Rare Air: How sport’s most famous endorsement deal took flight

Teenager Arthur Agee sits on the bed in his room in his home in suburban Chicago, reaches over and picks up his pair of basketball shoes. It’s 1988. On the sides and backs of his battered sneakers, the teenager has written in black capital letters “TUSS”, the nickname of his idol, Isiah Thomas, a star with NBA team the Detroit Pistons.

“I drew on these with my name,” says Agee, one of the subjects of the 1994 documentary Hoop Dreams, which charts his unsuccessful five-year campaign to transform from high-school basketball phenomenon to NBA star.

“I had heard that his [Thomas’s] nickname used to be Tuss, and I just started calling myself Tuss – ‘Hey, Tuss’,” he chuckles.

It was, and continues to be, every basketball hopeful’s hoop dream – to be such a bright star in the basketball galaxy that your name is embossed on the side of a shoe.

But where did it all start? How can it be that LeBron James was signed to a seven-year, $US90 million sportswear deal with Nike when he was just an 18-year-old high-school student? How did a signature footwear range become the sign that you could be known by a one-word moniker: LeBron, Kobe or Michael?

At the 1984 LA Olympics, Michael Jordan announced himself to the world. In the same year, after a stellar college career, the Chicago Bulls selected him at No.3 in the NBA draft. He had the game, he had the team, now he needed the deal.

The agent

Enter David Falk, the man who would become the most powerful player agent in basketball. As Jordan’s representative, Falk decided early on that Jordan was a rare talent, a combination of charisma and skill that could transcend the world of sport.

At the time, basketballers were identified as team players, not individual stars, and Falk wanted to break that mould.

“I thought that Michael had the total package, he was an electrifying player – no one had any idea at the time that he would become the greatest player in the history of the game – but I thought he’d be extremely exciting, he had great personality, and I thought he’d be highly marketable,” says Falk.

Falk also wanted the spotlight on his client as an individual talent, as he was wary of Jordan’s reputation being tainted by the under-performing Chicago Bulls.

“He was drafted by a Chicago team that played in front of crowds of 6000; they hadn’t won a lot of games,” says Falk. “It wasn’t like they were the [LA] Lakers or the [Boston] Celtics in a team stocked with future Hall of Famers. I also felt that he had the talent to dramatically distinguish himself as a rookie from the first moment that he stepped on the court.”

Now Falk had to find the company that could deliver on his plan. Adidas and Converse were the two main players in the basketball-shoe industry overshadowing Nike, which had been co-founded 20 years before by Phil Knight. “[Today], [Nike] are Goliath, in 1984 they were David,” says Falk. “Nike were this little entrepreneurial upstart, and I felt they needed a flagship individual to compete with Converse and Adidas.”

Falk organised a meeting with Nike’s head of basketball, Rob Strasser, and its designer, Peter Moore. Falk was pitching his idea of using Jordan as the champion of a brand created specially around his client when he came up with the name that was to change the athletic footwear industry forever.

Says Moore, “We were sitting in [Falk’s] office in August of 1984 with no airconditioning, talking about the idea of putting [Jordan] in an Air basketball shoe, and David said it would be great to call him Air Jordan. Rob immediately responded favourably. I was hesitant because of the airline, Royal Jordanian, but was convinced pretty easily.”

Moore says work began immediately following the meeting. “After our Washington, DC meeting with Falk, it was clear we were going to do the deal. Rob and I are sitting next to each other [on the return flight] and he tells me, ‘We need a logo’ and ‘We need a shoe’ and ‘We need this and that’, and ‘If possible, we need it before we land in Portland.’ Well, we didn’t get the shoe, but we did get the logo, and the idea of putting colour on the shoes to make him stand out.

“So the logo was first drawn on a United Airlines cocktail napkin. The idea of the winged Jordan logo was simply the name Air Jordan. I borrowed the winged idea from the various airline captains’ uniforms and the US Air Force’s various squadron badges. The basketball became the centrepiece, as opposed to the globe, and the banner carried the name.”

The deal

Now Nike and Falk had to convince Jordan, who wanted to do a deal with Adidas, that Phil Knight’s company was the right fit.

A meeting was organised at Nike’s Oregon headquarters in September 1984, and Jordan and his parents, James and Deloris, were flown in.

They screened a video presentation of Jordan’s college highlights with the Pointer Sisters song Jump as the soundtrack, and then ended it with the proposed logo – “Air Jordan, Basketball by Nike” – on the screen.

Falk, who said Jordan’s parents had to “literally force” Michael onto the Oregon flight, was dismayed to see that his client was bored and distracted during the presentation.

“I saw his demeanour at the meeting and I thought, ‘Oh boy, here we go, this one’s out the window. He’s not into it.’ ”

But he later realised the 21-year-old Jordan was putting on his “business face”. When he finally decided to ask Jordan what he thought of the presentation, hours later after they had had dinner, Jordan said, “I don’t want to see anybody else.”

Falk went ahead and did the deal – within 30 days he had negotiated for Nike to pay Jordan $US2.5 million over five years, plus a percentage from every pair of Air Jordans sold. The amount was unheard of at the time and Fortune magazine derided Nike for signing a rookie for such an exorbitant amount.

“No basketball player had ever signed a contract like that before,” says Matt Powell, a Forbes columnist and sports-business analyst for industry news site SportsOneSource. “People thought Nike was crazy.”

But Falk disagrees: “I never felt that [that Nike overpaid]. I thought it was a fair deal. [It was] absolutely the best money they ever spent. In hindsight, if you’d have known in 1984 that a team-sport athlete could eclipse his team at the level that Michael did, you would have made the deal for $1 a year and 50-50 on royalties.”

Powell agrees on that point. “From Jordan’s point of view, his contract allowed for royalties to be paid for each shoe sold, so he had real skin in the game to make the shoes successful. Nike needed a real home-run success, as the company was in a rocky financial position. Together they made history.”

The controversy

In the 1980s, basketball shoes were basically white, with the only colour being the company logo. Moore wanted to change the game and decided to introduce bold colour ranges into the Air Jordans, with one combination being the black, red and white colours of the Chicago Bulls – a plan that originally shocked Jordan.

Says Moore, “[When] Michael first saw the red, black and white shoes, he said he ‘could not wear the devil’s colours’. I explained to him that they were his new team’s colour scheme and I could not change that. He wanted [North] Carolina baby-blue shoes, [the colour of the team] where he went to college … a total 180 from the Bulls’ colours … but [he] soon became comfortable with red, black and white.”

After convincing Jordan, they ran into another roadblock – this one from NBA commissioner David Stern. The NBA had a strict uniform policy, and Stern banned the shoe because it didn’t comply with the league’s rule on coloured footwear.

He told Nike that Jordan would be fined $5000 each time he wore them on court.

Moore takes up the story: “Because there was so little time to get the shoes done, several steps were overlooked or ignored. Michael wears the shoes in the first exhibition game that year in New York against the Knicks and David Stern is there. During the warm-ups, the kids are all coming down on the floor wanting to get a look at the crazy shoes Michael is wearing, and they are all going crazy over what they see.

“The next day, Stern calls Rob to tell him he’s banning the shoes for not meeting the ‘uniform standard’. These shoes are already on their way to the warehouse.”

Nike, in a move that was to become its trademark, exploited the controversy to its advantage. “Rob [after being encouraged by Falk] has the advertising agency get a TV spot ready for the banned shoes,” Moore continues. “They send a storyboard and I fly to San Francisco to be at the shooting. I meet Michael, who is there to play a game; I pick him up from practice and we go to the studio, shoot the spot and then, instead of having dinner, we go bowling.

“The spot is simply him standing there dribbling a ball wearing the banned shoes and then two black bars come across the shoes like when they show criminals. The voiceover says something like: ‘The NBA banned these shoes but they can’t stop you from buying them.’ We sold every pair of those banned shoes in a record amount of time. Thank you, David Stern.”

And the kicker? “As Rob is leaving David Stern’s office after being told the shoe is banned, Stern tells him that his son thinks he [Stern] is a bad guy for banning the shoes and could Rob please send him a pair. Crazy. The banned shoe didn’t hurt anything, it simply ignited the whole program.”

Falk says, “I never anticipated that they would ban the shoe. We didn’t design the shoe with the intent that it would be banned. We designed the shoe with the intent that it would be sold.”

And sell it did – at $65 a pair. Not only to basketballers but also to teens, who were attracted by Nike’s renegade attitude and who transformed the Air Jordans into coveted streetwear.

“That was our dream,” says Falk. “You can’t say we anticipated it and that it would sell $1 billion worth of shoes, and anyone who says they anticipated that is just lying. We hoped that, because of Michael’s personality and the impact he would have in Chicago, it would sell well. Nobody dreamed that it would sell that well.”

Moore says, “The goal was to create a shoe that high-school kids would wear to play the sport and would look good with jeans … With the Jordans you would stand out, and that first year a lot of kids stood out because of the colour. It was designed first to answer Michael’s desire to have a mid-cut shoe that was as low to the ground as possible, and second to have him and that shoe stand out.”

The Air Jordan went on sale on April 1, 1985, in Los Angeles, Chicago, Philadelphia, North Carolina and Lexington. Nike’s hope was to sell 100,000 pairs – after the immediate success, they increased that projection to more than three million.

“Nike’s expectation was that they hoped, if the line was successful, that they would generate $3 million of sales between the third or fourth year – they generated $130 million in the first year,” says Falk. Nike CEO Phil Knight said, “I can say that the Michael Jordan endorsement is the most successful endorsement in the history of the sporting-goods industry.”

A product for the time, a brilliant athlete to endorse it, unique marketing and a slice of luck all played a role in the success of Air Jordan 1. “Anybody that says they had a vision that this would turn into what it’s turned into, I would not believe,” says Moore. “Think about it. It’s 1985, Beaverton, Oregon, and there is this small sports-shoe company trying to make something of themselves by putting a guy in coloured basketball shoes.

“Does that sound like a scheme to change the world? The fact is we were driving as fast as we could and reasonably blind doing it.

“If that [were to happen] now, market research, accountants, investor-relations experts would all stop such an idea. Nike was a Wild West show in those days, so there was no second-guessing. If it sounded like a good idea and you could convince a couple of people, then go for it.

“I will say that Mr Knight was not all that thrilled with the idea. But he had a lot of unspoken confidence in Rob Strasser … so he let it happen.”

Falk’s deal with Nike revolutionised how player agents negotiated endorsements – and the expectations athletes had about what their agents would deliver. However, as Falk points out, all those plans and schemes lack one vital ingredient.

“It’s become the blueprint for the next 25 years of all the deals that people have made – but people are searching for the next Jordan and there will never be another Jordan,” says Falk.

And Arthur Agee? Hoop Dreams brought him fame, and he helps American school children through the Arthur Agee Foundation and a life-skills program. In 2006, he announced he was going to produce sportswear under the label of Hoop Dreams – Control Your Destiny.

More than 20 years after that scene was filmed in his bedroom, Arthur’s still trying to get his name on a pair of sneakers.

AIR is being screen in Australian cinemas from April 5.

This article originally appeared in the September 2010 edition of Sport&Style magazine.