Move over, Dr. Dre.
The entertainment world has yielded a new billionaire, this time from the sphere of sports. Forbes's Mike Ozanian reports that Michael Jordan has increased his ownership stake in the Charlotte Hornets enough to put his personal worth over the billion-dollar mark.
Over the past several months, the NBA legend has upped his share of the team from 80 percent to 89.5 percent. Forbes' last official valuation conducted in January puts the Hornets' worth at $410 million, but Ozanian uses the $600 million estimate for Charlotte in the wake of the $550 million sale of the Milwaukee Bucks, previously valued at $405 million, back in May. And let's not forget the boost to team values expected throughout the league after Steve Ballmer agreed to purchase the Los Angeles Clippers for $2 billion.
Ozanian explains his methodology:
Our net worth figure for Jordan uses the $600 million figure. The Hornets have $135 million of debt, which makes Jordan’s equity in the team worth $416 million. After subtracting all the cash Jordan has invested in the team, we estimate his net worth outside of the Hornets to be $600 million, giving him a net worth of a $1 billion.
In February, Forbes's Kurt Badenhausen estimated Jordan's total net worth to be around $750 million, powered largely by his partnership with Nike and the Air Jordan brand. The $90 million he made last year makes him easily the highest-paid retired athlete, far head of golfing great/iced-tea pitchman Arnold Palmer's $40 million. In fact, Jordan is the top earner among all athletes, active or retired, other than boxer Floyd Mayweather, who made $105 million last year to become the second athlete to top the $100 million mark.
The first was, of course, Tiger Woods, who earned $100 million in 2007, $115 million in 2008, and $110 million in 2009. Back in February, Golf Digest reported that Woods had become the first billionaire athlete, estimating his net worth to be around $1.3 billion, the vast majority of which he's earned from endorsements.
Like Woods, Jordan's fortune isn't derived from his earnings on the court. During his 13-season playing career, Jordan pulled in just over $90 million in salary (including the $4 million the Bulls paid him to play minor league baseball in 1993). Of course, that's indicative of the era in which he played, when salaries were much lower than they are now. LeBron James has already surpassed Jordan's salary total, earning $129 million in 11 seasons. Kobe Bryant, meanwhile, has pulled in close to $280 million in 18 seasons on the court.
Perhaps it's more apt, however, to compare Jordan's path to the billionaire's club not to Woods', but to Dre's. The rapper-cum-mogul recently became hip-hop's first billionaire when Apple paid $3 billion to acquire Beats Electronics, the headphone manufacturer and music streaming service in which Dre and partner Jimmy Iovine had around a 50-percent stake. Jordan has taken a similar route in his post-playing days, combining the power of his personal brand with an entrepreneurial flair in his partnership with Nike. Both Jordan and Dre have banked on their name to sell products. Beats by Dre headphones are often panned for featuring subpar technology and sound quality, but they sell like hot cakes (for $300 apiece) because they're considered a fashion accessory, offering more status than utility. As a result, the premium headphone industry has exploded in a way no one previously thought possible.
Similarly, Air Jordans are the most coveted footwear in the world -- when was the last time a fight broke out over Manolo Mary Janes? -- bolstered by their iconic "Jumpman" logo and their intentionally limited supply. According to Forbes, half of all basketball shoes sold in the U.S. are Jordan-branded. Jordans generate roughly $2.7 billion a year for Nike, of which the man himself takes about $75 million.
To be sure, Jordan is still raking in the endorsement money, lending his star power to brands like Gatorade, Hanes, Upper Deck, and 2K Sports. But the vast majority of his wealth comes from his entrepreneurial endeavors. He owns a car dealership in North Carolina and seven restaurants around the country. Michael Jordan's Steakhouse in Chicago generated $1.6 million in just two months after opening in 2011. Jordan's most valuable asset by far, however, is his majority stake in the Hornets.
For a man who revolutionized sports marketing at the start of his career, Jordan is providing an example for athletes to continue to haul in the cash long after their playing days are over. Buoyed by the enormous value of his personal brand, he continues to be a force in both the business and sports worlds. He's part of a trend that is only gaining steam since Magic Johnson put his name on some movie theaters and grew his brand into a $700 million enterprise, owning everything from fast-food chains to fitness centers to three professional sports teams. David Wright's minority share in Vitamin Water netted him $20 million when the company was sold to Coca-Cola for $4.1 billion, and it was just revealed that LeBron made $30 million from the Beats sale thanks to his ownership stake. And Kevin Durant just opened a restaurant serving southern cuisine in Oklahoma City.
Players like Jordan and Johnson are important models for a community of athletes who routinely find themselves broke despite making boatloads of money in their careers. Along with Dre, they're also shining examples for young black men, athletes or otherwise, who are expected to make poor financial decisions, perennially stereotyped as being arrogant and undisciplined and largely blamed for the material glorification in modern hip-hop culture. And in a sport much maligned for its plantation dynamic, with white owners making millions off the fruits of black players' labor, they're taking control of their brand and using it make the successful transition from baller to businessman.
To contact the writer of this article: Kavitha A. Davidson at firstname.lastname@example.org.
To contact the editor responsible for this article: Tobin Harshaw at email@example.com.