of Nike’s take from the sale of LeBron’s signature sneakers.
If it is just about lining their own pockets, then one would be hard pressed to question the decision by MJ and King James to simply allow Nike to exploit their names. Unless you consider how, in the process, the growth and true potential of these young men is stunted by an agenda they/we seem to be blind to.
And exactly what has Nike done to help tap the resolve of the tens of thousands of Black boys who don’t make it to the NBA or NFL? What is Nike doing to help close the achievement gap? On the other hand, Nike’s Phil Knight has donated more than $300 million to Oregon and its athletic department over the past 20 years according toreports, single handedly financing Oregon’s transition from also-ran to D-1 powerhouse/fashion statement.
When I posed the question to a Nike representative the response was “Nike makes shoes and sports apparel, it is not our business to fix society’s problems.” Never mind that the marquee shoes are aimed at Black kids from the hood because of their willingness to spend huge amounts of money every time the new, hot shoe hits shelves. An Adidas exec once said that “the day after payday is the biggest sales day in this category”.
How is this mindset, the lack of give back, any different from the exercise of free speech that led to the demise of Donald Sterling and Bruce Levenson?
Imagine if MJ and King James developed facilities to make marquee shoes in the inner city instead of in facilities in Indonesia where children under 16 are paid like “slaves.” With nearly $3.5 billion in combined sales, they’d rank second to World Wide Technology as the nation’s largest Black business.
Such a bold move would change the conversation from whose contribution to the game is greater to who has done the most to help create winners from a lost generation of youngsters.
What has to happen for us to realize our true value? To see the same value in “us” that others see? What amount of destruction and tragedy has to beset us before we change and do things different?
Will we ever learn?
Everett L. Glenn, an attorney and former sports agent, was one of the first agents to represent multiple NFL and NBA first-round draft picks in the same year. His clients have included three NFL Hall of Fame inductees and 11 first-round draft picks. He is author of a NNPA three part series detailing how the sports industry exploits not only Black athletes, but other African Americans – accountants, financial advisers, banks, construction firms, etc. – who are capable of rendering services.