Nike had conditions before giving rookie Michael Jordan a record contract: Either be rookie of the year, or average 20 ppg, or be an all star, or sell $4 mill worth shoes in a year. Jordan was rookie of the year, scored 28.2 ppg, named all star, and Nike sold $100 mill of shoes in 1984-85.
Nike offered Jordan $500,000 a year in cash for five years, which was a ridiculous number at the time. The previous highest contract was James Worthy’s deal with New Balance, an eight-year deal worth $150,000 a year. Adding stock options and other parts of the deal, Falk said Jordan would earn $7 million over those five years, as long as Nike didn’t sever the contract.
In order to protect the company, Nike included a clause in Jordan’s deal that said if he didn’t accomplish one of three things — win Rookie of the Year, become an All-Star or average 20 points per game — in his first three years, it could end the deal two years early. Falk then asked, “What happens if he doesn’t do any of those three, but still sells shoes?” Nike’s response, according to Falk, was if Jordan sold at least $4 million worth of shoes in his third year, he’d get the final two years of the deal.