Imagine this… in 1980 instead of launching
an IPO that paved the way to future success,
Nike went out of business.
Because they were drowning in debt from a
never ending fight with the federal government
and their competitors Brooks and Converse.
Nike is forced to pay millions of dollars
of extra back tariffs on shoes that they imported
Nike goes bankrupt and dissolves.
Phil Knight quietly returns to being an accountant.
Bill Bowerman retires.
Michael Jordan signs with Adidas.
Tinker Hatfield never becomes a designer and
as a result the most iconic Nike sneakers
are never made.
The Swoosh disappears.
‘JUST DO IT’ never happens.
All this may sound like a far fetched episode
of Black Mirror but it almost happened.
And not only that but it turns out that the
rarest and probably the most important sneakers
that Nike has ever made don’t even have
a Swoosh on them.
Instead, they have a single generic stripe.
Welcome to Athletic Interest and the crazy
story of how Nike faked its own shoes to save
From the start, Phil Knight’s vision for
Nike was always to dethrone Adidas and become
the number one sports brand in the world.
As you can imagine, all of the other brands
in the pecking order were not happy to see
Nike come out of nowhere and take a bite out
of their revenue.
Brands like Converse or Brooks were founded
long before Nike and many were well established
in the athletic footwear market at that time.
While Nike was making moves to grow their
business, competing US brands tried to find
a weakness in Nike’s business model.
Besides their creative marketing, Nike’s
core advantage was importing high quality
sport shoes from Asia at a lower price than
their competitors – who produced in Europe
And those competitors, organized under the
RUBBER MANUFACTURERS ASSOCIATION, tried to
turn exactly that strength into a weakness.
The brands teamed up to lobby the government’s
Customs departments to use a very old law
to stop Nike’s momentum.
The list of players involved in support of
Nike or the Rubber Manufacturers bears some
Representing Nike’s interest in congress,
among others, was a certain Al Gore.
On the side of Nike’s competitors was Senator
But the two big names are not the only historic
thing about this dispute.
Its impact was so significant that it threatened
Nike to go out of business.
Phil Knight still recalls receiving the first
“I opened it and my hands started to shake.
It was a bill.
For $25 million.
(…) the federal government was saying that
Nike owed customs duties dating back three
years, by virtue of something called the “American
Selling Price,” an old duty-assessing method.
The American Selling Price, or ASP, was a
protectionist law from the era of the great
The ASP indicated that a tariff on an import
into the United States would be calculated
according to the price of a similar, American-made
good rather than the manufacturer’s price.
For example, the tariff on a particular good
might be 50% of a good’s price.
If a British company made that good for $20
and an American company for $50, the ASP standard
would put the tariff on the British-made good
at $25 (50% of $50) rather than $10 (50% of
So what did that mean for Nike?
To understand the financial implications,
we estimated some calculations based on the
information from a Washington Post article
by a Nike lawyer.
Nike had been paying a 20% import tariff on
manufacturing costs of $7.75, so $1.55.
But according to the ASP law, Nike had to
pay 50% of the price of a Brook’s competitor
shoe that was made in the US and priced at
So instead of paying $1.55, Nike suddenly
had to pay $8.50 per pair.
That’s more than they paid to manufacture
So Nike had to pay $16.25 total import price
per pair, instead of $9.30.
The difference of $6.95 may not sound like
a lot of money but when you multiply that
difference over the millions of sneakers that
Nike was importing, it would add up to a gigantic
bill and many millions of dollars.
25 million to be exact.
To put that into perspective, that was the
sales that Nike made in a whole year at that
As Phil Knight puts it: “if we actually
did owe $25 million to the government, we
were out of business.
Just like that.”
So what did they do?
The absurd next steps did not only solve all
of Nike’s problems and set the stage for
its success to this day – a byproduct was
the creation of the rarest Nike sneakers ever
Nike simply launched a new shoe brand and
called it One Line.
It was a knockoff, dirt cheap and with a simple
logo, manufactured in the US.
They priced it low, just above cost.
Now customs officials would have to use this
‘competitor’ shoe as a new reference point
deciding on import duty.
The sole purpose of the collection was to
produce exact copies of Nike shoes made offshore
that could be used by Customs to make comparisons
rather than the higher-priced models by Converse
The trick was that they had to make it look
like a different brand.
They even produced a real looking catalog
to make the brand look more credible to customs.
Imagine what it must have been like inside
of the Nike HQ the morning that they sent
in their One Line shoes to be assessed as
“Thus was born the One Line, which for a
couple years sold a couple thousand pairs
and reduced the increase in our duties by
After years of fighting, Nike managed to reduce
its duties significantly and finally settled
For Nike, given the high stakes involved of
either going public or going out of business,
it meant everything.
Phil Knight later described how this was a
fight for the survival of Nike:
“Every day was life and death.
That was the ultimate competition.
(…) If we lost (…), it’s very unlikely
there’s a Nike today, and we knew that.”
The rest, as they say, is history.
As a result of winning this fight Nike was
Reduce their tariffs
Save millions of dollars in their settlement
negotiation with the government.
Setup a lobbying foothold in Washington DC
Successfully launch their IPO
Begin manufacturing in China
And the icing on the cake – Nike was then
involved in the legislative process to scrap
the law that was standing in their way.
Everything that Nike is today was only possible
because of this shoe.
You have to give Nike’s leadership credit
for reverse engineering the strategy that
was being used against them to turn the problem
into the solution.
They understood that the law was being manipulated
by their competitors and decided to manipulate
the same law in the opposite direction.
After the ASP fight Nike was off and running
to dethrone adidas as the #1 sports brand
in the world.
You could argue that a few of the Rubber Manufacturers
Association footwear brands involved are still
feeling the ripple effects and haven’t been
the same since.
Some of the brands mentioned in the lawsuit
are still around and relevant while others
are barely on the radar.
Over time Converse sank so much that it fell
into bankruptcy, changed hands, and was bought
by … Nike.
The outcome of this battle shook up the order
in the United States athletic footwear industry.
Outside of the impact on the brands and tariff
laws The One Line brand also represents business
trends that were going on at the time.
As globalization and seeking out lower cost
countries to manufacture products became a
standard business practice the migration of
footwear manufacturing away from America – and
later also Europe – sped up.
While they only have one simple generic stripe
on the side and no swoosh The One Line brand
shoes may be one of the most significant pieces
of Nike history.
The more we’ve learned about The One Line
story the more it seems to be a quintessential
‘Just Do It’ Nike story.
The One Line brand played a critical role
in Nike’s victory in their battle with the
Customs department and was a game changer
that enabled the brand to survive long enough
to become what they are today.
By our estimates it is a small miracle that
any of these ‘off-brand’ unknown Nike
sneakers survived 40 years without ending
up in the landfill.
There are 12 known pairs of Nike ‘Moon Shoes’
in the world but how many pairs of ‘The
One Line’ survived over the years?
We’d bet not many.
Setting aside the question of ‘rarest ever’,
they are still probably the most important
line of shoes that Nike ever made and stand
as historic grail symbols of the Nike hustle.
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