Contracts between brands and athletes have been a staple in professional athletics as long as there have been stars to promote. Branded footwear truly took off when Michael Jordan came into the picture. A contract between Jordan and Nike signed before Jordan’s rookie season in 1984 began a rich and industry-changing move that defines the market to this day. But that “Jordan Brand” collaboration nearly never happened.
Even though Jordan played in Converse during his University of North Carolina days, being sponsored by Adidas was his goal. All the other big-name NBA players were with Adidas – Magic Johnson, Larry Bird, Dr. J and Mark Aguirre, to name a few. With those contracts already in tow, Adidas could not offer Jordan a special edge like Nike could.
At the time, Nike needed a boost. At the beginning of 1984, the company reported its first-ever quarterly loss. The Olympics in Los Angeles did not move the needle enough for Nike, so Jordan was the main target.
Nike was desperate to get Jordan, but Jordan did not have much interest in the brand. He was tired from his college basketball season and the Olympics and did not want to take the flight to Nike headquarters in Oregon. But Jordan’s agent talked the rookie’s parents into going with their son. With Jordan in the room, Nike went all-in, offering him $500,000 per year in cash for five years, way over the $100,000 per year Adidas’ stars were getting.
Jordan went back to Adidas to see if they could match, but with the other stars already on contract, they did not have the wiggle room. Another company called Spot-Bilt actually offered Jordan the most money, but Nike showed they were willing to adapt to Jordan’s likes. That is how Jordan settled on Nike.
But there was a catch – Jordan had to live up to the hype in his professional career to get his full contract. With a Rookie of the Year campaign, Jordan ensured his connection with Nike would be long-lasting.
Jordan wore the first Nike Air Jordan shoe on Oct. 15, 1984, but three days later the NBA banned them since they did not match the uniform scheme because they were red and black. The Air Jordan I was the first Jordan shoe to roll out in stores at $65 per pair the following March, and Nike’s revenue spiked – by the end of the year, the Air Jordan franchise itself garnered more than $100 million in revenue.
At first, the shoe price was low and sometimes even discounted until the brand gained steam. Today, Jordan sneakers cost anywhere between $130 and $190 for retro versions, more than double what was initially introduced. With the brand now existing for over 30 years, it continues to break boundaries – Jordan Brand is represented amongst many college programs and has been featured in partnerships, such as a collaboration with Gatorade, for example. Jordan may have retired in 2003, but Nike’s Jordan Brand is a force in the industry and one that has shaped what it means to be a major player in athletics, in terms of both apparel and footwear.
Nike, Nostalgia and the Resale Market
New models of Jordan sneakers do not come out too often – the main Jordan line makes roughly a new model per year. Just as the Jordan 1 shoe came out 33 years, ago, the Jordan 33 will be released sometime in 2018. The brand has lived on and prospered even though Jordan’s athletic career ended.
In-between those big releases, Nike and Jordan Brand come out with variations of the shoes as well as budget models for those who cannot afford the top-of-the-line models. In that way, Nike attempts to reach as many price points as possible to incorporate wider audiences into the equation. It is not uncommon to see Jordans on the feet of a baby or to see different pairs of Jordans while walking down a block anywhere in America.
Nike and Jordan Brand keep such a wide audience involved over time by incorporating nostalgia into marketing and branding. Jordan shoes from the past are often given new life in “retro” releases, as a specific colorway of the Jordan 1 will have a limited release from time to time.
Jordan Brand builds on current events to reference nostalgia in its brand. February 2018 was the 30th anniversary of Jordan’s dunk from the free throw line in the 1988 NBA Slam Dunk Contest during All-Star festivities. Nike did not let that moment go by, as it capitalized on the anniversary and released a replica of the shoes he wore for that dunk on the 30th anniversary, Feb. 14, 2018. The shoes were limited and sold out quickly for $200 a pair.
There are good odds that many of the pairs that were purchased in that limited release hit the resale market. A big reason for the increasing demand of Nike and Jordan Brand sneakers is the potential held in the resale market. Websites such as StockX and eBay are places where those who purchase limited release sneakers try to make a profit. Nike’s products hold such a value that the resale market grows constantly. The moment a limited release ends on the SNKRS app, that shoe can be found on StockX for above the retail price, sometimes as high as three or four times the retail amount. In that way, Nike and Jordan Brand’s value transcend time.
Limited releases such as the “Free Throw Line” shoe occur weekly for Nike through a platform it uses to capitalize on nostalgia – its SNKRS app. Nike pushes users to download the app as it is often the only place where consumers can purchase limited releases. A date and time are set for these releases, and users flock to the app to see if they can get their hands on a pair of the released sneakers. The nostalgia comes into play for many consumers with this app, as it allows a chance to touch a piece of history that has not been available for years.
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Nike and Jordan Brand operate in a unique niche by looking to the past to define their present with nostalgia – by keeping shoe releases limited, demand for products continues to rise. These releases are teased and sometimes leaked weeks in advance, and other times there are surprise releases to keep consumers on their toes. While releases of shoes are extended to other outlets such as Foot Locker or Finish Line, Nike maintains control of interest through the SNKRS app.
Therefore, Nike and Jordan Brand continue to grow by capitalizing on their past. Old and new models can be found on the feet of NBA and college basketball players, and at the pro level, a player rarely wears the same shoe two games in a row. While Nike athletes such as Kyrie Irving and LeBron James debut different colorways of their shoes almost weekly in their games, Jordan Brand stays more limited – but both utilize nostalgia in looking to the past and bringing value to consumers of the present through landmark moments in Nike and Jordan history.
Fighting Nostalgia with Technology
Nike and Jordan Brand hold an edge over competitors with the nostalgia held in their products. While Adidas had big-name athletes at the time of Jordan’s rookie year, the brand does not have the same anticipation of demand as Nike holds in its consumers.
Adidas’s edge over other apparel and footwear companies is mainly held in its technology, while Nike’s is in its nostalgia. In a way, Adidas acknowledges that Nike has the advantage in branding and nostalgia by putting its efforts into shoe technology and comfort. Adidas’ most popular shoe technology is called “Boost,” a comfortable cushioning material that represents the high end of many of Adidas’ footwear. It is a material Adidas currently holds an exclusive license to and that no other footwear company has been able to replicate, giving it a place in the industry where Adidas can differentiate itself. Once that license runs out, though, the company that owns Boost technology can choose what to do with it.
The one major basketball athlete that represents Adidas is James Harden. Harden has two signature shoes with his time with Adidas, not including variations of both models in materials and price point. Adidas also recently signed Yankee star Aaron Judge. Brands see a high return in signing basketball athletes since there is a high demand for purchasing basketball shoes over baseball cleats, for example. Harden and Judge give Adidas more recognition amongst the other big-player brands, and those signings along with the new technology are all steps to get ahead of the big player in Nike and Jordan Brand. What once was Jordan’s ideal landing place is now on the heels of where Jordan ended up due to the nostalgia formed during Jordan’s time with Nike.
Nike competes in the footwear technology with its “Zoom” cushioning. According to Nike, “Because Nike Zoom cushioning is incredibly thin, it brings the foot closer to the ground and enhances stability, especially during quick cuts and multi-directional movements.” Both Boost and Zoom are made to help performance, with Zoom found in both basketball and running shoes. Most of the Nike Jordan line has the Zoom cushioning, as it is considered a top-of-the-line product. Budget models of shoes are often found with little to no Zoom. This way, Nike can still compete with popular technology like Boost along with putting nostalgia at the forefront with its limited releases.
The Power of College and Player Endorsements
Under Armour is cited as one of Nike’s biggest competitor because of the slew of athletes it has signed. Two-time MVP Steph Curry leads the way in Under Armour’s endorsed athletes, along with Tom Brady, Jordan Spieth and Misty Copeland, among others. Those athletes help establish a winning culture within Under Armour as each becomes more successful. If someone wants to play like Curry, for example, the first step to do that would be buying his shoes or apparel. That is a win for Under Armour in using endorsements to build customer interest.
That winning culture is especially important to Under Armour as, compared to other apparel companies such as Nike and Adidas, it is relatively new to the market. Even though the company was founded in 1996 by CEO Kevin Plank, Under Armour did not start selling sneakers until 2008, showing how far the company has come by putting the focus in performance-based gear.
The Baltimore-based sports apparel and equipment company has become prominent through the rise of the millennial generation, as to younger consumers, Under Armour is something fresh and new. Greg Fania, a 23-year-old user of the brand, associates Under Armour with quality over reputation.
“I like Under Armour because it is an underdog brand, it’s new and underrated,” Fania said. “People buy Nike because it says Nike, not because their product is the best.”
Since it is a newer player in the market, Under Armour does not have the nostalgia that established companies like Nike feed off. As Adidas finds an edge through footwear technology, Under Armour finds the most return in player endorsements. It is those deals that give Under Armour a credibility boost.
According to Business Insider, Under Armour overtook Adidas in revenue 2014 with its $2.6 billion in revenue in apparel and footwear. While that was a big jump, it still has a long way to go in terms of surpassing Nike, which brought in $11.8 billion in revenue in that same sector in 2014.
Plank believes that acquiring “major athlete endorsements” is central in Under Armour’s thriving success. For example, after Spieth won the Master’s in April 2015, Plank said, “Thanks to Jordan, our company grew up today.” Therefore, Under Armour goes as far as its endorsed athletes allow it to.
Many of Under Armour’s most successful endorsed athletes have come from expiring Nike contracts. For example, Nike decided in 2013 that Curry would never have a signature shoe, so it did not outbid Under Armour. In the years following, Curry won back-to-back MVP awards, including being the first player to win unanimously. Brady is also a part of Under Armour’s Nike leftovers, along with U.S. Women’s National Soccer Team player Kelley O’Hara. Now, Under Armour is established enough that it is signing successful players as rookies, such as Spieth, Clayton Kershaw, Cam Newton and Buster Posey.
Under Armour has also competed with Nike and Adidas at the college level, sponsoring 18 different colleges heading into the 2017-18 season. In comparison, Nike is affiliated with 50 colleges and Adidas is affiliated with 13. Some colleges are switching from Nike or Adidas to Under Armour, just as Seton Hall switched from Adidas to Under Armour in 2014. College sponsorships can lead to endorsements at the players’ pro level, something Under Armour values greatly; therefore, investing in college athletics makes sense for the company that lacks nostalgia.
While Adidas and Under Armour try to set themselves apart with technology and player endorsements, Nike’s nostalgia and adaptation to the sports footwear and apparel landscape has them ahead of their competitors. According to brand value in sports business brands calculated by Forbes in 2017, Nike leads the way with $29.6 billion in brand value. Next up is ESPN, followed by Adidas with $7.9 billion in brand value. Finally, Under Armour fell in fifth with $4.4 billion in brand value. These numbers make sense for a brand that is as new as Under Armour in comparison to its competitors, but the rise in success of its college and athlete endorsements are allowing it to compete with the well-established companies. While Adidas has Harden and Judge, the company still hinges on how Boost technology differentiates itself from Nike and Under Armour. Ultimately, a switch in interest from Adidas to Nike by Jordan in 1984 paved the way for how sneaker culture is portrayed throughout sports to this day, and nostalgia along with the resale market allow footwear and apparel companies to both thrive and control interest through limited releases and digital interactions.
Elizabeth Swinton can be reached at elizabeth.siwnton@student.shu.edu or on Twiter @eswint22.