Out of sight, out of stock? Product sales will determine Jordan's shelf life in the endorsement arena - Special Report: Michael Jordan retires - Cover Story

Product sales will determine Jordan's shelf life in the endorsement arena.

Fans won't see Michael Jordan flying through the NBA this season and, in all likelihood, they won't be seeing as much of him in Nike, McDonald's, Wheaties or Gatorade commercials, either.

All of Jordan's accomplishments on the court pale in comparison to his superstar status in the endorsement arena, where time is running out now that his playing days are apparently over. Last year, he earned an estimated $32 million a year in endorsements, a number that dwarfs the $3.9 million he would have made playing basketball for the Chicago Bulls this season.

Jordan's retirement was viewed by corporate America as more the loss of a product than of a player. There are dozens of Jordan wannabes on the court, but few - Shaquille O'Neal and Larry Johnson - who will even be able to approach what His Airness did for his business partners.

And now that Jordan has walked away, it is up to Nike, General Foods, Coca-Cola, Gatorade and the other companies Jordan represents to decide whether to do the same. While they all publicly claim their relationships will remain strong, there most definitely are backroom discussions taking place concerning the future of their multimillion-dollar endorsement deals. In plain business talk, if Jordan still sells the product, they'll keep him; if not, he'll have even more time to play golf.

"Michael Jordan did not retire from Nike today," Phil Knight, chief executive officer of Nike, insisted after Jordan's retirement announcement in Chicago last week. Jordan's biggest partner, at an estimated $17 million a year, Nike has indicated it will lessen its advertising exposure of Jordan but will possibly utilize him more for personal appearances and product design.

A much-awaited new line of $140 Air Jordans will hit retail shelves next month, and sales of this shoe will be an early indicator of Jordan's post-retirement endorsement value. Expect some novel advertising angle, similar to what Nike did with Bo Jackson after his hip injury.

Nike sells about $200 million worth of Air Jordans annually but has developed a stable of other NBA stars. "Nike will surely accelerate the selling of Alonzo Mourning to fill in the Jordan gap," predicts Frank Nevins, a partner in Bullseye Sports Marketing Consultants of Cheshire, Conn. Other potential beneficiaries are Reebok, with O'Neal, and Converse, with Larry (Grandmama) Johnson, he adds. "They have to be licking their chops over at Reebok and Converse."

Jordan's other business partners have indicated they will stick with him for now, although most industry observers speculate they will adopt a "wait-and-see" attitude regarding his popularity. Quaker Oats, which signed Jordan to a 10-year contract worth an estimated $18 million in 1991, will continue to urge Gatorade drinkers to "Be Like Mike." And General Mills, whose Wheaties deal with Jordan expires next September, indicates it will stay with him.

It is in future deals that Jordan most likely will feel the pinch, assuming he stays retired. While one could argue that his popularity will climb because he retired on his terms, there also is the out-of-sight, out-of-mind philosophy.

"While in the short term his retirement may actually help sales of Michael Jordan merchandise, there is concern at the retail level that there are going to be a lot of Air Jordan shoes and T-shirts left on the shelves this Christmas," says Tracey Benson, editor of Sports Licensing International, an industry newsletter in New York. "The product is the same, but they won't have their high-profile star on the sports highlights shows every night."

Retailers are concerned about the same thing. "We put up signs in our store that say |Michael, we love you and we'll miss you,'" says Chuck Blatt, owner of the Sports Fever fan shop in Chicago, where replica Jordan jerseys outsell other Bulls jerseys by at least 5 to 1. Blatt says he'll probably raise the prices on the few replica jerseys he has left, since Champion (the official uniform supplier of the NBA) won't be able to make them anymore.

"I think a lot of people felt like it is their last chance to get a piece of him," says Blatt, who believes the Charlotte Hornets will become the biggest NBA product seller, although not at his store.

Not surprisingly, NBA Properties puts a positive spin on the forecast for the sale of its merchandise. The licensing arm of the NBA generates $2.1 billion a year in sales of caps, T-shirts, jackets and video games. While the Bulls have topped the list the past couple of seasons, Jordan, in a highly controversial move last year, took the rights to use his likeness on T-shirts away from NBA Properties and gave it to Nike.

"We went through that divorce a year ago," says Rick Welts, president of NBA Properties. "The Bulls team merchandise is at the top now, but historically the success of the franchises is the key to their sales, not any one player." In other words, whether Bulls merchandise remains No. 1 in stores depends on whether the team remains No. 1 in the standings. "That's a battle that will be played out on the basketball court."

One place Jordan's name will still appear is on the NBA All-Star ballot, which, conveniently, cannot have his name deleted for the 1994 game in February. Jordan will almost certainly be the top vote-getter, and there will be a certain call for a curtain call. Then, his ads may reappear.

But more realistically, the NBA, which recently signed a six-year, $11-billion television deal with NBC and Turner Sports - which provides the league with a slice of the advertising pie should revenue exceed $350 million for Turner and $1 billion for NBC - must face a future without the most recognizable athlete in the world on its sideline. "Immediate revenue streams for the NBA won't be affected because they just signed the television deals, but when that expected advertising revenue parachute doesn't kick in - and there's a good chance it won't now without Jordan - then the NBA will be affected," Nevins says.

Jordan says he retired because he had "nothing left to prove." On the contrary, he now must prove that his popularity can survive his retirement. If it doesn't, he will have plenty of time to drink all the leftover Gatorade.

COPYRIGHT 1993 Sporting News Publishing Co.
COPYRIGHT 2004 Gale Group