Nike Was Always Broke: The Blue Ribbon Sports Years

In January 1964, two men shook hands in Oregon and started a company. Phil Knight was a former University of Oregon runner with an accounting background and an idea from his time at Stanford: importing Japanese running shoes into the United States. Bill Bowerman was his old coach.

Each put in $500. There was no business plan and no lawyer. They called the company Blue Ribbon Sports, a name Knight had made up on the spot when a Japanese shoe company, Onitsuka, asked who he represented. Their first order was 300 pairs of Onitsuka Tiger shoes.

The trunk business

Knight sold them himself, from the trunk of his car at track meets around the Pacific Northwest. It was a side business. He worked as an accountant and later taught accounting at Portland State University. Bowerman kept coaching at Oregon and experimented with modified shoes for his runners. In its first year, Blue Ribbon sold about 1,300 pairs and grossed $8,000.

In 1965 Knight hired his first full-time employee, Jeff Johnson, a runner he knew from Stanford. In 1966 Johnson opened Blue Ribbon’s first store, in Santa Monica, California. For years Knight kept a day job alongside the company.

The shoes sold. That turned out to be the problem.

Why growth meant crisis

Blue Ribbon’s business had a structural flaw that every importer knows. It had to pay Onitsuka for each shipment of shoes before it could sell them, and it sold them months later. The more shoes customers wanted, the bigger the bill that arrived long before the money came in.

Knight’s answer was always to order more. Demand was growing, and he hated to leave sales on the table. So the company lived on borrowed money. By 1970 sales had reached $600,000, but the bank, First National, saw a business with almost no cash and growing debts. It capped Blue Ribbon’s credit line and imposed sales quotas.

Knight tried other routes. He asked for a $1.2 million loan, which the bank considered unrealistic. He tried to sell 30% of the company to the public for $300,000. According to the summary of his memoir by Shortform, the offering raised $300. The family of an early employee, Bob Woodell, lent the company $8,000.

A trading company steps in

Help came from an unexpected direction. Through the Portland branch of the Bank of Tokyo, Knight was introduced to Nissho Iwai, a giant Japanese trading company. Trading companies financed trade for a living: they bought goods from manufacturers and extended credit to importers, taking a cut in return.

In 1971 Nissho agreed to finance Blue Ribbon’s purchases. Its representative, Tom Sumeragi, became one of the company’s most important allies. Nissho also introduced Blue Ribbon to new factories, which mattered because the relationship with Onitsuka was falling apart.

The same year Blue Ribbon launched its own brand. It needed a logo, and Knight paid a Portland State University design student, Carolyn Davidson, $35 for a curved mark. He didn’t love it, but production was about to start. The name, after the Greek goddess of victory, came to Jeff Johnson, who said it arrived in a dream. Nike running shoes were on sale by the 1972 U.S. Olympic trials, and by the end of the decade Nike held about half of the American running-shoe market.

1975: the FBI

By 1975 Blue Ribbon was much bigger and still permanently short of cash. It owed Nissho about $1 million for shoes. Then one retailer’s payment arrived late, and the company found itself $75,000 short.

To cover the gap, Knight’s team drained every account it had. Checks to factory workers and creditors bounced. Bank of California, which had given the company a small credit line, decided it had seen enough. It froze Blue Ribbon’s funds, told the company it no longer wanted its business, and contacted the FBI, because, as the bank saw it, the situation looked like fraud.

It was the closest the company came to dying.

Nissho’s answer

Nissho did its own audit. A senior manager, Ito, went through the books with Sumeragi. He found a company that had been reckless with its cash but honest, and growing fast.

Then Ito went to Bank of California with Knight and told the bankers that Nissho would pay off Blue Ribbon’s debt in full. The bank, which had been courting Nissho’s own business, backed down.

The company survived. In 1978 it renamed itself Nike, Inc., and on December 2, 1980, it went public.

Three years later Knight invited Carolyn Davidson to lunch at Nike’s offices. It turned into a surprise party. The designer who had been paid $35 for the Swoosh was given a gold ring in its shape, set with a diamond, and an envelope holding 500 shares of Nike stock. She never sold them. After decades of stock splits they had multiplied many times over.

Nike today

In the fiscal year that ended May 31, 2026, Nike, Inc. reported revenues of $46.4 billion. The company that couldn’t make payroll in 1975 now sells around the world.

What the record shows

• Growth consumes cash. A business that pays suppliers before it is paid by customers needs more money the faster it grows. Blue Ribbon’s success was the cause of its crises.
• Profit and liquidity are different things. Blue Ribbon was selling more every year. It still bounced its payroll.
• The right lender understands the business. A bank saw thin cash. A trading company that financed shoes for a living saw a fast-growing customer worth backing.
• Credit can protect ownership. Knight funded growth with borrowed money rather than selling most of the company, and he and Bowerman kept control until the stock market listing.

Other founders in this archive faced the same squeeze. Brownie Wise built Tupperware’s sales faster than anyone planned for. Amancio Ortega designed Zara’s supply chain so that cash came in quickly. Knight survived by finding a lender who believed in the growth that was nearly killing him.