How Michael Jordan made over $2 Billion
Business lessons to learn from the NBA superstar
Whenever I think about Jordan two thoughts come to mind, basketball and business. That’s right, business. Over the years it’s almost become second nature for me to think about a celebrity’s financial ventures every time I see them on any type of media outlet. The majority of football, basketball, baseball, or hockey players are more than just athletes but we don’t recognize that.
Let me explain.
When a professional sports team signs a new player to their roster they consider different characteristics other than the players skill. Obviously their talent and level of play is the most important factor but one has to remember that a team is a BUSINESS. When a player is transferred to a team you also look at their image because they bring a following with them, which means more BUSINESS for the team.
That’s exactly what Jordan has been throughout the majority of his career, an athlete and a businessman with an image that is attached to a reputation of working hard and excelling.
How exactly did Jordan make over $2 billion?
Jordan’s wealth extends to more than basketball. In fact, the majority of his fortune wasn’t created from his salary. Endorsements, Hornets franchise, investment firms, NBA salary, and other revenue streams are what truly made Jordan a billionaire.
Charlotte Hornets Ownership
This is by far my favorite venture to study from successful people. When someone owns a part/piece of a company, you’re entitled to many privileges but the best feeling has to be when the valuation of the organization increases drastically.
As an example think of companies like Uber. At some point it had a valuation of a couple hundred thousand dollars or even into the lower millions. If one invested at that point to acquire equity, say 0.05% of the company, you would have made an absurd amount of money today.
That is what occurred with the Hornet’s valuation
Acquiring ownership of the Charlotte Bobcats in 2010 allowed in following years for him to become a billionaire. Jordan invested around $175 million in order to purchase equity in the team. A couple years ago he sold a minority portion of the team for an amount that would basically create a valuation of over a couple billion dollars.
Basically, his initial investment in the team grew exponentially, allowing him to have a fortune over $2 Billion because of his ownership in the franchise.
Endorsement deals
Nike, Jordan, McDonald’s, and Gatorade are just a few of the companies that have endorsed the former NBA champion multiple times.
According to Business Insider he made just under $100 million in all of his NBA career. Currently he earns over $100 million per year in Jordan royalties. That’s right, $100 million per year.
Royalties are payments made to owners of an specific asset in order to profit from it. Jordan has interests in the brand which entitles him to certain compensation for sales each year.
Jordan has made a significant amount of money from outside of his NBA salary because of endorsements and continues to do so. That is one of the reasons why it’s very interesting to study individuals who have achieved such rare success outside of their respective sports.
Liquor brand
People have always consumed alcohol and this particular venture from Jordan says a lot about the spirits industry. What’s so interesting about this business model is that it’s based on recurring purchases. Consumers purchase the same product multiple times and that is essentially what this business model consists of. Monthly cash flow based on the consumption of the same product over and over again. Its brilliant.
Jordan and other investors launched their own premium tequila brand called “CINCORO.” This investment is understandable because of the potential for growth. The liquor market will always exist because it has been present for thousands of years. This just depicts how important it is to invest the money we earn into multiple assets if we wish to become even more accomplished in business
Business lessons to learn from Jordan’s success
By understanding Jordan’s investments we can learn what is important to take into account in our own business ventures.
- First of all we need to be a master of ONE specific skill in order to gain a lot from it. Jordan’s skill was basketball, he was one of the greatest if not THE greatest. That allowed him to earn a substantial income which he saved and used for future investments.
- Once we become great at a skill, use that same money to invest in something YOU are knowledgeable at. The Charlotte Bobcats was an investment in basketball. Jordan knew what it was to be part of a successful organization and he knew his investment would be a smart move to make because he KNOWS about basketball franchises.
3. Our image and reputation are worth more than we think. If Jordan’s reputation had been negative, major endorsement deals wouldn’t have occurred. It takes a lot of effort, time, and work to build a reputation and an image, so it is crucial to maintain that because we can definitely capitalize from it in the future.
4. Create a product or service where people will purchase multiple times. This creates cash flow in a business, which is insanely crucial for its success (if you want to learn about cash flow read my previous article here). Other businesses with recurring purchases include supermarkets, restaurants, and energy services, they all have monthly payments coming in!
5. Play the long game. Success takes time and a lot of sacrifice, so we have to know and accept that whatever it is we are trying to achieve, it will take time. Jordan practiced his whole life before making it to the NBA. Work hard at what you do, be confident, and if you’re skillful enough you may have a chance of making it.
Closing Thoughts
Jordan became a billionaire by using the money he earned from basketball to invest into various assets. He also built a reputation of hard work and self improvement based on the idea of failing enough times until we reach success.
Sports are very similar to business, you will fail and face many challenges before accomplishing some degree of success. They both are complicated and take time to learn, however, anyone who wishes to excel at either one can do so if he/she has the proper mindset and work ethic.
At the end of the day this man is way more than just a former NBA superstar, he’s a depiction of PERSEVERANCE. Anyone who wishes to attain some sort of success in their life should definitely look and study at what Jordan did.
Very few become great like he did, but if there’s something to learn from his story is that we all have an opportunity to become someone great. The time we put into our craft determines the level of our output.
Business, sports, lifestyle, whatever it is you’re into, do it to the best of your abilities.
Work hard and work smart, learn from those who came before you.
Success never surprised anyone.