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AJ Jordan is a subsidiary of Nike. It was established in 2003 and is fully owned by Nike, but 66.6% of the annual profit is attributed to Jordan. Last year, AJ Jordan’s annual sales were 3.9 billion US dollars, and Jordan received only 160 million in dividends. So why did Jordan get so much money?
Jordan signed his first contract with Nike in 1984: $2.5 million over five years!
Many documentaries have introduced this matter. At that time, Converse already had Dr. J, Magic and Bird as endorsements. Jordan wanted to go to Adidas, but Adidas was only willing to offer Jordan an annual salary of 100,000 US dollars and did not guarantee to give Jordan an autograph. Sneakers, Nike finally bid $2.5 million for five years and succeeded. At that time, the highest NBA endorsement contract was Dr. J. $600,000 a year, followed by Magic, Bird and Jordan’s $500,000!
At that time, the top stars of the league were all signed by Converse!
In the first year of Jordan’s endorsement, Nike sales soared from 3.3 million to $126 million!
Nike also set three restrictions on Jordan in the contract. The first is to get the best rookie or to be selected as an All-Star within three years, the second is to average more than 20 points per game within three years, and the third is within three years. Sales exceeded $4 million, resulting in Jordan’s first year of signing Nike‘s annual sales of $126 million!
Of course, in addition to Jordan’s endorsement, the concept of air-cushion shoes first proposed by Nike is also the key to take-off. At that time, Converse was famous for canvas shoes. Until 1984, Converse was still immersed in the idea of “simple cloth shoes”. With the double blow of Air Jordan, Converse’s ruling empire was finally shaken!
Jordan plus Nike air-cushion shoe technology beat Converse!
Jordan’s second contract with Nike in 1988: a lifetime contract with 4.5% Nike shares!
85 years later, Converse, Adidas, Yarid, Intoni and other brands have also launched their own air-cushioned shoes. At the same time, Converse has successively recruited stars such as Spreir, Rodman, and Larry Johnson to try to get it. Nike and Jordan, if Jordan leaves Nike and joins Converse at this time, it is estimated that Nike will fall to the bottom in an instant!
Therefore, in 1988, Nike also tried its best to show its greatest sincerity. The first was to match the lifetime contract offered by Converse, and then it was a 4.5% stake in Nike. Finally, Nike also promised that Jordan’s sneakers will no longer appear in Nike’s shoes. LOGO, and instead of the hook is the Flying Man label specially designed by Nike for Jordan. With these three promises, brands such as Converse can only stay away!
In 2003, Nike separated the Jordan series as a new brand, and Jordan’s 4.5% Nike shares were converted into 66.6% dividend rights for the AJ series!
Jordan’s personality is well known. His biggest hobby is to interfere in areas that he is not good at. After acquiring Nike shares, Jordan often asked his agent Falcao to convey his suggestions, and Jordan often made some inappropriate suggestions at the shareholders’ meeting. Actual thinking, this has had a serious impact on Nike’s business!
When Jordan played, he only occasionally interfered with Nike’s design and operation, and when Jordan retired, this situation intensified, so in 2003, Nike and Jordan reached an agreement: Jordan gave up 4.5% of Nike shares in his hand, and in return Nike separated the AJ series. Become an independent brand, and Jordan will receive 66.6% of the dividend rights of the AJ subsidiary.
The Jordan AJ series is more popular than Nike!
Today, 4.5% of Jordan’s shares can be sold for nearly 10 billion US dollars. In recent years, Jordan’s dividends have increased from 90 million to 110 million, to 130 million, and then to 160 million. Obviously, the AJ series is becoming more and more popular. Rising stars Zion Williamson, Doncic, Tatum and this year’s new champion are all AJ players. In the North American market, the Jordan AJ series has occupied 6% of the share. If this trend continues, Jordan will have a future. It is very likely that the annual dividend will exceed 500 million, so do you think Jordan shares will suffer from the replacement of dividend rights?
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