Why are Nike Air Jordans so expensive? 😱 The truth about Air Jordans | Sahil Verma

You must remember this meme, "These shoes are $8,000. Your house will go for $80,000 in this." People made a lot of fun of this video. But do you know, the shoes MC Stan was talking about were actually worth $80,000. The name of these shoes is Air Jordan.

In February 2024, six Air Jordan sneakers were auctioned, and these shoes sold for $8 million, which is approximately ₹67 crore. And this wasn't the first time. Last year, in April 2023, Air Jordan 13 was auctioned, and these shoes sold for $2.2 million, which is approximately ₹18 crore. The most surprising thing is that despite being so expensive, these shoes go out of stock in a matter of seconds. Why is this so? Why do these shoes sell for so much? Why are people crazy about them? And why did the National Basketball Association ban these shoes?

The Secret to Air Jordan's Success

In 2020, when the world was grappling with the COVID pandemic, sales in every category of the sports sector plummeted. But Air Jordan achieved approximately 20% growth even during that difficult time, generating $3.7 billion in revenue for Nike. What exactly is the secret to its success?

Most people probably think the quality must be excellent. No doubt, the highest quality materials are used to make these sneakers, and their designs are also quite innovative. But are they really so expensive that a pair of shoes costs millions? Absolutely not. In reality, what makes these sneakers so expensive is the legacy of Air Jordan. And this legacy wasn't built in a few days; rather, it's the result of years of hard work, planning, and numerous strategies.

Key Points

• Air Jordan's legacy and brand value are what make them so expensive.
• The contract between Michael Jordan and Nike proved to be a game-changer in the basketball and sneaker industry.
• Nike used the NBA's ban of Air Jordan 1 as a marketing opportunity.
• The demand and price of these shoes increased due to sneaker culture and sneakerheads.
• Air Jordan 3 played a crucial role in keeping Michael Jordan with Nike.

The Beginning of Air Jordan: The 1980s

The story of Air Jordan begins in 1980, when Adidas and Converse dominated the basketball scene in America. All the popular basketball players of that era, such as Larry Bird, Magic Johnson, and Kareem Abdul-Jabbar, wore signature shoes from these two brands. In basketball, signature shoes mean making that player a brand ambassador, because during the game, the player wears shoes of that brand, and the company pays them.

As basketball was one of the most popular sports in America, every sports shoe manufacturing company wanted to enter this field. In the 80s, Adidas and Converse were already established brands, while Nike was new to the field and looking for a star player.

The Union of Michael Jordan and Nike

At that time, even Michael Jordan, one of the greatest legends in basketball history, hadn't yet made a significant name for himself. But Nike's marketing executive, Sonny Vaccaro, had seen Jordan play basketball in college and understood that Jordan was going to be the next star of the game.

In 1984, when Jordan was selected for the NBA, Sonny wanted to offer Jordan a contract with Nike. It was a risky decision because Jordan wasn't a big player at the time and hadn't played any professional games. But Sonny somehow convinced Nike management to work with Jordan.

However, Jordan still needed convincing. Jordan was a fan of Adidas and wanted his first contract to be with Adidas. But Adidas had lost its founder, Adolf Dassler, a few years earlier, and the company was going through a tough period. Additionally, Adidas management wanted to deal with a taller player than Jordan, so they didn't give Jordan a serious offer.

After Adidas, Jordan had the option of Converse, as he had used Converse shoes throughout his career. Converse did offer Jordan a deal, but he didn't like it. Jordan wanted Converse to create a new range of shoes for him and involve him in the design and innovation process. However, Converse was already working with star players like Larry Bird and Magic Johnson, so they couldn't give a new player like Jordan that much attention. As a result, Jordan also rejected Converse's offer.

Meanwhile, Nike was repeatedly approaching Jordan, but he was ignoring them because he had no interest in a new company like Nike. Finally, Jordan's mother convinced him to at least listen to Nike's offer once.

Historic Contract and Air Jordan 1

At that time, neither Jordan nor Nike had any idea how much history they were about to make in that meeting. Nike offered Michael Jordan a 5-year contract for $2.5 million and a 25% royalty on every shoe, which was the biggest shoe contract in the NBA at the time. The surprising thing was that such a large contract was being offered not to a famous star player, but to a new player who hadn't even played a single NBA game yet.

What Jordan liked most about this offer was that Nike was completely open to his suggestions, meaning he could also be involved in the design and innovation of the shoes. Therefore, he immediately signed the contract. And thus began the legacy that continues to this day.

Nike was taking a huge risk on Jordan, so they also had some conditions. The condition was that within his first three years in the NBA, Jordan had to achieve one of these three accomplishments: Rookie of the Year Award, All-Star Award, or maintain an average of 20 points per game in an NBA season. If Jordan failed to achieve any of these, the contract would be terminated. All the pressure was on Michael Jordan.

With these conditions, work began on making the shoes, and this new lineup of shoes was named 'Air Jordan'. 'Air' because Nike would compress and fill air into the soles of its shoes, making them feel very lightweight and increasing their cushioning. Nike had named this the 'Air Sole'.

After several experiments, Nike launched its first Air Jordan shoe in early 1985, which was named Air Jordan 1. It was completely different from other basketball shoes of that era. At that time, almost all basketball shoes were entirely white, but Air Jordan 1 was made with a black and red combination, which drew everyone's attention to it.

NBA Ban and Nike's Marketing

Everything was going according to plan, but then a big problem arose for Nike. Not only fans but also the NBA authorities noticed these shoes. The NBA banned Air Jordan 1 as soon as it was launched. At that time, the NBA rule was that all shoes must have at least 51% white colour, whereas Air Jordan 1 only used 23% white colour.

The banning of Air Jordan's very first shoe was a major setback for Nike. But Nike saw this ban as an opportunity. They knew that people really liked Air Jordan 1, so they used the news of the ban for publicity. They created a commercial that conveyed the message that even if the NBA bans these shoes, it cannot stop you from wearing them. Because of this campaign, Air Jordan 1 became popular as 'The Banned One'.

Furthermore, Nike asked Michael Jordan to wear these very shoes in every match. Although, this incurred a $5000 fine for Michael Jordan in every game, which Nike was paying without any issues. The publicity they were getting from this controversy made $5000 seem like nothing.

The truth was that Air Jordan 1 was not actually banned; it was only incurring a penalty, and Nike had deliberately spread the rumour of a ban through its commercial.

Michael Jordan's Stellar Performance and Air Jordan Sales

The gamble Nike took on Michael Jordan also paid off completely in their favour. Michael Jordan achieved all three of the accomplishments that Nike had set as a condition in the contract within his very first season. In his debut NBA season, Michael Jordan captivated millions of people.

As a result, within just 6 weeks of its launch, Nike had sold 1.5 million pairs of Air Jordan 1. Their target was to earn only $3 million in the first 3 years, but Air Jordan 1 became so popular among people that its sales crossed $126 million within a year. This was such a massive success that Nike had never even imagined it.

Sneaker Culture and Air Jordan's Design

The success of these shoes wasn't solely due to Michael Jordan or Nike's marketing strategy; the fantastic design of Air Jordan shoes was also a major reason for its triumph. During the late 70s, hip-hop culture began in America, and funky sneakers became an essential part of hip-hop artists' style. Their fans also started wearing sneakers, and thus a sneaker culture began in America, where these people were known as 'sneakerheads'.

These people didn't just buy sneakers to wear them; they also built collections, much like enthusiasts collect cars and bikes. Sneakerheads were always eager to buy new sneakers, and as soon as a new sneaker launched in the market, they would immediately buy multiple units and sell them to other sneakerheads at exorbitant prices. Because of them, the price of these shoes would increase by 100 to 1000 times. This sneaker culture has now reached India as well.

Nike knew that if they wanted to achieve something big in this space, they had to win the hearts of sneakerheads. Therefore, when they prepared the Air Jordan lineup, they focused not only on the performance of their shoes but also on their looks. When Air Jordan 1 was launched, sneakerheads were captivated by its design and appearance.

The Failure of Air Jordan 2 and the Rise of Air Jordan 3

But Nike's success didn't last long because the second shoe in the Air Jordan lineup, Air Jordan 2, failed miserably. It even reached a point where Michael Jordan was about to terminate his contract with Nike because of Air Jordan 2.

After the massive success of Air Jordan 1, Nike was under pressure for their next sneaker to be even better. Therefore, Nike chose two of its best designers, Peter Moore and Bruce Kilgore, to design this shoe. Peter Moore had designed Air Jordan 1, and Bruce Kilgore had designed Air Force 1, which were Nike's best-selling shoes at the time.

While designing Air Jordan 2, Peter Moore and Bruce Kilgore had only one thing in mind: to create a shoe that was performance-based, but also looked so splendid and luxurious that people could wear it with a three-piece suit. After months of hard work, they prepared this shoe.

At its launch in 1986, Air Jordan 2 was liked by many people, but more people disliked it, including Michael Jordan. The Nike logo was not clearly used in this shoe, which was surprising. Additionally, in an effort to improve quality, its production was done in Italy, which significantly increased the shoe's production cost, and it was launched at a retail price of $100, which was a very large sum at the time (Air Jordan 1's retail price was $65).

The company didn't suffer significant losses due to Air Jordan 2, but it wasn't as successful as Air Jordan 1. According to Michael Jordan, it was quite heavy, and he was also disappointed that his advice was not valued in the design of Air Jordan 2. Therefore, after completing his 5-year contract in 1989, he had decided to leave Nike.

This would have caused Nike a great deal of loss. Therefore, the company first removed Peter Moore and Bruce Kilgore from designing Air Jordan and brought in a young designer, Tinker Hatfield, who was tasked with designing Air Jordan 3.

After several months of hard work, this shoe was ready and shown to Michael Jordan. Tinker himself flew to California, and as expected, the first glimpse of this shoe won Michael Jordan's heart, as all his requirements had been taken into account during its creation. According to Michael's requirements, the shoe's weight was kept low, and it was a mid-top shoe. Additionally, Air Jordan 3 was the first sneaker to feature the iconic Jumpman logo of the Jordan brand.

Air Jordan 3 proved to be a life-saver for Nike. It completely changed Michael Jordan's intention of leaving Nike, and it was also very popular among sneakerheads. After this success, Nike and Michael Jordan created a legacy for which people are always willing to pay exorbitant prices.

The most special thing about Air Jordan is that no matter how much the market fluctuates, they never reduce the price of their shoes nor do they ever offer discounts. This is why when someone buys a shoe for ₹1 lakh, they are confident that its price is indeed ₹1 lakh, because if they wish, they can keep the shoe for some time and sell it for an even higher price.

Furthermore, friends, if you want to know how Campus Shoes surpassed brands like Nike and Adidas to become India's largest shoe manufacturer, you can watch that video by clicking on the 'i' button. By the way, friends, do you think spending millions on these shoes is worth it or not? Do let us know in the comments. That's all for today.