Still in the Game (cont.)

THE VETERAN

Magic Johnson

It’s 8 p.m. on a Tuesday, and the Ladera Shopping Center in the Los Angeles neighborhood of Ladera Heights is hopping. The Starbucks is packed. Next door at TGI Friday’s, young professionals are filing into the bar and sliding into booths near the front. At the back of the restaurant, some 50 executives from a Fortune 100 firm sit in front of rapidly cooling plates of pasta and ribs. Instead of eating, they’re craning their necks at Magic Johnson—all 6 feet 9 inches of him—as he paces the length of the table. He talks about doing business in urban America with the same enthusiasm he brings to recounting his five NBA championships with the Los Angeles Lakers.

Before Johnson opened the restaurants in 2004, there was little here save for fast food restaurants and convenience stores. Now it’s a hub of activity. Bringing business into underserved urban communities is not only the right thing to do, Johnson tells his audience; it also makes money. Serving urban communities is the one guiding principal of Magic Johnson Enterprises. The company comprises more than 100 Starbucks, a dozen 24 Hour Fitness Centers, several AMC Magic Johnson Theatres, a majority stake in food services giant SodexoMAGIC, Magic Workforce Solutions staffing company, a $500 million private equity fund, and three real estate development funds. Johnson has not only built a business on his philosophy of serving underserved communities, he’s the authority on it.

It’s a bit of a role reversal for Johnson, who back in his playing days never missed an opportunity to learn from business leaders who had courtside seats or showed up at the same social events. Johnson once approached Sony Pictures CEO Peter Guber, who was sitting court-side, during the middle of a game to ask “How do I get into business?” He patched together a virtual MBA with the wisdom gleaned from Guber, real estate financier Victor MacFarlane, Lakers owners Jerry Buss, and Creative Artists Agency co-founder Michael Ovitz, among others. “Earvin has always had this burning desire to be in business,” says Magic Johnson Enterprises president Eric Holoman, who met Johnson at a sponsors’ party after the 1987championship. “Sometimes I think basketball just delayed the inevitable.”

Johnson started dabbling in business while he was still playing ball. In 1988 he became the first NBA player licensed by the league, with a Magic Ts brand of logo T-shirts. Before the 1992 NBA finals, Johnson recalls presenting Michael Jordan with a T-shirt with Jordan’s name on the outside and Johnson’s label on the inside. He said, “Michael, win or lose, tomorrow I’m still going to make money.”

Not all his ventures succeeded. Magic 32, a sports paraphernalia store Johnson opened in 1990, was almost an immediate flop. “I went to the retail Super Show in Atlanta and bought everything for the store that I liked,” says Johnson. He realized later that his taste was entirely different from that of his much younger target audience. “That taught me a couple-hundred- thousand-dollar lesson about making the business about the customer and not about yourself.”

That principle influenced Johnson going forward, helping him recognize the pent-up demand for services in urban America. Big corporations hadn’t noticed. “I didn’t say, ‘I’m going to build this and they will come,’” says Johnson, who retired from the NBA in 1994. “There was already demand for these services.”

Johnson’s first move into urban America came in 1994, when he set out to replace the Baldwin Theater in Los Angeles. He wanted to rebuild the rundown movie palace and give a boost to the neighborhood, which straddled a middle-class neighborhood of Baldwin Hills and gang-torn south L.A. Having learned his lesson at Magic 32, Johnson did his homework this time and went to banks with statistics in hand. No luck. So Johnson went to see his courtside buddy Peter Guber, who eventually put Johnson in touch with the newly formed Loews Cineplex Entertainment, part of Sony and now called AMC Theaters.

The movie executives agreed to partner with Johnson under the condition that he put up a few million of his own money, no small sum for Johnson at that time. Johnson agreed, and the new Magic Johnson Theater opened in 1995 and went on to become one of the topgrossing theaters in the country.

That success led to more partnerships, notably one with Starbucks. Johnson doesn’t drink coffee, but he noticed that Starbucks wasn’t just about coffeedrinking; it was about socializing and networking. Again, he saw demand for that kind of outlet in urban communities. “People said no way minorities would pay $3 for a cup of coffee,” says Johnson.

PAGE 1 2 3 4 5 next