CNBC special report: Swoosh! Inside Nike

Darren Rovell Sports Business Reporter • Profile

It was everything you'd expect of a movie premiere. But this premiere was for a shoe — the latest offering from footwear giant Nike. With flashbulbs popping, actor Michael Rapaport and rapper Warren G joined Denver Nuggets star Carmelo Anthony late last year at a Beverly Hills Jaguar dealership to launch Carmelo's latest shoe, the Air Jordan Melo 4.

Nike has this business of buzz down to a science. That’s not surprising from what may be the most successful marketing machine in history. It’s a juggernaut that began with Nike’s signature Air Jordan and continued for 23 more versions — a shoe that has become a part of basketball legend Michael Jordan’s legacy.

“It’s something that represented my name,” Jordan told CNBC. “And what I did to the game of basketball that has continually transcended over time.”

It’s no wonder that Nike named a building after Jordan. In 2007, the Jordan brand, now a separate Nike subsidiary with its own building, grossed about $800 million. That’s just $100 million less than the entire company was pulling in when they signed Jordan 23 years earlier.

No one knows just how much Jordan did for Nike better than Nike founder Phil Knight, who talked to CNBC in a rare interview.

“Jordan was huge and still is," said Knight. "He became, ultimately, probably the greatest basketball player of all time. And set the tone for what became, not just a great endorsement, but has now become a brand.”

Michael Jordan's last game was in 2003, but sales of his brand keep growing.

“Brand Jordan today sells about twice as much product around the world as when he was playing,” said Knight.

Video   Phil Knight on Nike's Launch Feb. 10 - Nike founder and CEO Phil Knight talked to CNBC's Darren Rovell about the how he launched one of the world's most successful marketing machines. CNBC

It almost didn’t happen. When Jordan left the University of North Carolina in 1984, he was leaning heavily towards signing with Nike’s archrival Adidas.

“The thing is, I never wore Nike shoes until I signed that Nike contract,” said Jordan. “All through college we wore Converse. And up to that point, my favorite shoe was an Adidas shoe.”

It was Nike’s basketball talent scout, Sonny Vaccaro, who convinced insiders that they should spend everything they had.

“I said, ‘Well, what do we have?’” Vacarro said. “And (they said) ‘We have about $500,000 to spend.’ And I said, ‘Well, give all to the kid. Give it all to Jordan.’ And they said, ‘Well, we don’t have to give all of it, we’ll give...’ I said, “No, if it takes giving him all, give it to Michael Jordan.’”

So Nike made the half-million-dollar bet. At the time, it was an unheard of price for an endorsement deal, especially for someone who had yet to play a minute in the NBA.

“We knew it would be good,” said Vacarro. “We paid him the most money we could afford. And we overpaid, according to other companies, for someone who wasn’t a proven commodity. But to Nike’s credit they did the right thing, and it caught fire, and this kid caught fire. And this sucker was good.”

Nike also offered Jordan his own signature shoe line, a promise that rival Adidas wouldn’t match.

“They didn’t feel it was worth it,” said Jordan. “Which in hindsight is perfect for me, because it made my decision much easier. And I ended up with Nike, and it became a great relationship.”

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