Jordan Retirement Leaves Sponsors Holding the Ball : Marketing: Nike and others scramble amid news of the NBA star's departure. Millions in endorsement fees are at stake.

By BRUCE HOROVITZ

Oct. 7, 1993 12 AM PT

TIMES STAFF WRITER

With his unexpected retirement, Michael Jordan appears to have tossed a cog the size of a basketball into his magnificent marketing machine.

The basketball superstar’s stable of sponsors--including consumer product giants Nike, Gatorade, McDonald’s and Hanes--all insisted Wednesday that they will stick by Jordan whether he’s on or off the court. Several have multimillion-dollar contracts with Jordan that extend into the next century.

But sports marketers say that even as the basketball legend was announcing his retirement Wednesday, the sponsors that pay him nearly $28 million annually in endorsement fees and royalties were scrambling. Each was trying to figure out how to give the same commercial appeal to a retired Jordan as to an active hero of the court. And his sudden decision comes just weeks before the beginning of the National Basketball Assn. season, around which many marketers geared their Jordan campaigns.

“His sponsors have definitely taken it in the gut,” said Brandon Steiner, president of New York-based Steiner Sports Marketing. “This has got to have a lot of executives panicking at Nike and Gatorade.”

Each of Jordan’s sponsors “has to take a very, very deep breath and rethink its marketing strategy,” said Leonard Armato, president of Los Angeles-based Management Plus Enterprises. “The strategies were all based on the person who was No. 1 in the sport. And now, by his decision to retire, that will no longer be the case.”

Beyond that, Jordan’s departure from basketball leaves sports marketers “with a void that is not likely to be filled by a single person,” said David Burns, president of Chicago-based Burns Sports Celebrity Service.

Industry executives say Jordan transcended basketball and presented companies such as Nike and Gatorade with a pitchman who was part sports legend and part likable guy.

He was also a catalyst for moving NBA merchandise off the shelves. Despite some controversy over Jordan’s public affinity for gambling, sports marketers say he is admired by consumers who are not basketball fans.

Sponsors all stressed their support of Jordan on Wednesday.

“Michael Jordan did not retire from Nike today,” Nike Chief Executive Philip Knight said in a statement. “Our nine-year creative collaboration has always been more than an endorsement deal. It is a partnership that will continue, and we have already discussed future plans.”

In fact, Nike now plans to expand Jordan’s Air Jordan line of basketball shoes, spokeswoman Elizabeth Dolan said. After all, she said, Jordan will now have more time to devote to Nike. The newest Air Jordan model, which will retail for about $125 a pair, will hit stores in November, she said.

But some are already questioning the longevity of the Air Jordan line. “They’ll obviously have to phase it out over time,” said Katee Yorke, research editor at the newsletter Sporting Goods Intelligence.

Nike officials insist they were not caught flat-footed. They note that Jordan--whose estimated $20-million endorsement contract expires in 1996--wasn’t even the focus of the company’s 1992 basketball campaign. Rather, they note, it was the outspoken Phoenix Suns forward, Charles Barkley.

Nike seems to be positioning Barkley as Jordan’s “Air apparent.” In fact, Barkley’s Air Force Max line of Nike basketball shoes outsold Jordan’s Air Jordan line last year, Dolan noted.

Nike stock dipped 75 cents a share Wednesday to close at $45.25 on the New York Stock Exchange.

Gatorade is entering its third year of a 10-year, $18-million contract with Jordan. Executives at Quaker Oats Co., which makes Gatorade, tried to put the best light on the situation. “Michael will continue to serve as a spokesman for Gatorade,” Chairman William D. Smithburg said in a statement.

A McDonald’s spokeswoman also said the hamburger giant will stick with Jordan.

Last year, the Hanes underwear division of Sara Lee signed Jordan to a multimillion-dollar, 10-year contract. “We are a little surprised he decided to retire this early,” said Hanes spokeswoman Nancy Young. “But we certainly don’t think he’ll fade away.”

Of course, the folks at Reebok--whose spokesman is Orlando Magic star Shaquille (Shaq) O’Neal--wouldn’t mind if Jordan did a fast fade. “We always presumed that Shaq would someday assume the mantle of the preeminent player in the game,” said Reebok spokesman Dave Fogelson. “This may hasten his assuming that position.”