Nike wanted Magic Johnson and Larry Bird — they got a rookie named Michael Jordan instead

In 1984, Nike was a distant second in the basketball-shoe market behind Converse, which had signed Magic Johnson, Larry Bird and Isaiah Thomas. Nike's strategy was to sign the NBA's biggest stars — but they were all locked up by Converse and Adidas. Nike's talent scout, Sonny Vaccaro, pushed for a different approach: bet everything on a rookie.

On October 26, 1984, Nike signed Michael Jordan to a six-year, $2.5 million contract — three times more than any previous NBA rookie deal and a sum that shocked the industry. The contract included an unprecedented clause: Jordan would receive royalties on every shoe sold under his name. Nike projected $3 million in sales over the first three years.

The Air Jordan I launched in April 1985. The NBA fined Jordan $5,000 per game for wearing the black-and-red shoes, which violated the league's uniform policy. Nike paid the fines, ran a 'Banned' ad campaign, and the controversy turned the shoe into a cultural phenomenon. The first 50,000 pairs sold out immediately. First-year sales reached $126 million — 42 times Nike's projection.

By 1997 the Air Jordan line had become a separate business unit, Jordan Brand, generating over $1 billion annually. In 2022, Jordan Brand brought in $5.1 billion in revenue for Nike, with Michael Jordan receiving an estimated $150–256 million in royalties. A signing that happened because Nike's first-choice stars were unavailable had become the most successful athlete endorsement in history.