How Michael Jordan built his $5.5b fortune

Michael Jordan is the greatest basketball player of all time. And the richest.

The National Basketball Association legend’s sale of his stake in the Charlotte Hornets this month cemented his net worth at an estimated $US3.5 billion ($5.5 billion), according to the Bloomberg Billionaires Index, which is calculating his fortune for the first time.

Michael Jordan has a handsome profit after selling his stake in the Charlotte Hornets.Credit: AP

Jordan, who led the Chicago Bulls to six NBA titles and won five MVP awards, is a cultural icon whose likeness, from his silhouette on shoes to his smiling face on $US100 collectible Wheaties boxes, is ubiquitous. The hall-of-fame player became the league’s second black majority owner in 2010 when he bought a controlling stake in the Hornets, then called the Bobcats. But it was a licensing agreement with Nike in the 1980s, when Jordan was still relatively unknown, that formed the foundation of his trailblazing fortune.

The sale of Jordan’s Hornets stake follows a standout 2022 for sports team transactions and affirms the NBA’s status among the world’s most profitable leagues. Its franchises have soared in value in recent years as billionaires have used their vast wealth to become owners. Mat Ishbia, who founded wholesale mortgage lender UWM Holdings Corp., agreed last year to buy more than 50 per cent of the Phoenix Suns in a record deal that valued the club at $US4 billion.

Jordan sold his ownership in the Hornets to a group led by Gabe Plotkin, founder of Melvin Capital Management, and Rick Schnall, co-president of private equity firm Clayton, Dubilier & Rice. As part of the $US3 billion deal, Jordan retains an undisclosed minority stake, according to the team. Bloomberg’s estimate assumes he sold a 65 per cent stake in the team and kept a less than 5 per cent interest.

“Now is the right time for me to hand over the reins,” Jordan, 60, said in an August 3 open letter to Hornets fans.

“I’m excited to see what the future holds, and I look forward to supporting the team and the community in my new role for many years to come.”

A spokesperson for Jordan’s family office declined to comment for this story.

Mum’s advice

Aside from the Hornets, much of Jordan’s wealth stems from his wildly successful Jordan Brand apparel line at Nike, which was the subject of this year’s Ben Affleck-directed film Air. His mother, Deloris Jordan, was integral in securing that deal, Jordan said in The Last Dance docuseries that aired on ESPN and Netflix.

“My mother said, ‘You’re going to go listen. You may not like it, but you’re going to go listen,’” Jordan said in the docuseries.

A pair of Air Jordan 1s, from 1985, that were worn by Michael Jordan. His trailblazing deal with Nike formed the foundation of his fortune.Credit: AP

In 1984, he signed a five-year contract with Nike for $US2.5 million. The first Air Jordan model was introduced soon after.

Last year, Jordan Brand recorded $US5.1 billion in revenue, representing almost 11 per cent of Nike’s total sales, according to company filings.

Thilo Kunkel, director of Temple University’s Sport Industry Research Centre, said there’s “wild speculation” about how much Jordan has earned from Nike. Typically, such deals feature royalties plus bonus-style payments when certain sales thresholds are met.

“If it was its own brand, it would have a pretty decent market cap rivalling some of the Under Armours of the world,” he said. “It’s almost like a luxury sports brand at this point.”

The Bloomberg index calculation estimates that he earned a 5 per cent royalty on Air Jordan’s sales as well as income from endorsement deals and his NBA salary. Nike didn’t respond to requests for comment about Jordan’s earnings.

Like Mike

In recent years, other athletes have pursued their own long-term brand deals with sports apparel lines in the hopes of being “like Mike.” Under Armour Inc. announced in March that it reached a long-term deal with NBA star Steph Curry for his Curry Brand that includes an annual cash payment, incentives, royalties and stock. And NBA star LeBron James built up a roughly $US1.5 billion fortune through sponsorships, investments and his own consumer and entertainment business, the SpringHill Co., according to the index.

Simeon Siegel, an analyst for BMO Capital Markets, said the Jordan brand has “transcended” him as a player. Many of its customers are too young to have even seen him play professional basketball.

“Jordan the person and Jordan the brand have helped shape Nike as well as the entire athletic apparel landscape,” he said.

Then there are the other endorsements. He signed a 10-year, $US13.5 million deal with Gatorade, which resulted in a famous 1991 TV ad called “Be Like Mike.” He’s appeared on Wheaties boxes 19 times, more than any other athlete. In 1991, at the height of his career, the New York Times reported that he was earning between $US15 and $US20 million annually from deals with various brands.

He’s also made bets on other sports-related businesses. In 2020, he launched Nascar’s 23XI Racing, whose roster includes Bubba Wallace, the circuit’s only Black driver. That same year, Jordan was granted an equity interest in DraftKings Inc., where he serves as a ​​special adviser to the board. The size of his stake in the sports-betting company, which started trading publicly in April 2020, is undisclosed.

A spokesperson for DraftKings declined to comment.

Jordan serves as an adviser to Heir Inc, which was co-founded by his son Jeffrey. The company has an app that offers members access to athletes and sports experiences, according to its website.

Michael Jordan won six NBA titles as a member of the Chicago Bulls and is regarded as the greatest basketballer ever.Credit: AP

The earnings he received as a player are nothing to scoff at, either. He was paid more than $US90 million during his career with the Bulls and Washington Wizards, according to Spotrac, which tracks sports contracts.

Charlotte legacy

Jordan, who grew up in Wilmington, North Carolina, said it was a dream to own a team in his home state. He played at the University of North Carolina under legendary coach Dean Smith, who encouraged him to go pro after his junior year. Jordan called his college years the “purest” experience for him as a player.

During The Last Dance, Jordan laughed as he listened to his mom read aloud a letter he wrote in college asking her to send him stamps and put money into his account because he was down to $US20.

Jordan bought his majority stake in the Charlotte Bobcats in 2010 at a $US275 million valuation and later changed their name back to the Hornets. The team didn’t have much success during Jordan’s tenure as majority owner, failing to advance beyond the first round of the playoffs in any season.

Before selling his stake, Jordan took steps to ensure the Hornets remained in Charlotte. In 2022, the city extended the team’s lease through 2045 and agreed to a $US275 million deal that would renovate its uptown arena and help build a new practice facility.

“Although we were not as successful on the court as I — and many of you — would have liked, I am proud of the things that we accomplished as an organisation,” Jordan said in his letter to fans.

Bloomberg

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