Was Nike a Big Brand Before Signing Michael Jordan?

To directly answer the question – no, Nike was not yet a major player compared to rivals like adidas and Reebok in the years before signing Michael Jordan in 1984. But the Air Jordan deal paved the way for Nike to become the sportswear leader it is today. Let‘s take a deeper look at the Swoosh‘s humble beginnings and rise to prominence.

Sneaker Market Domination Before Air Jordans

In the 1970s and early 80s, the sneaker world was ruled by other brands:

• adidas – founded in 1949, the long-time market leader endorsement NBA stars like Kareem Abdul-Jabbar
• Puma – adidas‘ biggest rival in Europe, gained US traction sponsoring Joe Namath
• Converse – official shoe supplier of the NBA with heritage dating back to 1908
• Reebok – upstart British brand that skyrocketed in the 1980s aerobics craze

Nike did earn $270 million in sales by 1980 after going public in 1979. But its 50% U.S. market share was limited to running and training shoes. Nike had yet to make a dent in the basketball sneaker wars.

MJ‘s Wish to Sign with adidas

Michael Jordan entered the 1984 NBA draft with dreams of signing with adidas. But adidas declined to offer a contract until Jordan proved himself in the league.

Nike‘s offer of $500,000 per year blew other brands out of the water. While Nike today seems like a "no-brainer," Jordan had to think hard before joining the upstart Swoosh over established giants like adidas and Converse.

Early Air Jordan Sales Underwhelm

The debut Air Jordan 1 original sold $130 million in the first two years, according to Nike founder Phil Knight. Impressive yes, but below the targeted $270 million.

Retailers reported selling only about half their stock of the initial Air Jordan models. The shoes were not instant hits, despite Jordan‘s visibility. Nike actually capitalized on the NBA‘s "ban" of the AJ1 black and red colors to build hype.

But early sales showed becoming a basketball powerhouse would prove challenging, even with Jordan on board. Let‘s look at how long it took Nike to catch incumbent sneaker brands.

When Did Nike Overtake Rivals adidas and Reebok?

Reebok

Thanks to aerobics, Reebok overtook Nike as the top U.S. athletic shoe brand in 1986 with sales reaching $1.4 billion. Nike reclaimed the #1 U.S. spot in 1988 as Jordan‘s popularity rose. Globally, Nike passed Reebok in 1990.

adidas

adidas remained the world‘s largest sports shoe brand throughout the 1980s and early 1990s. Nike finally surpassed adidas in worldwide annual sales in 1995, a decade after signing Jordan. Basketball shoes and Jordan cachet played a big part in driving Nike‘s global domination.

China – Game Changer for Nike‘s Growth

Nike leveraged basketball and Jordan Brand‘s appeal to expand into China starting in the 1980s. By 2002, Nike China sales hit $200 million. In recent years, Greater China has become Nike‘s second largest market behind only North America.

Nike‘s Market Value Before MJ – Just $170 Million

When Nike went public in 1979, shares were priced at $22 adjusted for splits and dividends. That gave the company a market value of only $170 million.

For comparison, Nike‘s market cap today is $177 billion – over 1,000 times higher!

Nike‘s 1984 annual revenue sat at $919 million before signing MJ to a 5-year, $12.5 million contract. Jordan‘s deal was monumental for the era, tripling typical NBA sponsor contracts.

But Nike was still just a scrappy $1 billion business aspiring to be a global powerhouse. Signing Michael Jordan turbocharged their path to sportswear supremacy.

Phil Knight on Landing Jordan

Co-founder Phil Knight shared this perspective on signing MJ in a 2016 interview:

"We hoped to sell $3 million of Air Jordans in three years. In year one we sold $130 million."

"There were good reasons not to sign Michael Jordan. But he could fly. And man could he fly. That‘s all I needed to know."

Knight admitted Jordan could easily have been a bust. But betting on the rookie phenom paid off in the form of billions from Air Jordan shoes and apparel.

The Step-by-Step Timeline of Nike‘s Rise

• 1964 – Phil Knight and Bill Bowerman found Blue Ribbon Sports, later renamed Nike in 1971
• 1979 – Nike goes public at a modest $170 million valuation
• 1980 – Nike hits $270 million in sales, with 50% U.S. shoe market share
• 1984 – Pre-Jordan, Nike sales reach $919 million
• 1984 – Nike signs rookie Michael Jordan to 5-year $2.5 million deal
• 1988 – Nike again becomes top U.S. shoe brand over Reebok
• 1990 – Nike overtakes Reebok as top global shoe brand
• 1995 – Nike finally surpasses adidas in worldwide athletic shoe sales
• 1997 – Jordan Brand subsidiary launched

The Air Jordan Effect

In 2022, Jordan Brand alone approached $5 billion in annual sales. Michael Jordan‘s ongoing royalties and equity deal are worth over $1.3 billion.

Air Jordans transformed Nike from promising upstart to absolute world leader. Just don‘t forget Swoosh roots in Phil Knight‘s startup long before MJ came aboard!