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It's Magic, You Know?
How Magic Johnson Beat the Odds on His Path to Becoming a Billionaire
Ryan Cox
August 24, 2024
Magic Johnson’s basketball career is one of the biggest "What could have been?" stories in NBA history.
If he hadn’t been forced to retire after 12 seasons due to contracting HIV, would he be considered the greatest player ever?
We’ll never know.
But what we do know is that the way he reacted catapulted himself to an incredible height in business.
Table of Contents
Who is Magic Johnson?
Earvin “Magic” Johnson Jr., standing at 6 feet 9 inches, is often regarded as the greatest point guard of all time.
Born in 1959 in Lansing, Michigan, Magic was the son of Earvin Sr., a General Motors assembly worker and used car lot janitor, and Christine, a school janitor.
He grew up with six siblings and three half-siblings from his father’s previous marriage.
Magic's work ethic was instilled early by his parents and the game of basketball. Both his parents played basketball and mentored him as he developed his skills.
“My dad was my hero. And I got my personality from my mother.”
He fell in love with the game as a young child, practicing every day with dreams of being like Bill Russell.
In 8th grade, Magic scored 48 points in a game, the first sign that he had a future in basketball.
He attended Everett High School, a predominantly white school, instead of the nearby predominantly black high school due to a mandatory busing requirement. He faced racism on the team with teammates ignoring him during practice and refusing to pass him the ball.
“As I look back on it today, I see the whole picture very differently. It's true that I hated missing out on Sexton. And the first few months, I was miserable at Everett. But being bused to Everett turned out to be one of the best things that ever happened to me. It got me out of my own little world and taught me how to understand white people, how to communicate and deal with them.”
Magic earned his nickname from Lansing State Journal reporter Fred Stabley Jr. during his sophomore season after recording a triple-double with 36 points, 18 rebounds, and 16 assists.
After high school, Magic was recruited by top-ranked schools like Indiana and UCLA but chose to stay local and play at Michigan State.
He didn’t have aspirations to play professionally at first, focusing heavily on his communications major with a desire to become a commentator, but he ended up leading Michigan State to the Elite Eight as a freshman.
The following year, he faced off with Indiana State in the national championship against a team led by someone you may have heard of before: Larry Bird.
Magic and the Spartans took home the victory.
In 1979, Magic was selected first overall in the NBA Draft by the Los Angeles Lakers.
Teaming up with Kareem Abdul-Jabbar, Magic was named to the NBA All-Rookie Team and became an NBA All-Star Game starter his first year.
After a dominant Game 6 performance in the Finals with 42 points, 15 rebounds, 7 assists, and 3 steals, he became the first rookie to win the Finals MVP, leading the Lakers to their first of five championships during the “Showtime” era (1980, 1982, 1985, 1987, 1988).
Magic retired in 1991 after publicly disclosing his AIDS diagnosis.
He returned to win the MVP Award in the 1992 All-Star Game but faced protests from fellow players due to safety concerns if he suffered an open wound during the game.
He briefly coached the Lakers during the 1993-94 season and returned as a player in the 1995-96 season before retiring for good.
Although short, he had an extremely decorated and successful career.
Magic earned himself a spot on the 50 Greatest Players in NBA History list in 1996 and the 75th Anniversary Team in 2021. He was a two-time inductee into the Naismith Memorial Basketball Hall of Fame, individually in 2002 and as a member of the 1992 Dream Team in 2010.
Since retiring, Magic has been an advocate for HIV/AIDS prevention, an entrepreneur, philanthropist, and broadcaster.
What is Magic Johnson’s Net Worth?
Magic Johnson is currently worth $1.2 billion.
In October 2023, he became the fourth athlete, alongside Tiger Woods, LeBron James, and Michael Jordan, to achieve billionaire status.
However, Magic stands out among these athletes because he did not accumulate a substantial portion of his wealth from his playing contracts.
Throughout his NBA career, Magic earned about $40 million in salary and an additional $2-4 million per year from endorsements.
This modest sum, at least by today's standards, was partly due to the 25-year, $25 million contract he signed with the Lakers in 1981, which was the longest and highest-paying contract in sports history when signed.
Magic’s primary wealth-building strategy was through joint venture partnerships.
He learned a crucial lesson early in his career when he turned down a stock-only offer from Nike for a $100,000 cash offer from Converse.
At the time, Nike was an up-and-coming company, while Converse was a well-established brand. But it's reported that the Nike stock he passed up would be worth $5.2 billion today.
“Nike was just a year or two old. Converse offered me the most money. When you grow up broke? You take the money.”
Despite relatively low career earnings and the missed Nike opportunity, Johnson's rise to billionaire status is arguably the most impressive among the four athletes who have achieved it.
Magic Johnson’s Business Ventures
Magic Johnson houses all of his businesses under Magic Johnson Enterprises.
The executive team consists of Magic as CEO, Kawanna Brown as COO, Christina Francis as President, and Sheila Ewing as Vice President.
With such an expansive enterprise, this talented team plays a massive part in Magic’s success.
“Serve as a catalyst for fostering community and economic empowerment by providing access to high-quality entertainment, products and services that answer the demands of multicultural communities.”
Sports Ownership
Magic currently holds shares in a sports portfolio worth north of multiple billions.
While most of his investments are close to Los Angeles, his most recent makes him bicoastal.
Washington Commanders: In 2023, Magic became a co-owner of the Washington Commanders, purchasing the franchise for $6.5 billion alongside a 21-member group led by Josh Harris. This was the most expensive franchise purchase in American sports history.
LA Sparks: Magic invested in the LA Sparks in 2014 alongside an investment group and serves as a minority owner. He is actively involved and frequently supports the team in person.
LAFC: Magic became a co-owner of LAFC in 2014. Under his ownership, the team became the first MLS franchise to exceed a $1 billion valuation.
LA Dodgers: In 2012, Magic purchased a 2.3% stake in the LA Dodgers as part of the Guggenheim Baseball Management Group, serving as co-owner. The purchase price of $2 billion was, at the time, the most expensive franchise purchase in American sports history.
LA Lakers: Magic acquired a 4.5% stake in the LA Lakers for $10 million in 1994, eventually selling his stake in 2010. Despite selling, he remained an unpaid Vice President and later rejoined as the Director of Basketball Operations from 2017 to 2019.
Dayton Dragons: Magic purchased a share of the Dayton Dragons, the minor league affiliate of the Cincinnati Reds, in 2000.
Team Liquid: In 2016, Magic bought a controlling interest in Team Liquid as part of the aXiomatic Gaming investment group alongside Peter Guber (Golden State Warriors co-owner) and Steve Case (AOL co-founder). The team is currently estimated to be worth close to half a billion dollars.
Sports Metaverse Teams: In 2022, Magic joined SimWin Sports as an owner, investor, and advisor. SimWin Sports is a company built on Web3 technology, allowing fans to acquire, train, trade, and sell virtual players.
"I am a businessman. This is what I do each and every day. I love it. I love coming to work. I never have a bad day."
Magic Johnson Enterprises
Magic Johnson Enterprises spans several industries and ventures, all leveraging a central business model.
Magic recognized that urban markets were often overlooked by executives who neither understood nor believed in their growth potential.
"Assists is what Earvin is all about. That's what my whole life has been, assisting others."
He used his rapport in these communities to drive economic growth and tap into this underutilized market.
Movie Theaters
In 1995, Magic partnered with Sony Retail Entertainment to open the first 12-screen multiplex in Los Angeles, known as Magic Johnson Theaters.
The mission was to operate in underserved communities across the US.
Eventually, six locations were launched nationwide in Los Angeles, Atlanta, Houston, Cleveland, New York, and Maryland.
Combined, these theaters featured 72 screens with an average of 3,370 seats per location.
However, the Cleveland, Houston, and Atlanta locations were closed due to lack of profitability.
Hospitality
Magic’s foray into hospitality began in 1998 when he partnered with Carlson Restaurant Worldwide to open Magic Johnson’s TGI Friday’s, part of a franchise with 850 restaurants across 55 countries.
In 2001, he partnered with FatBurger, and in 2004 with Burger King Corp, opening 29 restaurants across Georgia, Alabama, Texas, and Florida.
His strategy included hiring from within the community, partnering with minority suppliers, and branding each as a Magic Johnson location. This approach increased traffic and sales by an average of 20% across the stores.
"When you are a successful business person, you are only as good as your team. No one can do every deal alone."
In 2006, Magic founded SodexoMagic to provide food services and facilities management to corporations, healthcare facilities, schools, and universities.
Recently, Magic celebrated the opening of the American Express Centurion Lounge at Hartsfield-Jackson International Airport in Atlanta, where SodexoMagic operates dining services, featuring a menu designed by Michelin-star chef Deborah VanTrece.
SodexoMagic has a long-standing presence in Atlanta, operating most airline clubs except in Concourses E and F, and maintains a full kitchen near the airport.
Real Estate
Magic Johnson has diversified his real estate investments to cover various aspects of the industry:
Johnson Development CalPERS: A real estate acquisition and management company.
Washington Mutual Home Loan Center: Partnered with this organization in 2001.
Canyon-Johnson Urban Fund: Formed in 2001 in partnership with Canyon Capital Realty Advisors LLC, this fund has facilitated over $4 billion in new developments and urban revitalizations.
Magic has also invested in multiple midtown developments near Georgia Tech and the Four Seasons in Atlanta, further expanding his influence in Georgia.
Investments
To reach his current level of success, it should come as no surprise that Magic Johnson has made a long list of investments along the way.
Biggest Investments
Among his numerous investments, four organizations have been the most pivotal in his journey to becoming a billionaire.
PepsiCo: In 1990, Magic bought a controlling stake for an estimated $60 million alongside Earl Graves, creating the largest minority-owned and operated Pepsi facility in the country at the time. This was his first business venture outside of product endorsements.
Starbucks: In 1998, Magic opened his first Starbucks in Ladera Heights, CA, and expanded to 125 franchises by 2010 before selling his shares. He deviated from the typical “suburban mom” locations, focusing on urban markets. By hiring locally and tailoring store designs and playlists to reflect the neighborhoods, he created 2,100 jobs and paid an estimated $29.8 million in salaries and wages over his ownership period.
EquiTrust Life Insurance: In 2015, Magic acquired a 60% interest in what would become his largest business venture. The organization manages $14.5 billion in annuities, life insurance, and other financial products. With $17 billion in assets, the company earned Ward’s Top 50 Performing Insurance Companies recognition and generated $2.6 billion in annual revenue. This business venture alone is where a majority of his net worth stems from.
Yucaipa Investment Fund: In 2011, Magic joined Yucaipa to invest in Vibe Holdings, becoming chairman and focusing on Vibe Magazine, Uptown Magazine, and the Soul Train TV Show. His goal was to drive growth in digital, live entertainment, and print industries.
Other Investments
Beyond his primary investments, Magic Johnson has also made notable investments in various industries.
Founders National Bank: In 1998, Magic acquired a majority interest, forming JJP Partnership.
24 Hour Fitness: In 2001, Magic partnered with the fitness company to address low membership rates in urban markets. His branded locations reportedly had 24% more active memberships than non-Magic branded locations, fostering community connections through tournaments, promotions, and periodic visits.
Aetna: In 2008, Magic partnered with Aetna to promote health and wellness in urban communities.
Best Buy: Also in 2008, he partnered with the electronics brand.
Skydio: In 2015, Magic invested in this leading US drone manufacturer and world leader in autonomous flights.
Walker & Co: In 2015, he invested in this health and beauty company, which produces products tailored to the needs of people of color.
Sonic Energy: In 2016, Magic invested in this US company developing wireless ultrasound charging systems.
Mitu: Also in 2016, he invested in this Latino media brand and digital network, aiming to connect Latin content creators with viewers worldwide.
ShotTracker: In 2016, Magic invested in this basketball company that makes wearable technology to track player and ball movement.
TopGolf: Magic is an investor in this sports entertainment and hospitality company, which has locations across the US, UK, Australia, Mexico, and the UAE.
"I look three to five years ahead, not 10 years behind."
Media
Outside of his numerous business ventures, Magic Johnson still finds time to make appearances and produce media.
Magic's media journey began in 1999 when he produced the film Passing Glory. This basketball movie showcases the journey of an all-black high school team facing off against an all-white team in New Orleans during the peak of the civil rights era.
In 2012, Magic launched a pay television network called Aspire, targeting African Americans with “Black entertainment featuring original lifestyle series, Black movies, and hit sitcoms” (AspireTV website). The network continues to thrive today.
Magic has also appeared as an NBA analyst over the years, most recently on NBA Countdown in 2022. Although there were reports he would make more frequent appearances, he has not been seen on the show since.
This may be due to his busy schedule with other business ventures and promoting his documentary, They Call Me Magic, released in 2022 on Apple TV. The documentary follows Magic's life from childhood through his NBA career, featuring a star-studded cast of former teammates, and has been very well received.
The Success Strategies of Magic Johnson
Find a Niche: Recognizing that black communities were largely overlooked by corporations, Magic focused his efforts on building a loyal customer base and growing his enterprises in this niche.
Capitalize on a Community: Magic went all in on black communities, understanding their needs and potential, and created a deep connection within these communities.
The Power of Delegation: With numerous ventures and responsibilities, Magic mastered the art of delegation, maximizing his output while conserving his energy for strategic decisions.
Don’t Let Setbacks Set You Back Forever: After being diagnosed with HIV, Magic could have quit. Instead, he used this moment as a pivot point to transition into business, arguably the best decision he ever made.
The Bottom Line
Magic Johnson’s life and journey offer a powerful lesson: If you give up at your lowest moment, you’ll never know what you could achieve.
When faced with the challenge of an HIV diagnosis, Magic could have easily retired comfortably, having already made enough money to live without working again.
Instead, he chose to pivot and arguably found even greater success off the court than he did in his legendary NBA career.
By leveraging his intelligence, drive, and foundation, Magic Johnson reached nearly unattainable heights in business and life.
In life, winning and losing will both happen. What is never acceptable is quitting.
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