Kanye photo: Talia Azadian
Kanye West created quite the stir with the drop of a single called “Facts” on New Year’s Eve, which largely was a take down of Nike and its Jordan franchise. Further driving home the point, he used the “Jumpman” beat from Drake and Dream’s WATTBA mixtape. Part of West’s needling of Nike goes back to his falling out with the brand in 2013, but it’s also just West working the press like an old pro, as he says in the single, “I was out here spazzin’, all y’all get the message?”
There’s been a lot of push back on West’s boast, with the most high profile coming from Michael Jordan’s son, Marcus Jordan. Much of the debate is around how much the Jordan brand makes for Nike and the player himself versus how much Adidas and West are making from the various Yeezy Boost shoes.
“Yeezy just jumped over @Jumpman23 ??” LOL I needed a good laugh to start my #2016
— Marcus Jordan (@HEIRMJ) January 2, 2016
Let’s examine the facts…
When it comes to dollars, really there is no comparison. On its October investor day, Nike stated it expects its Jordan business to double to $4.5B by fiscal year 2020, implying that the franchise’s current annual sales are about $2.25B per year, part of Nike’s total $30.6B in sales in 2015. That amount probably doesn’t include the cost Jordan’s royalties, which are though to be $90-$100M per year (neither confirmed nor denied by Michael or his people). Nike doesn’t provide detail by launch, but for some scale, Sportscan tracks sneaker style sales at major U.S. retailers and last year’s retro Jordan 11 launched in December sold 342,012 adult pairs. One more number, the Jordan brand was founded in 1984, adding amazing longevity on to its long list of accomplishments.
The Adidas/West relationship is brand new, less than a year old in terms of actually product and the brand hasn’t released any info about West’s sales contributions other than the Adidas CEO, Herbert Hainer, in May saying West’s Boost launches were part of an overall successful quarter. West provided some details on budgeting in the speech he made when accepting Footwear News Shoe of the Year award for the Yeezy 350 Boost, saying Adidas’s original contract called for 25 clothing SKUs for the Yeezy Season 1 fashion show held during NYFW in February 2015, with a “$500,00 talent budget,” and that he himself kicked in another half million of his own to make it work (watch at 14:50 in video below).
While Adidas like all brands provides very little detail on the number of pairs of shoes it makes, because it wanted to highlight its limited status, Adidas was specific about the very first launch of the Yeezy Boost 750: Light Brown, saying it would be restricted to 3,000 pairs. Since then, there have been additional pairs of the 750 Light Brown sold globally plus an all black silhouette; as well, there have been four launches of the Yeezy Boost 350 in Turtledove, Pirate Black, Moonrock and most recently Oxford Tan with sales limited to select retail partners aka its Consortium stores, plus Foot Locker, Finish Line and some of the big urban chains like Villa.
The Yeezy Season 1 autumn apparel and footwear collection included Boost 950 boots in Chocolate, Moonrock, Peyote and Pirate Black. Both the clothing and the 950 boots dropped in November and were limited to Adidas’s Consortium stores. Again, not a lot of pairs in circulation.
Putting together the cost of design, production plus developing a selling plan and platform as well as marketing, it is quite possible the Yeezy platform has lost more money than its made though the return on the investment from a marketing perspective has to be viewed as major success story.
But here’s the important part, while Nike and Jordan make a ton more money from Jordan than Adidas and West do from Yeezy Boosts, West in his song isn’t talking about dollars, he’s talking about heat on the street and buzz and if you ask anyone who is deep into sneaker culture what the most popping sneaker is right now, they will tell you it’s the Yeezy Boost 350.
Sneakerhead data site Campless does an excellent job of translating that buzz to number and if you look at the top ten shoes by “sneaker significance,” four of the top five shoes are designed by Kanye West, and stats don’t include the Boost 350 that dropped on December 29th. Campless was also tapped by Complex for a December story examining why some of Nike’s retro Jordan shoes were no longer selling out upon arrival with the article highlighting the uptick in product hitting the marketplace plus price increases that have pushed out some resellers.
The bigger question for a lot of people is whether it even matters that people seemingly are less excited about buying retro Jordan sneakers. After all, Nike is a global company and in December it reported kick-ass sales and orders in multiple regions. Also, investors have been concerned about Nike’s launch day shoes all year, especially as this trend might impact Nike’s biggest retail partner, Foot Locker, and yet the chain has delivered great numbers, repeatedly defying skeptics all year long.
It’s important to keep in mind, too, Jordan has had a crazy good run in terms of red hot demand. It could just be that with or without the energy sideswipe from West, it’s hit a bit of a growth peak with some shoes selling out but not all (a level of demand most brand would dream to achieve!) And yet the genius of Nike is that it doesn’t live and die by one shoe or franchise. It’s global and not only focuses on innovating the next great technology, but also has an incredible catalog that it taps into like no other brand.
Still, the influencer culture sits at the top of the lifestyle sneaker food chain and there is a big trickle down effect that impacts a brand, depending on how its viewed among the most ardent. Ask people in the sneaker business and they will tell you that West has done more than sell shoes and build buzz for Adidas, he’s also added to brand credibility overall, adding a cool halo that’s lifted the value of all of its shoes and made it more competitive with Nike.
That said, Kanye isn’t working with a c-list sneaker brand. Adidas has been working hard especially in the United States to bolster its reputation, including poaching three designers from Nike to up its design game. Couple the fresh legs of Adidas with some Jordan fatigue and it could be possible that West is riding a wave that started forming before his first shoe launched.
Given West’s profile as the ultimate influencer, Adidas no doubt would like to lock him down to a long term contract and make West its Jordan, however, the two have said nothing officially about their future together, and during NYFW in September 2015, Adidas let it be known that in a change from Yeezy Season 1, the designer’s Season 2 apparel would be produced by West alone with Adidas only handling footwear, an indication perhaps that West won’t be quick to sign on any dotted line that requires a long term commitment.
So yes, for the moment at least from the perspective of the culture, Ye is jumping over Jumpman, and yet, it’s going to be a while if ever before he matches the long term, massive success story that has been Nike’s Jordan brand.
