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Part IV Case Study: Nike Buys Converse for About $305 Million
Nike, one of the world’s best-known sports shoe brands, has united with one of the oldest names in
athletic footwear. Nike purchased Converse, a century old company most famous for its Chuck Taylor All
Stars, for $305 million.
The acquisition seemed unforeseen to some, as the roles could have easily been reversed had Nike and
Converse made different choices along the way. Converse debuted the Chuck Taylor All Stars in 1917,
and until the 1960s, Converse had almost complete dominance in the basketball shoe market. In 1964,
Nike was just beginning (as Blue Ribbon Sports, becoming Nike in 1971). Their focus was more fitness-
based. The company founder was a track and field enthusiast, and their first athletic sponsor was a
tennis player.
In the late 1970s, Nike made their big leap into basketball footwear. In an unprecedented move, Nike
paid the college coaches and gave the schools free shoes, sweatshirts, and t-shirts. They decided the
value of having people see the athletes in their products, in person and on television, outweighed the
cost of the products themselves.
The plan worked and soon more than 80 colleges were wearing Nike’s products. But Converse still had a
stronghold as they had the real NBA superstars wearing their shoes. Then, 1984 came and Michael
Jordan was drafted to the Chicago Bulls. In another bold move, Nike spent their entire endorsement
budget for rookies that year on Jordon. It ended up being a 5-year deal worth $2.5 million.
