How Michael Jordan Still Earns $80 Million A Year
Michael Jordan turns 50 on Sunday and retrospectives of his career have been getting heavy airtime this week. The highlights include his six titles with the Chicago Bulls, his impact on athlete marketing and countless unforgettable moments on the court (“flu” game; switching hands driving the lane; the “shot” versus the Cavs). Los Angeles Lakers forward Antawn Jamison opined last week that Jordan could still average double-digit points in the NBA. I think it is safe to say we’ve seen the last of MJ soaring above the rim after hitting the half-century mark with three retirements already under his belt. But Jordan the business? It is stronger than ever.
Jordan earned an estimated $80 million last year from corporate partners Nike, Gatorade, Hanes, Upper Deck, 2K Sports, Presbyterian Healthcare and Five Star Fragrances. Other Jordan assets include six restaurants, a North Carolina car dealership, a motorsports team and his 80% stake in the Charlotte Bobcats. Jordan out-earns almost every member of the world’s highest-paid athletes 10 years after his last NBA game (Floyd Mayweather topped Forbes June 2012 list with earnings of $85 million).
The Jordan Brand, a division of Nike, is responsible for the vast majority of MJ’s earnings. Jordan partnered with Nike after being drafted by the Bulls out of North Carolina in 1984. The original five-year deal was worth $500,000 annually, plus royalties. The terms of Jordan’s current deal with Nike are a closely guarded secret, but royalties now generate more than $60 million annually for MJ, according to sources.
Nearly 30 years later, the brand is still a marketing juggernaut. It controlled 58% of the basketball shoe market in 2012, according to research firm SportsOneSource. The Jordan Brand’s parent Nike was second with a 34% share, while Adidas (5.5%), Reebok (1.6%) and Under Armour (0.6%) divvied up the leftovers.
Nike signed up current NBA stars Carmelo Anthony, Blake Griffin and Chris Paul, as well as non-NBAers like Derek Jeter and Nascar’s Denny Hamlin for the Jordan Brand. But the star is still Jordan and the Air Jordan franchise.
Nike will release the Air Jordan XX8 this weekend to coincide with the NBA All-Star game. It is the 28th shoe in the Jordan franchise. The suggested retail price is $250. In addition to new Air Jordans, Nike continues to pump out retro versions of the franchise with an average selling price of $130 to $150.
The Jordan Brand is doing “exceptionally well” says Susquehanna Financial analyst Christopher Svezia. He estimates the brand grew 25-30% in 2012 and now generates more than $1.75 billion globally, including apparel. The U.S. Jordan Brand sneaker business alone had $1.25 billion in wholesale revenue in 2012, says Matt Powell, an analyst at SportsOneSource. LeBron James is the top-seller among current NBA players with signature shoe deals, but Jordan outsold James by a 6 to 1 margin in 2012 in the U.S.
Gatorade, Hanes and Upper Deck are long-time Jordan sponsors. 2K Sports put Jordan on the cover of its NBA 2K11 and 2K12 video games. His latest deal is with Presbyterian Healthcare and its Winston-Salem parent, Novant Health. The agreement signed last year was part of a sponsorship renewal for the Bobcats franchise. It was the first time Jordan included himself as a carrot to close a team sponsorship deal. Jordan will appear in TV ads for the hospital system.
Jordan still resonates strongly with consumers. His 22 million Facebook fans rank fourth among athletes, behind only soccer icons Cristiano Ronaldo, Lionel Messi and David Beckham. His Q score, which measures awareness and popularity, is 43 among sports fans. The next highest active athlete is Peyton Manning at 32. Jordan has had the top Q score among sports fans every year since 1987. The one exception was in 1990 when Joe Montana usurped him for a single year (Tiger Woods is the only athlete to top MJ’s Q Score among the general population, which he did once in 2008).
“Jordan is unique in that he has been able to maintain that emotional connection with his consumer base for more than 25 years,” says Henry Schafer, Executive Vice-President at the Q Score Company.
Jordan’s net worth is estimated at $650 million thanks to years of endorsement checks and $90 million in salary from the Bulls. Jordan’s net worth has the potential to surge through his 80% stake in the Bobcats. The team has been losing as much as $20 million annually and part of Jordan’s ownership agreement included providing working capital to cover those losses. Those deficits will shrink under the NBA’s new collective bargaining agreement, which triples the amount of revenue sharing from high-revenue to low-revenue teams. The Bobcats will be one of the biggest beneficiaries of the new plan and are expected to receive as much as $18 million annually by next season. The value of the Bobcats was up 14% to $315 million, including $150 million in debt, in Forbes recent annual look at the business of basketball.
Happy birthday, Michael. It’s been a memorable first half-century. Next stop: the Forbes billionaires list.