How 3% of 3 becomes 5

By  •  Updated: 08/01/23 •  3 min read

Jordan’s mother struck a deal with Nike that gave Michael a percentage of all sales of products with his name on.

Nike resisted because it was breaking industry norms, but eventually gave in to get the deal done.

The end of the film sees Phil Knight – Nike’s CEO and founder – coming to terms with it saying they’d probably sell $3 million at most. The percentage wouldn’t add up to much.

Then we see the real figure.

In their first year, Air Jordan’s sold $162 million of product.

That’s $5.4 million in royalty for Jordan in a market that Nike thought was worth about $3milliion

Now, here’s where most people screw these deals up.

You do not jump from $3 million to $162 million without some effort.

Jordan was being paid $250k for his endorsement, and we know he really wanted to go with Adidas.

Without the deal, he’d probably have worn the Nike’s on court then gone back to wearing his Adidas on the street. The endorsement would only have sold basketball shoes to players.

Instead, Michael put body & soul behind the deal and created the world’s most famous sports brand. It went beyond basketball and make basketball shoes a fashion item in the way that Nike’s Cortez running shoes were before.

I’ve struck many deals in the past where I get a smaller flat fee, but a percentage of sales.

Before that I ran affiliate deals which were percentage only.

In both cases I worked my arse off compared to anything I ever did in a fee-only deal, and definitely harder than I ever worked for a salary.

I’ve been around affiliate marketing since the 90’s and believe me, those “passive income” guys are some of the hardest workers you’ll ever meet. They just don’t feel like they’re working.

There’s some downsides to these deals to be sure, particularly if the company on the other end flakes out, or messes something up just as you’re getting a payback.

But, if they’re done well, they’re the absolute best way to structure a deal if you’re good at what you do.

I’m going to do a workshop next week about this.

It’ll cover:

If you’re interested, just drop me an email.

No need to fill in any forms or register just yet, I’m just gauging interest.

Stephen Pratley

I build email lists, that grow into one-man businesses.