8 Game Changing Lessons from Nike’s Negotiations with Michael Jordan

Near the end of the negotiation, basketball legend Michael Jordan’s mom drops a dealbreaker on Nike executive Sonny Vaccaro when she says we are good “except for one minor provision – Michael gets a percentage of the revenue of each shoe sold.”

This move, from the recently released movie Air: Courting a Legend, with Matt Damon and Ben Affleck, is just one of many strategies and tactics highlighted in a movie about perhaps the most impactful sports negotiation in history (and which is reportedly still paying Jordan hundreds of millions of dollars annually based on that one provision).

Understanding that its writers may have exercised some “creative license” and these negotiation lessons from the movie may not all be true-to-life. (Full disclosure: Nike is a longtime training client of mine, although this negotiation pre-dates our relationship.)

1. Do your strategic homework so you negotiate with the right person

Michael Jordan was an Adidas guy (he told USA Today that “In all honesty, I never wore Nike shoes until the day I signed with Nike.”) But his Mom Deloris did most of the negotiations and appeared to be the most powerful voice on his team, seemingly even more so than his agent David Falk.

So how did Nike’s Vaccaro hone in on this? He met with George Raveling (played by Marlon Wayans), a former NBA player and college coach who coached Jordan on the 1984 Olympic team. He also met with Howard White (played by Chris Tucker), a top Nike executive who understood the Jordans’ cultural background in a way Vaccaro didn’t.

This groundbreaking deal would not have happened except for Vaccaro’s strategic intelligence gathering.

2. Perseverance and creativity

“I don’t like to take no for an answer,” Vaccaro told Jordan’s mom when asked why he went around Jordan’s agent and showed up unannounced at their North Carolina home.

Vaccaro wouldn’t give up even though a ton of folks told him he had no chance to get Jordan for Nike, then largely a running shoe company with a very small share in the basketball market (Converse and Adidas dominated). Nike Founder and CEO Phil Knight initially even threw cold water on his idea. But Vaccaro wouldn’t give up. Nike has made billions as a result.

Vaccaro’s creativity also proved to be essential. Nike’s original plan was to split its endorsement budget over 3 to 4 players to spread its risk. That’s what big companies often do. But Vaccaro looked at it differently and wanted to bet it all on Jordan. It was a good bet.

3. Don’t underestimate the value of brainstorming

There’s a scene in the movie where the Nike executives sit around a table Sunday night and brainstorm and plan for the presentation/negotiation with the Jordans the next day.

They script everything out, and some of it works. But not everything. Some of their ideas fall flat. This highlights two important elements of brainstorming. One, you need to take the time to brainstorm and plan. People think differently, and two (or more) heads are often much better than one, especially when strategically planning for negotiations.

And two, sometimes you need to call an audible and pivot away from seemingly great ideas and plans if they’re just not working. Vaccaro realized in the actual meeting that Nike’s video presentation was not resonating. He read it in the Jordans’ facial expressions and body language.

So he scrapped the video midstream and made a passionate plea in which he laid out his vision of how their partnership would fit in Michael’s personal and professional life. This was a game-changer for Jordan and Nike.

Sports superstars are a different breed. Many have been treated like prima donnas since they first exhibited otherworldly physical skills in their chosen sport, some as early as 10 years old.

As a result, they often have different interests than the rest of us. This was crucial in the negotiations between Nike and perhaps the greatest basketball player ever, Michael Jordan, as depicted in the movie “Air.”

4. Hone in on your counterpart’s core interests

In 2005, the Phoenix Suns basketball team had just made it to the conference finals led by NBA MVP Steve Nash and All Stars Amar’e Stoudemire, Shawn Marion, and Joe Johnson.

A year prior, the Suns’ owner Robert Sarver and Johnson couldn’t reach agreement on a $50 million contract extension despite only being $833,333 a year apart.

The next year as a restricted free agent, Johnson signed with the then lowly Atlanta Hawks for $70 million. Importantly, Johnson asked the Suns NOT to match the Hawks’ offer – expressing a clear desire to leave Phoenix.

Why did he leave a team that would have competed for a title as the money would have been the same? Johnson “felt like the Suns tried to lower his value” by not making him an offer, according to The Arizona Republic.

Johnson felt disrespected, a core fundamental interest for sports superstars.

Likewise, Jordan in the movie felt that Nike basketball’s global marketing efforts would revolve around his unique charisma and abilities. Yes, money was a factor. But Jordan’s non-financial core interests were also crucial.

5. Create leverage by differentiating from your competitors

Nike’s Sonny Vaccaro brilliantly maximized Nike’s leverage by urging Jordan’s Mom to focus on what Nike and its two competitors could do to promote her son. How? He told Jordan’s Mom that Nike’s competitor Converse could never maximally market her son as it was already committed to then NBA superstars Larry Bird and Magic Johnson.

He also suggested she ask Adidas, Nike’s other competitor, about its decision-making structure. Why? Vaccaro knew Adidas was experiencing internal management challenges that could limit its ability to promote Jordan.

Bottom line: Vaccaro knew his competition inside and out and how Nike differed in its ability to satisfy Jordan’s long-term goals.

6. Super aggressive goal-setting can pay off

“If we’re going to make it, we gotta take risks,” Vaccaro told his Nike bosses. And he put his job on the line for it. Now, I am not suggesting you put your job on the line in all your negotiations.

But sometimes it’s worth going for that big home run.

7. When you meet makes a difference

Vaccaro traveled over 2,000 miles to meet Jordan’s Mom and make his pitch. After sitting down with her, he asked if he could meet Michael while he was there. She said “you don’t need to see him, it’s not time for that.” She was right.

When, how, where and with whom you meet should be strategically decided (and are essential elements of my 5th Golden Rule, Control the Agenda).

8. Precedent helps a lot but may not be dispositive

I urge everyone in my training programs to research the precedent in their negotiations. Find out what provisions have been agreed to in the past by your counterpart in similar circumstances.

Humans have a psychological tendency to try hard to be consistent. So finding and highlighting what your counterpart agreed to in the past will increase the likelihood they will agree to it again.

This can help a lot, but it may not get you across the finish line. In “Air,” Vaccaro responded to Jordan’s Mom requesting a unique term by saying “I agree with you, but that’s just not how the business works.”

That was true. But Nike’s founder Phil Knight decided to change the way his business worked. That provision is now precedent in almost all basketball superstar endorsement deals.

Latz’s Lesson: The Nike-Michael Jordan negotiation and partnership ended up being a slam dunk for both parties. This team effort involved core interests, differentiation and leverage, aggressive goal-setting, meeting at the right time, and precedent.

* Marty Latz is the founder of Latz Negotiation, a national negotiation training and consulting company that helps individuals and organizations achieve better results with best practices based on the experts’ research. He can be reached at 480.951.3222 or Marty@LatzNegotiation.com.