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This week Nike announced a lifetime partnership with NBA superstar LeBron James that will pay him about $30 million a year. Or more. The exact details of the deal remain “private,” insofar as anything involving LeBron James is private. Maybe it’s $40 million a year. Maybe it’s all the millions.
Anyway, the deal is big enough to make one wonder whether LeBron is the next Michael, as in Jordan. As in Air Jordan. As in Nike named a building on the company campus after him. Air Jordan started with sneakers. Now you can buy Air Jordan onesies.
He’s a monopolist. There’s only one Michael Jordan in the world. And monopolists make their hay by limiting the supply of their output and charging a higher price for it.Andrew Zimbalist, professor of economics at Smith College
Marc Ganis, who heads a Chicago-based firm called SportsCorp., doesn’t necessarily think Nike can do it again.
"I don’t believe that Nike feels they can replicate the magic of the Air Jordan brand," he said. "It is such an important brand, in and of itself, that has been cultivated and managed so well, that it is no longer dependent on Michael doing appearances, commercials or other similar activities in order to support it."
According to Ganis, if “Air Jordan” were to split from Nike, it would be the third-largest business in the sporting goods world, behind only Nike itself and Adidas.
Andrew Zimbalist, professor of economics at Smith College and author of several works on the economics of sports, feels Michael Jordan’s rise to that level of popularity and commercial power is not hard to explain.
"He’s a monopolist. There’s only one Michael Jordan in the world," Zimbalist said. "And monopolists make their hay by limiting the supply of their output and charging a higher price for it. And that’s been the fundamental strategy. He and his handlers have been very selective. And they’ve also been selective in terms of the image that is portrayed by his endorsement of these products."
Jordan protected that image most famously — or infamously — in 1990. He was asked to support Democratic Senate candidate Harvey Gantt over Republican Jesse Helms. Jordan may or may not have actually said, “Republicans buy sneakers, too,” but he did not endorse Gantt.
"It was a very good idea not to, if you were trying to build a brand and a business, up until the current social media age," Ganis said. "Now it’s a little different. Now, because some of these things have gone mainstream, it’s a lot easier for athletes to take positions like LeBron has taken. In fact, in some cases, it’s expected."
Given the scale of the deal announced this week, which pays James at least $7 million a year more than he makes playing basketball, it’s a cinch he will have the security to endorse whomever he wants to endorse and support whatever cause he chooses to support. But will his name, his sneaker, his brand ever approach the glittering brilliance of Brand Jordan? You’ll recall that Marc Ganis doesn’t think so. Neither does Andrew Zimbalist.
"He’s not going to be worth to Nike what Michael Jordan has been worth," Zimbalist said. "He’s not the same level of talent. He’s not the same type of personality that Michael Jordan has been, and is still, but he’s going to be worth hundreds of millions of dollars to Nike."
Which is, after all, the point.
This segment aired on December 12, 2015.
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