In the shadow of Michael Jordan, it is nevertheless him who inspired and continue to inspire many NBA stars in the management of their subsequent careers: according to Forbes magazine, the fortune of Earvin, “Magic” Johnson, is today worth 1,200 millions of dollars. In the documentary series dedicated to the Lakers star of the 80s and released a year and a half ago, Dwyane Wade and Charles Barkley recognized his influence. “We are all indebted to Magic,” said Shaquille O’Neal.
It must be said that the former playmaker seems to be a model in terms of business, his participation in sports franchises (the Washington Commanders in the NFL in American football, the Los Angeles Dodgers in the MLB in baseball, the Los Angeles Sparks in the WNBA in women’s basketball and the Los Angeles Football Club in the MLS) to its investments in areas as varied as movie theaters, fast food, real estate, health care and especially the life insurance provider EquiTrust, which contributes much of its accumulated . can.
“Insignificant” professional income
By surpassing this symbolic mark of one billion dollars, Magic Johnson joins the very closed circle of multimillionaire athletes in which only his US teammate Michael Jordan and current Lakers star LeBron James appear. , and former golfer Tiger Woods. An important achievement when we reread the words of Earvin Johnson to Sports Illustrated in 1990, a few months before his first retirement (he would return briefly during the 1995-1996 season), to whom he expressed his desire to “be a player in the $100 million range to $200 million” to invest in a franchise. “And it doesn’t have to be the Lakers; It doesn’t even have to be an NBA team. I am a sports fan. If baseball were available before basketball… the ball, “I’ll be there. I want to do great business.”
Compared to the other three athletes in the “ten figure” circle, Johnson did not generate massive income during his 13 seasons in the NBA: “only” $40 million ($110 million today if inflation is taken into account). , more than ten times less than LeBron James whose income is already close to 500 million dollars. Even playing in a decade when NBA stars became commercial machines, Johnson’s advertising revenue ranged from $2 million to $4 million a year according to Forbes estimates, while James’s are reaching around $70. million dollars this season. Therefore, we easily understand that it is off the courts where Magic’s fortune was built.
Express training before your first sports retreat
Pour Earvin Johnson, the point of departure is situated in the années 1980 where he meets Peter Guber, the patron of Sony Pictures, and Joe Smith, musical director on the occasion of a Great Western Forum match, in which he plays the Lakers at the time. The playmaker asks them to go into business and the two men become mentors by introducing him to Hollywood actor agent Michael Ovitz. The latter instinctively trusts him, subscribes to business publications and involves him in simulated business meetings. With his investment, Johnson convinced Ovitz so much that the superagent, although he was limited to showbiz stars, took charge of the renegotiation of the athlete’s contract with the Lakers and put him in contact with potential business partners, without receiving commission. .
As his career neared its end, Ovitz witnessed Johnson’s first “big” coup during a lunch with PepsiCo executives in 1990: a 33% stake in a $60 million deal to take over “a plant bottling plant near the capital, Washington DC… with an investment of less than half the value of the land.
Mix “business” and social approaches
The hallmark of the “entrepreneur” version of Magic Johnson is probably the social dimension that he infuses into his investment decisions, which does not fail to have echoes of the operations carried out by Serena Williams in recent years. First, when she undertakes the construction of a cinema in a district of Los Angeles undermined by gang violence. Gangs that he himself will meet to convince them of the importance of this project. “I’m here to say that this cinema will help the entire black community,” he says in the documentary series ‘They Call Me Magic’. “I want you to come. I want your families to come. But you have to do it.” “I agree that there can be no violence, neither outside nor inside this theater. And I am creating jobs. So if you have people who want to work, I will use them.”
Taking advantage of the success of the Baldwin Hills location, which in just six years had become one of the most profitable in the country with 5 million in revenue, Johnson will open others in the neighborhoods of the African-American community in other large cities in the country such as Houston. , Atlanta or even New York. This financial success is due in particular to Magic’s decision to strengthen its catering offering with flavored soft drinks and hot dogs. “These hot dogs are our dinner. The same goes for drinks,” he explained to the New York Times in 2000. “Our soda sales were fine. I told myself that black people loved flavored drinks because “they were raised with Kool- Help. So we added punch, orange soda and strawberry, and the numbers exploded.” He ended up selling all these theaters to the Loews movie theater chain, owned… by his friend Peter Guber.
Test transformed with Starbucks
The Baldwin Hills cinema will also be the gateway to another large-scale operation, always with a social angle. In 1995, he invited Starbucks CEO Howard Schultz to attend a screening… but mostly to convince him of the business potential of the African-American community. Three years later, in 1998, the coffee chain formed a 50/50 joint venture with Johnson to open more than 100 stores in African-American neighborhoods across the country. “To finance this rapid expansion, Starbucks even allowed Johnson to use the company as his personal bank, taking out a loan for his half of the capital, explains Forbes. He eventually repaid the entire loan and, in 2010, sold the stores again. company with a profit of 75 million dollars.”
Here too, Magic wanted to reach its customers as best as possible by offering sweet potato pies, setting up picnic tables with chess boards and broadcasting R&B through the speakers. And the result is more than conclusive since these approximately 100 Starbucks stores recorded an average spending per customer higher than the national average despite being located in neighborhoods where the average income was quite low.
Upgrade with real estate, medical and life insurance
This masterstroke opened the doors to the real estate sector for Earvin Johnson through institutional investors such as the California Public Employees’ Retirement System. CalPERS is investing a whopping $50 million in the real estate development company targeting African American communities that he co-founded in 1996 with investment management firm MarFarlane for an initial investment of just $1.5 million. He reiterated this concept a few years later together with the hedge fund Canyon Capital, with which he successively raised $300 million in 2001, double that four years later, and $1 billion in 2008.
Magic does not stop his progression and, at the same time that he enters the capital of the Dodgers in 2012 (the value of his participation is estimated today at 110 million dollars), he invests in Simply Healthcare, which is sold in 2015 for one billion Dollars. . He reinvested the sum received in the purchase of a 60% stake in the life insurance provider EquiTrust, which is today the largest asset in the portfolio of Magic Johnson Enterprises, of which the former basketball player is the majority owner. “Since he took over, Earvin Johnson has grown the company’s total assets from $16 billion to $26 billion, with annual revenue approaching $2.6 billion,” says Forbes.
Lost opportunities too…
With some smarter decisions, Magic Johnson could have even become a billionaire a few years earlier. A few months before he was drafted by the NBA in 1979, Nike attempted to recruit him by offering him a contract that included royalties on shoe sales as well as an even larger amount of stock in the company than he had previously agreed to with one Michael Jordan. . five years later. Johnson preferred to turn to Converse, which then dominated the basketball shoe market. We know the rest of the story…
A few years after his first retirement, Earvin Johnson acquired a 4.5% stake in his favorite team, the Lakers, for the sum of $10 million. In 2010, he will decide to sell this stake for approximately three times the amount. But these 29 million dollars seem very far from the 265 million dollars that the same stake in the City of Angels team would be worth today. Also in 2010, the Magic’s loyalty to his longtime franchise also played a trick on him when he rejected an investment offer in another California team, the Golden State Warriors. Five-time NBA champion between 2015 and 2022, the Oakland franchise is valued today by Forbes at $7.7 billion, more than 17 times its purchase price 13 years ago.
But there is no time for regrets for the five-time NBA champion who continues to diversify his investments, particularly in NFTs or CBD. He is also part of the board of directors of Fanatics, a partner in the online sale of products from the main American sports leagues. Finally, his infrastructure joint venture is tasked with renovating Terminal 1 at New York’s John Fitzgerald Kennedy International Airport and the cargo hub at Los Angeles International Airport.
Source: BFM TV
