TURKS & CAICOS SUN
Page 45
MARCH 8TH - MARCH 15TH, 2014
WORLD NEWS
How Michael Jordan Made $90 Million In 2013 N
ike released the Air Jordan 10 “Powder Blue” retro sneaker on Saturday, 20 years after the first Jordan 10s hit shelves. Like all the Jordan retro releases, this one was highly anticipated and first-day sales hit $35 million. For perspective, in all of 2013, Adidas Adidas sold $40 million in the U.S. of the signature shoes of its top star, Derrick Rose. The Bulls’ current star guard isn’t the only one operating in the shadow of Jordan. Reigning MVP LeBron James is the top seller among current NBA players with $300 million at retail last year for his Nike shoes, according to data tracker SportsOneSource. Jordan crushed those numbers with $2.25 billion in U.S. retail basketball sales in 2013. It has been more than a decade since Michael Jordan last appeared in an NBA uniform, but MJ most certainly has still got it. Jordan made an estimated $90 million last year thanks to the rich partnership he enjoys with Nike. His 2013 earnings eclipsed those of all other retired or current athletes save boxer Floyd Mayweather. It marked Jordan’s biggest earnings year yet in a career paved with monster paydays, which peaked in Jordan’s last season with the Bulls (1997-98) at $80 million. Jordan entered the NBA three decades ago after three years at North Carolina, where he announced himself to the country his freshman year with the game-winning shot in the 1982 National Championship game. Nike saw the marketing potential of Jordan, drafted third overall by the Bulls, and offered him a five-year contract worth $500,000 annually plus royalties. It was a huge sum at the time for a shoe deal, but it was a partnership that would lead both parties to unprecedented heights. Jordan took the court his rookie year in 1984 in a pair of red and black Air Jordans, which matched the Bulls’ uniforms, but did not feature any white per NBA protocol. The league banned the shoes and fined Michael $5,000 every game for wearing them. Nike covered the fines and capitalized on the attention with a commercial with the following voiceover: “On September 15th, Nike created a revolutionary new basketball shoe. On October 18th, the NBA threw them out of the game. Fortunately, the NBA can’t stop you from wearing them.” A marketing juggernaut was born. New Air Jordans followed annually in assorted colors and there have been a myriad of special releases along the way. The retro business makes up about half of the Jordan shoe business today. “Nike has made an art form of unrequited demand,” says SportsOneSource analyst Matt Powell regarding the retro releases. “Making sure that there is supply well below demand keeps things fresh.”
Michael Jordan Retail shoe sales for the Jordan Brand in the U.S. grew 11% last year to $2.7 billion, with basketball making up 84% of that, according to Powell. Roughly 50% to 55% of that goes to Nike. If you factor in sales of Jordan apparel, the international Jordan business and sales at Nike stores, the Jordan brand is contributing roughly $2 billion of revenue to Nike, which posted sales of $26 billion over the last 12 months. Jordan, the man, gets a cut of every shoe, hoodie or pair of shorts sold by Nike under the Jordan Brand. We estimate MJ’s take from Nike was at least $75 million last year. “Given that he is the name that launched the brand, you could argue that he deserves more,” says Phil de Picciotto, founder and president of Octagon. “Jordan is the perfect athlete.” 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%, according to SportsOneSource. Adidas (5.5% market share), Reebok (1.4%) and Under Armour UA +0.13% (0.7%) are still searching for answers to Jordan. The Jordan Brand isn’t sitting still. It opened its first Jordan-specific store, Flight 23, this month in New York City, outside of Madison Square Garden where No. 23 tortured Knicks fans for so many years with moments like this legendary dunk or his double nickel return to MSG. MJ still weighs in on designs of new Jordan shoes and suggests players he thinks would be a good fit for Nike’s Jordan endorsement roster, which counts roughly 20 current NBA players, including All-Stars Carmelo Anthony, Chris Paul and Blake Griffin. The Jordan Brand also taps players outside of basketball like baseball’s Derek Jeter, Nascar’s Denny Hamlin, boxing’s Andre Ward and football’s Andre Johnson.
Outside of Nike, MJ’s earnings get a boost from long-time endorsement partners Gatorade, Hanes, Upper Deck and Five Star Fragrances for his cologne line. He’s also added deals with 2K Sports and Novant Health in recent years. In addition, he owns seven restaurants, a car dealership and his most valuable asset, 80% of the NBA’s Charlotte Bobcats. Jordan used himself as the carrot to help close a Bobcats sponsorship deal with Novant in 2012. Is Michael Jordan still relevant in today’s culture? More than any other athlete if you go by hiphop lyrics — there were references to Jordan in 50 new songs in 2013, according to ESPN The Magazine’s music issue. The next most mentioned athlete was Kobe Bryant at 18, followed by James with 15. Jordan was named the most popular sports figure of 2013 in the ESPN Sports Poll with 4.2% of the vote. Jordan’s Q score, which gauges awareness and popularity, has been tops among sports fans every year since 1991. His 25 million Facebook fans are 43% more than any other U.S. athlete. Jordan’s ownership tenure, first with the Washington Wizards and now with the Bobcats, has been rocky (his motorsports team also shut down last year due to a lack of sponsorship). He has not been able to translate his prowess on the court into the ownership suite in terms of wins and losses. But from a business sense, Jordan might hit another game-winner with his ownership of Charlotte. Jordan became majority owner of the Bobcats in 2010 in a deal that valued the team at just $175 million. Jordan also agreed to put up cash to cover operating losses the team was piling up. But after five straight years of heavy losses, the Bobcats turned an operating profit (earnings before interest, taxes and depreciation) of $7 million last season. The team benefits from the new collective bargaining agreement that reduced the players’ cut of revenues from 57% to 50%. The CBA also tripled the revenue sharing going from the NBA’s haves to have-nots. Charlotte is one of the biggest beneficiaries with revenue sharing that should reach $18 million. NBA teams are also on the verge of a massive cash infusion with new TV deals set to be negotiated this year. The current pacts with ESPN/ABC and TNT are worth $930 million annually and insiders think the next round of agreements will be worth at least twice as much. The value of the Bobcats, which Jordan owns 80% of, was up 30% over the last year to $410 million in Forbes’ latest look at the business of basketball. Mark Cuban thinks every NBA team will be worth $1 billion within 10 years. We estimate Jordan’s current net worth at $750 million. His earnings prowess shows no sign of letting up and should land him a spot on Forbes billionaire list in the coming years.
Brazil in a sweat as 100-day World Cup countdown begins KEY DECISIONS W ith less than 100 days to go before the World Cup starts, Brazil is in the home straight of the countdown and huffing and puffing to complete stadiums, airports, IT networks and public transportation systems. Four of the 12 venues are still not ready and at least two will not be completed until at least April, two months before Brazil meet Croatia in the opening match on June 12. Authorities are also racing against the clock to finish airport terminals and transport systems and to clean up areas around the grounds. Officials at soccer’s ruling body FIFA have expressed concern but can do little more than cross their fingers and hope everything is alright on the night. “I am not a World Cup specialist but I will say this has not been easy for sure,” FIFA secretary general Jerome Valcke told reporters in Zurich at the weekend. “I think things will work well but it is also true that whenever you receive something late it becomes a challenge to make it ready in time.” Valcke, the man charged with organizing the tournament, prompted a diplomatic uproar in 2012 when he
said Brazil needed “a kick up the backside”. President Dilma Rousseff replied by vowing this would be “the World Cup to end all World Cups”, a slogan repeated by FIFA boss Sepp Blatter, but others say there are reasons for skepticism. Two of the completed arenas have already shown signs of wear and tear, with part of the roof at the Mineirao stadium in Belo Horizonte falling off at the weekend. No one was hurt in the incident. “Only when stadiums are completely ready can you train people to work inside them,” said Jose Roberto Bernasconi, president of the National Association of Architectural and Consulting Engineering Companies. “There are stewards, security, plumbers, fire safety officers. When you have 65,000 people inside the ground including kings, presidents, prime ministers, everything has to work. “Remember when Heathrow opened Terminal Five a while back?”, asked Bernasconi of the London airport. “They lost hundreds of bags. “That’s not unusual at the start. These things need to be tested.”
One of the reasons for the late rush is Brazil’s delay in making key decisions. The only country to lift the World Cup five times, Brazil won the right to host the competition in 2007 but took almost two years before deciding the host cities. It also delayed the building of the infrastructure that is vital not just for the World Cup but also necessary if the South American nation is to keep growing. Brazil has grown hugely over the last decade and more than 30 million people have emerged from poverty to move into the consuming classes. However, experts say not enough money has been invested in the infrastructure needed to keep up with that expansion. At least one airport will welcome passengers in canvas tents because new terminals are not ready. Some host cities will declare public holidays on matchdays in a bid to cut down traffic on already congested streets. Five cities abandoned plans to add bus lanes, underground lines or trams and several scaled back their prom-
ised investment while telecommunications networks and media centers can only be added once the stadiums are complete. “We still have to install all the IT solutions for the media,” said Valcke. “Without IT and without the telecommunications in place in the stadium you will say we are the worst organizers and it was the worst event. “To install the IT in a stadium it needs at least 90 days and we have to work for all the people who have an interest.” There is certainly interest from fans. So far 1.5 million tickets have been sold, more than half of them to Brazilians, a record at this stage. Authorities expect three million Brazilians to travel to see games and another 600,000 foreigners to visit during the month-long jamboree. The hosts have exasperated FIFA, with Blatter recently praying to “God, Allah, whoever” to ensure everything is ready in time, and Valcke once again had to put on a brave face this weekend. “It is very last-minute work but it will work in the end,” Valcke said. “You will have what you expect and the teams will have the best.”