Sports

Why Nike Is Desperate to Keep Michael Jordan’s Sponsorship Money Secret

Nike is forced to hand over one of the most lucrative and secret contracts in sports

FRANCE-US-BASKETBALL-JORDAN
Photographer: Patrick Kovarik/AFP via Getty Images

Michael Jordan would like you to know just how powerful he remains as a product pitchman. Nike, Gatorade, Hanes, and the retired basketball star’s other corporate teammates would prefer you didn’t.

An unusual intersquad drama is unfolding this week in a Chicago federal courtroom as Jordan, now 52, tries to wrest a $10 million payment from Safeway for using his name without permission in a 2009 promotion by the company’s now defunct Dominick’s Finer Foods grocery store brand1. His argument: Every time the name “Michael Jordan” is used to market anything, it commands a hefty price. Jordan’s attorneys are trying to show just how much a typical company pays for the use of his name. His corporate sponsors, meanwhile, are fighting to keep his contracts sealed.

Team Jordan has so far sketched the financials in broad strokes. Jordan made more than $100 million in sponsorships last year, according to his lawyers, and about $536.6 million from 2000 to 2012. Here’s the breakdown shown to jurors on Wednesday morning:

The defense team is pushing for more details. At the heart of the friction is Jordan’s 42-page agreement with Nike, a document that Gary Way, the company’s global counsel, has described to the court as “one of the most competitively valuable documents in the industry.” Way is one of only three Nike employees who has access to the document, which is kept under lock and key in a room separate from all of Nike’s other legal filings, in Beaverton, Ore. The agreement details, among other things:

  • The amount Nike pays all of the athletes under the Jordan brand umbrella, a roster that includes Blake Griffin, Carmelo Anthony, and Derek Jeter
  • Jordan’s authority to select athletes for endorsement contracts
  • Precisely how Nike and Jordan share revenue and expenses

Not only would the document give its competitors an edge, Way argued, it would also harm Nike’s relationships with its sponsored athletes. Ultimately, Nike lost its bid to keep the unredacted contract out of the proceedings. “This is the United States of America. We have public trials here,” Judge John Blakely told Nike attorneys in a June 30 hearing. “That’s how that rolls.”

The sneaker empire, meanwhile, is joined by a host of other companies in its fight for secrecy. PepsiCo’s Gatorade; HanesBrands; trading-card maker Upper Deck; and Take-Two Interactive, the company behind the NBA 2K video game series; have all filed to intervene in the case to try to keep the details of their Jordan agreements under wraps.

Nike’s legal team has said that Safeway’s push to bring the contracts into the public eye was a strategy to wrest a settlement from Jordan. Maybe so, but the former Chicago Bulls star charged into court regardless of what his corporate backers may have advised. Opening statements happened on Wednesday, and the trial is expected to last until Aug. 20.

Judge Blakely has agreed to keep the Jordan contracts close to his chest, releasing details requested by the defense on a line-by-line basis and only if he deems them germane to the case. “You’ve got to show me a reason why this particular term means something,” he told the Safeway attorneys.

What’s already clear is that Jordan still has a killer marketing game. An average of $40 million a year from Nike alone is a tremendous figure. In his most lucrative year as an athlete, Jordan made a salary of $33.1 million from the Bulls. LeBron James is estimated to make about $20 million a year from his Swoosh sneaker deal. Nike has never said whether that figure is accurate—although we may well find out in the next few days.

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  1. 1 The contested ad, which ran in Sports Illustrated, congratulated Jordan on making the Basketball Hall of Fame, while offering a $2-off coupon for steak. It read: “You are a cut above.” Only two of the coupons were redeemed.