Exceptional Americas magazine, Ernst & Young



How this legendary basketball athlete has become a business superstar, too.

It was Earvin “Magic” Johnson’s rookie year with the Lakers and, at a mere 20 years old, his first NBA championship. Kareem Abdul-Jabbar was injured with a sprained ankle that was so swollen his doctors wouldn’t let him fly to Philadelphia with the team. Right before the sixth game, it was a big blow.

Surrounded by defeated teammates, only Johnson was inexplicably hopeful. “I knew I had an hour to work on the guys at that airport and then I was going to have five hours [on the plane] to work on their mindset and attitude to get ready for this big game,” he recalls. “So I thought about what I should do.”

Abdul-Jabbar always took the first seat on the plane so that, during boarding, every other player had to walk past him. Johnson thought: “I’m going to go and be the first one on that plane and sit in Kareem’s seat.”

So he did. As each player passed him in the aisle, he flashed a toothy smile and unabashedly exclaimed: “Never fear, Magic is here!” Once in the air, he offered up a five-hour pep talk that probably sounded more like a Sunday-morning sermon than anything else. He dug out doubt and replaced it with confidence.

Arriving in Philly, Johnson kept talking. By the next day, his teammates were coming around. “We finally got the guys to say, ‘We’re going to win this game.’ Now I said all that, now I have to have a good game. I got to back up my actions, right?”

He didn’t let himself or his team down. Johnson started the game against the Philadelphia 76ers as center, but by the time the last buzzer sounded, he had taken a turn in all five positions. He ultimately scored 42 points, snatched 15 rebounds and offered seven assists. It was a historic performance – both on the court and behind the scenes – and cemented Johnson’s reputation as the ultimate team player.

It was only the beginning. Throughout the next 32 years, Johnson would repeat this act of leadership and persistence on the court and in the boardroom. As one of the most successful athletes-slash-businessmen in the world, Johnson makes his work look effortless – the true sign of a graceful competitor. Behind the huge smile and amenable personality is a man who simply wants to win.

But he’s not willing to be on top at any cost. Throughout his career, he’s had a lot riding on his fame and fortune – from the starry-eyed boys who followed his basketball career and the millions of people who live in the ethnically diverse, urban communities that his businesses serve to the young, black entrepreneurs who are now watching and learning.

“I’ve got a whole community on my shoulders,” he says. “If I ever fail, couldn’t nobody else come behind me.”


 

Playing it big in a small town

Along with multimillion-dollar ventures in urban areas, Magic Johnson has made investments in more modest ways, such as Ohio’s class-A baseball team, the Dayton Dragons. Along with his AMC and Dodgers partner Peter Guber, Johnson has had a hand in the team’s 815-game sellout record. In 2012, the team was valued at US$23m, filling the 7,230-seat stadium night after night.

“We’ve been making money from day one,” Johnson says. “We’ve got four mascots at a class-A team. Nobody has that. We can do barbecue parties like nobody else. We got lawn seats for US$7.”

Johnson once again finds himself in a solid partnership with a brand that suits the way he works: know your customer and give them what they want, while investing in the community so that the dollar stays close to home.

“There’s a lot of money out there,” he says. “We can get money anywhere. But who can be a partner that brings more to the table than just money?”

And if this magical partnership works for class A baseball, what can it bring to the Dodgers?

“It’s a great thing,” Johnson says. “Because the fans are really excited.”

Welcome back to L.A., Magic.


 

Johnson knows who he is. He also knows his brand – backwards and forwards. And that’s the simple reason that he’s been trusted with so many other brands, from Starbucks to the Dodgers.

“I’m in the people business,” he says. “I love people. I look for things that people are going to need.” With a laser focus on the neighborhoods that reflect his own upbringing in Detroit, Johnson has introduced partners to the benefits of investing in urban communities. It’s not just a personal passion; it’s a very intentional business decision.

“The dollar recycles, but in our community it wasn’t recycling,” he says. “People were saying, ‘I’ve got to go outside my community to spend my money.’”

So Johnson opened Starbucks cafes and AMC movie theatres and shopping centers with grocery stores right in the communities that needed them. But he did it with an eye on the people who lived there. He replaced scones with sweet potato pie and made sure a family could get a meal while taking in the latest blockbuster.

It’s not as if Johnson hasn’t had some struggles and missteps. But by and large, his risks have been calculated and careful.

Through a good mix of instinct and on-the-job training, Johnson has turned his MVP brand into a multimillion-dollar business empire that includes Yucaipa Johnson, the country’s No. 1 minority-owned private equity growth fund, and Canyon-Johnson Urban Funds, a private real estate fund company dedicated to the development of projects in underserved communities.

“God blessed me with the platform of the Lakers and he gave me some sense to know what to do with my money once I made a little bit of it,” he says. “The key for me getting in business is I’ve always wanted to be a businessman. People don’t realize that I did my first deal at 19, when I first got into the NBA.”

Back then, Johnson took advantage of a Federal Communications Commission (FCC) policy that offered tax credits and other incentives to minorities, convincing friends and teammates to pool their funds to purchase an AM station in Colorado.

“They also had about 20 acres of land that the towers were on,” he says. “We moved the two towers closer to the building, sold the 15 or 16 acres and got all of our money back. Then we converted the AM to FM. And that was my first deal.”

It takes guts to sit in Kareem Abdul-Jabbar’s seat. And it takes guts to plop down a couple million dollars on an AM radio station in the middle of Nowhere, Colorado. But confidence is not something that Magic Johnson lacks.

When Johnson wants something, he gets it. But what you see on the court is exactly what you see in his business tactics. It’s a cliché, but it’s true: Johnson is the ultimate team player. And he’s not afraid to get his hands dirty.

In 1990, he rode with Pepsi delivery trucks in southern Maryland so that he could better understand the partnership he had with the company and Black Enterprises founder Earl Graves. When launching his south central Los Angeles AMC movie theatre in 1993, he met with gang leaders to assure the safety of his patrons. Starbucks founder Howard Schultz taught him to watch carefully before acting. He listened to Lareda residents who were concerned that the bar at TGIF Fridays he was inviting to his new shopping center would be a bad influence.

“I never get into anything unless I really do my homework and my research, and I’m going to really be involved 100 percent,” he says. He learned this lesson through a series of influential mentors, beginning with mega-manager Michael Ovitz.

In the 1980s, before taking him on as a client, Ovitz insisted that Johnson read a stack of business magazines and newspapers. Without comprehending it all, that’s exactly what Johnson did, impressing Ovitz enough that he took a risk on the basketball player. Johnson spent the next several years learning at his manager’s knee, learning how to put it all to work. This process has paid off, most recently with a huge win: the L.A. Dodgers baseball team.

“I never rush in,” he explains. “I could have gone with the richest guy for the Dodgers. [But] it wasn’t a good fit for me.”

Johnson really hit it off with Mark Walter, controlling partner of the group, which is rounded out by Peter Guber, Todd Boehly and Bobby Patton. Johnson and Gruber were old friends, first going into business together on the AMC movie theatres. In some ways, it’s his own dream team.

Johnson isn’t slowing down any time soon. In the summer of 2011, he launched a new cable network, ASPiRE, which is designed to appeal to black families.

“Filling another void,” he says. “I’m staying true to what I do.”

Just like that rookie who sat in Kareem’s seat.

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