Jordan (still) rules

The NBA's greatest player remains its greatest goldmine

The latest sequel in the NBA's most engaging storyline -- call it Michael Jordan: The End III -- is playing out as if written for the Disney Channel. With only days remaining in the 2002-03 regular season, the aged warrior is mustering the last bit of life from his 40-year-old legs in a desperate attempt to lift his mediocre team into the postseason.

Almost everyone concedes Jordan the imprimatur of "Greatest Player to Ever Play the Game," and even Jordan's critics acknowledge that, after an underwhelming 2001-02 season hampered by injury, his controversial return to active duty after a three-year hiatus did not taint his legacy one iota. But as the goodbye tour winds its way through these final days, consider this: Jordan's stint with the Wizards also reaffirmed his status as the "Greatest Cash Cow to Ever Play the Game."

Five years ago, I wrote a story for Fortune magazine titled "The Jordan Effect," in which we calculated the player's financial impact on the overall economy. When our crack team of reporters and finance brains (I just tried to stay out of the way) finally put away their adding machines, it was determined that Jordan, since arriving as another bag-carrying rookie in 1984, had contributed about $10 billion to the global economy. With Jordan preparing to step offstage for the final time (yes, I believe it really is his final exit), I took a whack at updating that figure by determining Jordan's combined economic clout since 1998 and how it was affected by his comeback. Here goes:

I began with revenues generated by Jordan's various Hollywood ventures. Since June 1998, when "The Jordan Effect" was published, Space Jam (released in 1996) has generated an additional $20 million in worldwide box-office receipts and $150 million in video sales. And while he never graced the screen in last year's Like Mike, you have to give Jordan credit for that film's inspiration as well. (After all, it wasn't called Like Kobe.) Add $51.4 million in worldwide box-office revenues for the film, plus an additional $100 million in video sales, most of it earned since last Christmas when a staggering four million Like Mike DVDs and videos were purchased. Subtotal: $321.4 million.

In 1998, Jordan's video Come Fly With Me became the all-time No. 1 video release. Still is, with more than 1 million additional units sold, creating another $20 million for the kitty. Moreover, three years ago the NBA released the Ultimate Jordan DVD, which has since sold 290,000 units for another $7.8 million. Subtotal: $349.2 million.

Michael Jordan to the Max hit IMAX screens in 2000 and, despite the fact that Jordan was in retirement at the time, became the highest grossing sports documentary ever -- with $18.6 million in ticket sales. (It surpassed Hoop Dreams, which pulled in $7.8 million.) Additionally, 360,000 Max DVDs were sold, adding another $7.2 million to the till. That brings us to a subtotal of $375 million.

Now let's explore the outskirts of Jordan's financial magic, where his popularity has transcended sport and driven consumers to embrace products well beyond the athletic arena. Jordan has cut back somewhat on the number of companies with whom he is aligned. But he remains involved with Nike, of course, as well as Quaker Oats, Sara Lee, Hanes, Oakley, Electronic Arts and Upper Deck, to name a few. Subtracting Nike from the equation for a bit, each company typically pays Jordan between $2 million and $5 million annually, and their investments are still paying off. Sales of Jordan's signature cologne, launched in 1996, is still selling so strong (about $200 million since 1998) that Five Star Fragrances, Jordan's partner, plans to launch additional product lines under the Jordan name.

In 1998, we worked with a marketing expert who calculated Jordan's impact on companies' bottom lines as a multiple of his endorsement earnings; the expert -- Harvard Business School professor Stephen Greyser -- arrived at a figure of 1.7. Considering that published estimates note that Jordan earns, conservatively, $35 million annually from endorsements, we can add another $297.5 million. Our new subtotal is $672.5 million, not including shoes and apparel, which I'll get to in a bit.

First, though, let's take a look at Jordan's impact on the Wizards from a simple perspective -- fannies in the seats. When Jordan bought a minority stake and became team president in 1999, the franchise was one of the league's also-rans -- on and off the court. As Jordan watched from a luxury box in the MCI Center during the 2000-01 season, the team drew an average of only 15,577 fans at home (18th in the league). Washington did only slightly better on the road (15,752, 22nd overall). With Jordan back in uniform, attendance predictably soared at home and away from the MCI Center. Over the past two seasons, Washington has drawn an average of 20,423 fans, second in the league. On the road, the Wizards became the league's rock stars, leading all teams in attendance with an average of 19,567 fans. Based on the Wizards' average ticket price and that of the league as a whole, Washington generated nearly $31.8 million in incremental ticket sales during the 2001-02 and 2002-03 seasons. I feel pretty safe in crediting every penny to Jordan. Subtotal: $704.3 million.

Not surprisingly, Jordan's efforts enhanced the value of the Wizards franchise. According to Forbes, which annually tracks the value of sports franchises, the Wizards were worth $214 million in 2001. One year later, the team's value was placed at $278 million, a 30 percent increase in a market where just about everything else tanked. Given that Jordan has not missed a single game this season (he sat out 22 last season) and has his team in the playoff hunt, it doesn't take a Wall Street whiz to determine that the Wizards are worth at least as much as they were last year. Let's offer a modest 10 percent bump to $305.8 million. That's a $92.8 million jump from Jordan's front-office days. Given the historical increase in values for sports franchises in recent years, let's conservatively credit Jordan with 75 percent of the Wizards' financial growth, or $68.9 million. Subtotal: $773.2 million.

Now on to Nike. Out on the West Coast, the sneaker company folks are still savoring their longtime affiliation with His Airness. Under their guidance, "Jordan" has evolved from a basketball sneaker into a global brand with numerous product lines and a symbol (the Jumpman) almost as ubiquitous and emphatic as the company's signature swoosh. "There are very few examples where a company can take a solid brand and extend it into other categories," says industry analyst Brian McGough of Morgan Stanley. "[Nike CEO] Phil Knight may not like this comparison but the only other one I can think of is Barbie." Jordan-branded Nike products are expected to generate $320 million during fiscal year '03 (which ends in May), up 40 percent from FY '02. During the five seasons since the Fortune article was published, Jordan products have accounted for about $1.1 billion in sales.Interestingly, when Jordan retired for the second time, in 1998, sales of Jordan-branded Nike products increased, rather than declined, as many industry experts predicted. If that trend is an indicator, Nike appears in no immediate danger of a significant falloff (if any at all) once Jordan works in suits and ties again. So, calculator out, adding $1.1 billion, our new subtotal: $1.877.3 billion.

Finally, there's the league itself. The NBA derives about 20 percent of its revenues from licensing fees generated by the sale of NBA merchandise, including all "official" caps, jerseys, jackets, decorative plates (you know you have one), etc. To calculate the portion of gross retails sales that should be attributed to Jordan, we tweaked a formula devised by two respected Harvard economists -- Jerry A. Hausman and Gregory K. Leonard. Without boring you (and me) with the sordid details, just know that Hausman and Leonard concluded that Jordan was responsible for 20 percent of sales. Much of that was due the overwhelming popularity of Bulls and Jordan products. Bulls apparel was the league's top seller throughout the 1990s, and Jordan jerseys accounted for nearly a quarter of all those sold during that period. Today, the Wizards rank No. 5 in sales (they were in the bottom third prior to Jordan's return); and M.J.'s No. 23 Wizards jersey is the No. 4 seller overall (behind Allen Iverson, Kobe Bryant and Paul Pierce).

This year the NBA will generate about $2.15 billion in gross retail sales worldwide. I credited Jordan with 15 percent of sales for the last two years, 10 percent for the three prior years. That came out to a mere $1.23 billion.

There you have it. Michael Jordan has contributed an additional $3.1 billion (give or take a few million) to the global economy since 1998, raising The Jordan Effect -- his overall economic impact -- to just over $13 billion.

How long will it last? Hard to tell, though the ripples from Jordan's presence, by all indications, show little sign of falling flat any time soon -- in large part because his comeback allowed another generation of fans, many of whom had never seen him play in person, to witness a glimpse of the legend at work. Back in February, Jordan described himself as the league's "bridge to the next generation." True enough, and he'll be collecting a toll for years to come.

Roy S. Johnson is an assistant managing editor for Sports Illustrated. His "Pass the Word" column appears on SI.com every Friday. Catch Johnson on CNN Headline news every Thursday at 3:40 p.m. ET.

 

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