The NBA Hall of Famer is worth $1.2 billion thanks to investments in several professional sports teams and a life insurance company that has reached new heights under his ownership.
If Earvin Johnson wanted to realize his bold business ambitions, he was going to need a little magic. During the peak years of the Showtime-era Lakers in the 1980s, there was little reason to believe that an athlete would ever be taken seriously in the boardroom. So when a then-31-year-old Johnson told Sports Illustrated in 1990 that he wanted “to be in that $100-$200 million range” someday, the magazine wondered what he would even do with that kind of wealth. “For a franchise,” he answered. “And it doesn’t have to be the Lakers; it doesn’t even have to be an NBA team. I’m a sports fan. If baseball became available before basketball, I’d be right there. I want to do big business.”
Today, Johnson owns small stakes in the NFL’s Washington Commanders, MLB’s Los Angeles Dodgers, the WNBA’s Los Angeles Sparks and MLS’s LAFC. His Magic Johnson Enterprises has been a major player in everything including movie theaters, fast food franchises, real estate, healthcare and, most significantly for Johnson, the Des Moines, Iowa-based life insurance provider EquiTrust, of which his controlling stake makes up the majority of a personal net worth that Forbes now estimates to be $1.2 billion.
That makes the 64-year-old Johnson just the fourth athlete Forbes has ever identified as a billionaire, alongside Michael Jordan, Tiger Woods and LeBron James. And unlike the others, Johnson didn’t have the benefit of massive income from his playing days. His career earnings with the Lakers from 1979 to 1991, plus a brief comeback in 1996, add up to around $40 million (about $110 million when adjusted for inflation), pocket change when compared with James’ $479 million and counting. And even during his prime playing years, Johnson pulled in only between $2 million and $4 million per year in endorsements, according to Forbes estimates at the time. James, by comparison, will make an estimated $70 million off the court this season alone.
With so much farther to climb, Johnson needed to succeed in business the same way he did on the court—by being a great teammate. He built his portfolio through joint ventures and partnerships on the strength of his winning smile as much as his savvy, making lasting relationships with those at the upper echelons of the business world.
“He was born with that special talent; he’s had it since the beginning of his career,” says Mandalay Entertainment CEO Peter Guber, who has invested with Johnson on multiple ventures, including the Los Angeles Dodgers. “If I could know exactly what it was, I would bottle it and give it to myself and everybody in my company.”
Johnson first met Guber decades ago during a game at The Forum, when the most powerful people in Los Angeles were courtside regulars. Before an inbounds pass, Johnson approached Guber, then CEO of Sony Pictures, and music executive Joe Smith to ask how he could get into business. The two became mentors and in 1987 introduced Johnson to CAA cofounder and Hollywood super-agent Michael Ovitz. After initially telling Johnson he had no interest in athletes because of their limited earning potential, Ovitz agreed to put him through a business boot camp that included getting him subscriptions to business publications and having him participate in simulated business meetings. Johnson won him over so much that Ovitz even renegotiated his Lakers contract and set him up with potential business partners, all without taking a penny in commission.
“It’s probably the first and only time I ever did that,” Ovitz tells Forbes. “I just made a decision, I can’t really tell you why, that I was just going to help him out and make it work for him. But I did it, and he was just terrific. I was very happy that I did what I did.”
That Magic trick worked several times over the years. In 1990, Ovitz watched Johnson charm executives from PepsiCo over lunch at the 21 Club in midtown Manhattan, eventually landing a 33% stake in a $60 million deal to take over a bottling plant near Washington, D.C., reportedly for a cash outlay of less than half of its value. “He was unbelievable,” Ovitz recalls.
A few years later, Johnson pitched Guber on building a movie theater in the Baldwin Hills neighborhood of Los Angeles, which was plagued by gang violence at the time. Nevertheless, Guber’s Loews movie theater chain agreed to a 50/50 partnership. Johnson met with representatives of the Crips and Bloods and convinced them to declare the theater neutral territory. “I said, ‘I am not here to disrespect either one of you,’” Johnson recounted in the 2022 Apple TV+ docuseries They Call Me Magic. “What I am here for is to say, this theater is going to help the entire Black community. I want you to come. I want your families to come. But you guys gotta agree that we can’t have violence, outside or inside that theater. And I am creating jobs. So if you guys got some guys who want to work, I will employ them.”
Six years later, the theater produced $5 million in ticket sales and was among the top-grossing movie venues in the country. Johnson eventually added theaters in predominantly Black neighborhoods in Houston, Atlanta, New York City and Washington, D.C.. In 2004, he sold the theaters back to Loews.
During that same period, Johnson invited then-Starbucks CEO Howard Schultz to his Baldwin Hills theater for a screening of Whitney Houston’s Waiting to Exhale, and sold him on the potential of Black America’s considerable spending power. Three years later, in 1998, Starbucks established a 50/50 joint venture with Johnson to open more than 100 coffee shops in Black neighborhoods across the country. To fund the rapid expansion, Starbucks even allowed Johnson to use the company as his personal bank, taking out a loan for his half of the capital. He eventually repaid the loan in full, and in 2010 sold the locations back to the company for a reported $75 million profit.
“We got a tremendous amount of leverage in those partnerships,” says Ken Lombard, president of Johnson Development Corporation from its founding in 1992 until 2004. “Because we could get into a room and Earvin comes in and all of a sudden everyone is trying to figure out ways to make it happen versus reasons why they shouldn’t.”
In addition to leveraging his celebrity, Johnson brought to each of his deals what he felt was his expertise—reaching Black consumers. He stocked his movie theaters with flavored sodas and extra hot dogs, for example. “I told Loews, Black people are going to eat dinner at the movies,” he told the New York Times about the strategy in 2000. “Those hot dogs are our dinner. Same with the drinks. Our soda sales were just okay. I said, Black people love flavored drinks because we were raised on Kool-Aid. So we put in punch and strawberry soda and orange, and the numbers went through the roof.”
Similarly, he swapped out scones for sweet potato pie in his Starbucks shops, where he also installed picnic tables with chess boards and played R&B over the speakers. Despite their locations in lower-income neighborhoods, the average spend per customer at his Starbucks locations was higher than the national average.
Lombard says the Starbucks deal was a game-changer for Johnson, earning the respect of institutional investors who had initially turned him down. The California Public Employees Retirement System (CalPERS) invested $50 million in a real estate development venture he cofounded with San Francisco-based investment management firm MacFarlane Partners in 1996, targeting Black communities. Johnson and MacFarlane put up just $1.5 million, collecting money through asset management fees and incentives upon exiting. Later, Johnson scaled the same concept in partnership with Canyon Capital, a Los Angeles-based hedge fund, raising a $300 million fund in 2001, a $600 million real estate fund in 2005 and a $1 billion fund in 2008.
“Sometimes people try to criticize people who do joint ventures, especially an African American entrepreneur,” says Earl Graves Jr., another professional athlete-turned-businessman who fronted Johnson’s first deal with PepsiCo alongside his father, the founder of Black Enterprise magazine. “When you go to deposit money at a bank, they don’t ask you whether you were creator of the business or just in a joint venture.”
For all of his business savvy, Johnson missed out on some of the biggest paydays. As the now-infamous story goes, Nike offered him an endorsement deal before the 1979 NBA draft that included royalties on shoe sales as well as a substantial amount of company stock, even greater than the deal Michael Jordan would accept five years later. Johnson turned it down in favor of guaranteed money from Converse, costing him a massive financial windfall.
In 1994, Lakers owner Jerry Buss gave Johnson a chance to purchase a 4.5% stake in the team for $10 million, which Johnson eventually sold in 2010 to healthcare billionaire Patrick Soon Shiong just before NBA team values exploded. According to Forbes estimates, in 2010, Johnson’s stake in the Lakers would have been worth $29 million. Had he held on, Johnson’s stake in the team would be worth more than $265 million today.
The same year, Johnson took a meeting in Santa Monica with Guber and Joe Lacob, the new owners of the Golden State Warriors. “He was the first person we met with after we acquired the team about him potentially being involved with us,” Guber says. Citing his deep ties with the Lakers, Johnson ultimately declined to invest. Forbes now values the Warriors at $7.7 billion, more than 17 times what the team was purchased for in 2010.
Still, Johnson has been able to enter, exit and scale up his investments for more than 30 years. The money earned from his Lakers and Starbucks sales in 2010 gave him the ability to write a $50 million check to join the Dodgers ownership group in 2012, alongside Guber and Guggenheim Partners. His 2.3% stake has now more than doubled in value, worth an estimated $110 million. The same year Johnson bought into the Dodgers, he made a small investment in Simply Healthcare, coinciding with its launch of a Medicaid plan for people with HIV and AIDS, and when the company sold for $1 billion in 2015, Johnson used the money to buy a 60% stake in EquiTrust Life Insurance from Guggenheim.
EquiTrust is now the biggest asset in the Magic Johnson Enterprises portfolio, and with Johnson as its majority owner, it represents just how far he has come as a businessman. Since taking over, Johnson has grown the company’s total assets from $16 billion to $26 billion, with annual revenues hovering around $2.6 billion. Andrea Caruso, chief operating officer of the life insurance data provider MIB Solutions, says the pandemic boosted awareness for annuity products but didn’t necessarily guarantee success because “life insurance is sold, not bought.” Far more important, she says, is navigating the complex web of ever-changing regulatory guidelines.
“Life insurance definitely does require an investment. Would I say it’s an easy investment? No,” Caruso says. “But it does provide an opportunity to provide that piece of mind to people.”
While owning a life insurance company may have a deeper meaning to a man who was diagnosed with HIV in 1991, according to Ovitz, “he was always agnostic about what the business was as long as it fit the parameters of what a good business should be.”
Today, Johnson has money in everything from NFTs to CBD. He’s on the board of directors for Fanatics and Cameo. His infrastructure joint venture is contracted to renovate Terminal 1 at John F. Kennedy International Airport in New York and Los Angeles International Airport’s cargo facility.
Incredibly, Johnson is now thought of by many as a businessman as much as he is an athlete, and he is setting an example of how future generations could bridge that divide. Russell Westbrook is certainly copying the Johnson playbook with his investments. And in They Call Me Magic, fellow Basketball Hall of Famers Dwyane Wade, Charles Barkley and Shaquille O’Neal cite Johnson as their primary business inspiration. Or as Shaq put it: “We all owe Magic.”
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