Michael Jackson & The Fall Of L.A. Gear
L.A. Gear’s 1990 sneaker, the ‘Billie Jean’, was the centrepiece of Michael Jackson’s landmark $20 million endorsement deal with the brand. Billed as the largest (and priciest) corporate endorsement deal in showbiz history, when L.A. Gear signed up the ‘King of Pop’ they had high hopes that he’d be able to sprinkle their sneakers with his commercial magic.
Set to become a major competitor for Nike’s Air Jordan, which saw unprecedented sales in the 1980s and even to this day remains a top selling sub-brand for Nike. L.A. Gear marketed heavily and poured millions into Jackson’s range to guarantee ‘Thriller-esque’ successes.
So, why have you never heard of them?
It started way back in 1978 to be exact. When L.A Gear founder, Robert Greenberg, first moved to Los Angeles from his native Boston. Greenberg began distributing skates during the roller-disco craze. But by the early 1980s, he saw more promise focusing on athletic shoes, which led to the birth of the L.A. Gear brand in 1983.
L.A. Gear rode a tsunami wave of success on the back of the 1980s ‘fitness boom’, and within three short years the company went public. Incorporating bright colours and rhinestones, L.A. Gear attracted teenagers with advertising that evoked a relaxed California lifestyle, full of surfing and well-tanned bodies.
L.A. Gear sales skyrocketed from just $10 million in 1985 to over $617 million by 1989. Only behind rivals Nike and Reebook, L.A. Gear became the third largest athletics shoe manufacturer on the market.
But in the fickle world of fashion footwear, profits were often unpredictable, and many investors feared the fitness bubble was about to pop. As a result, the top three became ruthlessly competitive, doing whatever it took to gain market share in this burgeoning $5 billion industry.
Sneaker companies became experts in how to pull consumers into stores with big-league marketing tactics previously associated with automakers and soft-drink companies. At the time, Tom Clarke, vice president and director of marketing at Nike said ‘marketing is changing the face of our business. Today shoe companies are scrambling to assemble stables of stars from sports and show business for their marketing campaigns’. Nike, Reebok and L.A. Gear turned athletic-shoe sales into a marketing-driven enterprise a la Coke and Pepsi.
So, when L.A. Gear sales started slipping in early 1989, it wouldn’t be much of a surprise that they took inspiration from Pepsi’s marketing handbook and started pursuing Michael Jackson for a similar endorsement deal. ‘You can have a great commercial, but your recognition factor is far higher with a celebrity,’ said the then executive vice president for the company, Sandy Saemann.
As the story goes, in early 1989 Michael Jackson’s attorney, John Branca, called Jay Coleman, one of the industry’s top corporate-sponsorship brokers, saying ‘that Michael was thinking of wearing sneakers instead of his black loafers when he was filming new music videos for his upcoming greatest hits album’. The switch to sneakers would have been a pretty radical image change for Jackson. So, Jay told Branca not to go anywhere till he had a chance to talk to L.A. Gear’s chairman, who was a good friend of his.
With Jackson suddenly available, L.A. Gear sprang into action by sending representatives to meet with Jackson while he was recording new music. L.A. Gear were apparently desperate to get involved with someone of Michael’s stature, no matter what the cost. While financial agreements were being made, Michael Jackson requested $20 million for a two-year contract apparently because it would surpass Michael Jordan’s 7-year, $18 million deal with Nike. This surmounted to one fifth of LA Gear’s annual advertising budget at the time, but even so they accepted it.
As part of the deal, L.A. Gear agreed to air portions of Jackson’s music and video clips in their TV commercials. Jackson was then required to wear L.A. Gear shoes in a television commercial and several print ads, as well as in upcoming music videos, including new singles to be released as part of his greatest hits’ album scheduled for spring 1990.
Alann Heldfond, a top celebrity representative said ‘It would be a real stretch to picture Michael Jackson doing the Moonwalk in a pair of L.A. Gear shoes’. Although wearing the product at all was a major concession for Jackson, who had never touched the products he endorsed. Although Jackson sung about Pepsi for several years, none of the commercials ever showed him holding or drinking the beverage.
But it began with a rocky start when in September 1989, the new partnership was announced at a glitzy press conference at the Hollywood Palladium. The executive vice president for the company, introduced Michael Jackson and proceeded to gift him L.A. Gear items including their best-selling sneaker in order to have him photographed by the press holding the product. This angered Jackson, who covered the shoe under a jacket and then left the items on the side before official photographs were taken.
In the following months, Michael Jackson took part in various photoshoots which were featured in print advertisements, particularly targeted at Jackson’s young fanbase. Jackson’s appeal for children led to L.A. Gear agreeing to launch and market heavily his signature ‘Billie Jean’ sneakers in preparation for the ‘Back to School’ selling period.
In August 1990, Michael Jackson appeared in his first L.A. Gear TV commercial. Filmed in a tightly secured area in downtown Los Angeles, the commercial cost $700,000 to produce. The 30 second clip featured Jackson’s trademark dancing and just one close-up of Jackson’s face as he transformed the dark alley into an electrically charged scene. In the highly stylized spot Jackson didn’t sing or speak. Nor did the commercial have any typical Jackson music. “We wanted something uniquely different from the 500 different ads people see every week,” said Saemann.
With L.A. Gear’s sales still on the decline, Jackson was to be a much-needed boost for the company in the run up to the Christmas sales period. ‘The trend in the athletic shoe market is toward a flashier, more upbeat look,’ said Dick Silverman, then editor of trade publication Footwear News. ‘I don’t see any reason why these shoes shouldn’t be extremely successful.’
However, when the ‘MJ’ line was launched into stores in September 1990, retailers immediately reported abysmal sales. Some department stores struggled to sell even a few pairs and were quickly discounted as a way to quickly shift stock. Parents complained about the style, refusing to buy the impractical fashion-oriented sneakers. Many concerned that the studded and buckle-laden design would make their kids look like junior Hell’s Angels in them.
But apart from pure aesthetics, the lack of sales could be attributed to Michael Jackson’s relatively low profile during this period. L.A. Gear hoped Jackson would have released his planned greatest hits and several new music videos in time for the introduction of the shoe line. But Jackson reportedly was way behind on both music projects, and the whole idea was later scrapped in order for the artist to release a whole new body of work, Dangerous, the following year.
This turn of events led to a devastating return for L.A. Gear, provoking them to pursue legal action against the artist two years later. In a $46 million lawsuit, the company alleged fraud and breach of contract.
The suit contended that its advertising for the shoes suffered because Jackson missed deadlines to deliver footage that could have been used in shoe commercials and had not released the album that was involved in the contract. According to the suit, at the time when Jackson said he was producing the first video, he actually was planning a trip to Africa. Michael Jackson filed a $44 million countersuit against L.A. Gear. Although the specific acts of fraud and breach of contract Jackson was alleging were not disclosed to the press.
While both cases were settled out of court, the damage to L.A. Gear’s bottom line persisted. Throughout the 1990s, L.A. Gear’s popularity kept waning. A lucrative deal with Wal-Mart failed as sales for L.A. Gear shoes continued to decline. Over the years, company was so desperate to sell the remaining inventory, L.A. Gear shoes began showing up at flea markets, swap meets, and supermarkets; and the company filed for Chapter 11 bankruptcy in 1998.