A Big Rebound for the Jordan Effect
His Airness is back, and America is thrilled -- especially Corporate America. After months of playing cat-and-mouse with the media, Michael Jordan has decided to lace 'em up one last time. The 38-year-old Chicago Bulls legend, who joined the Washington Wizards front office just more than a year ago, made his comeback to the National Basketball Assn. official last week -- and the billion-dollar empire built around him couldn't be happier.
No company that enjoys a financial association with Jordan will talk dollar details. But even as a retiree, Jordan has remained a Madison Avenue darling. Nike, Gatorade, Hanes, and WorldCom are but a few of the brands still linked with Team Michael, and the endorsement checks continue to roll in.
Jordan, who's in the middle of most of his multiyear contracts, probably won't see an increase in the estimated $37 million he earns annually from endorsements (and he's donating his $1 million salary, the league minimum for a player with his years of experience, to victims of the September 11 terrorist attacks). But His Airness' return to basketball could generate hundreds of millions of dollars for companies associated with him. "Michael has tremendous international appeal," says P.J. Sinopoli, spokeswoman for Gatorade. "He appeals to people of all ethnic backgrounds, all economic backgrounds."
So just how much money has Jordan generated so far? Try $10 billion. That's about the value of all the sneakers and underwear, cologne and sunglasses, tickets and IMAX movies sold by Jordan during his career. And the number is only getting bigger. "He's the superstar of superstars," says economist Gregory Leonard, who co-wrote a lengthy study on the so-called Jordan Effect in 1997.
Leonard predicts a season of sellouts for the Washington Wizards, a surge in attendance across the NBA, and juiced television ratings nationwide. Even Washington itself will get a boost. Jordan is a human tourist attraction who was credited with generating an average of about $600 million a year for the local economy during his tenure in Chicago.
If past is prelude, lots companies will benefit, too. Gatorade, which first signed Jordan in 1991 and created the catchy "Be Like Mike" campaign, has risen to the top of the sports-drink market, with revenues now topping $3 billion a year. The maker of Citrus Cooler and Lemon Lime continued to use Jordan during his retirement -- casting him more as an "ambassador" of sport.
Then there's Nike, by far Jordan's biggest corporate partner. MJ may have five MVP awards and six championship rings, but Jordan's resume should also include transforming the sneaker world into a $2 billion-a-year industry. During his career, fans quickly became accustomed to shelling out $150 for leather and rubber, and they'll be lining up even more now that Comeback Part II is reality. "Nike is the only one you could attribute a direct correlation to because they have the branded products," says Jim Andrews, editorial director of IEG Sponsorship Report, a newsletter that tracks celebrity endorsements. He adds that Jordan's magnetism "has a direct effect on the bottom line."
Even as sneaker companies have drastically scaled back their use of big-money pitchmen, Jordan continues to shine, particularly with the "Jordan" brand, a Nike spin-off. The details of MJ's contract with Nike remain a secret, but estimates are in the $20 million-a-year range. And that's not including royalties, which analysts say can dwarf the base salary, particularly with global sales. "Michael already has the primary role in the brand," says Jordan brand spokeswoman Cheryl McCants, "and that would certainly continue."
SETBACK FOR NEW STARS?
The NBA also looks forward to having No. 23 playing again, but Jordan's comeback puts Commissioner David Stern in a tough position. With the success of players like Philadelphia 76er Allen Iverson and Los Angeles Laker Shaquille O'Neal, last season was the first since Jordan's retirement that the NBA took off the training wheels and finally established a new identity with a new set of superstars. "For years they've been trying to find the next marquee player," says Kurt Hunzeker, editor of Team Marketing Report, a Chicago-based industry newsletter. "What they've developed over the past few years...could be set back."
The NBA could use a shot in the arm, however. TV ratings of the NBA Finals -- an important indicator of the league's vitality -- plummeted after Jordan retired. During the 1998 Finals, Jordan's last year, each game drew an average of 29 million viewers, according to Nielsen Media Research. The following year, the number fell to 16 million. The audience crept up to 19 million last year as the Lakers battled the 76ers, but that's still nowhere near Jordan-era numbers.
Now, says Kevin Sullivan, spokesman for NBC Sports, which carries the finals and other games throughout the year, "in all likelihood ratings will go up," even if the Wizards don't make the playoffs. NBC is entering the fourth and final year of its NBA contract and should ink a new deal in the coming months. "He's a lighting rod kind of guy," says Sullivan.
AOL, OR CONGRESS.
The Wizards, a perennial NBA laughingstock, are seeing Jordan-mania at the ticket window. Already, the team has sold 14,000 season tickets at the 20,000-seat MCI Center. The phenomenon is spreading slowly across the country. With single-game tickets being snapped up, even the most hapless teams probably won't have an empty seat in the house when the Wizards come to town.
What sort of new endorsement deals are in the offing? Most analysts agree that Jordan has moved beyond 30-second commercial spots. Any new deals would likely involve Jordan having a hand in how corporations present their brands using his marquee name.
The most logical option: AOL Time Warner. It's based in nearby Dulles, Va., and Jordan is tight with Wizards minority owner Ted Leonsis, the AOL bigwig who first lured him to Washington. Some even speculate that Jordan might run for Congress from the suburban Virginia region or from his native North Carolina.
FEAR OF FAILURE.
There's one big risk, of course. What if His Airness turns out to be, well, deflated after so many years on the sidelines? At 38, his days of dunking the ball from the free throw line are long gone, and his popularity could suffer if he can't keep up with younger, quicker opponents.
And don't forget, he's returning to a team of also-rans that could struggle to make the playoffs, even with Jordan wearing their colors. "Look, there is always the chance that he will fail here," says Marty Brockstein, editor of the New York-based Licensing Letter. But even an average Jordan could turn out to be wildly popular. One thing is for sure, though: Many of the nation's CEOs will be pulling for him as much as the fans.
By Rod Kurtz in Philadelphia
Edited by Thane Peterson