|
The Magic touch
|
 |
July 2, 1998: 2:30 p.m. ET
NBA great is off the court, but scoring big in business and the inner city
|
NEW YORK (CNNfn) - Earvin "Magic" Johnson -- you know his smile, his NBA record and his health. What you may not know is that he's still scoring points -- not on the basketball court -- but in corporate boardrooms and underprivileged communities.
One of the greatest basketball players who ever played the game, Johnson's now putting his money into big business. With an estimated net worth of $100 million, Johnson is into just about everything: movie theaters, video games, an ownership stake in the Los Angeles Lakers -- even music and television deals.
His newest venture is a late-night talk show.
And while some critics are frowning on "the grin that stole late-night," Johnson is taking his legendary smile all the way to the bank, using the marquee value of his name to sell gourmet coffee, restaurants and credit cards.
He's also investing in urban America, focusing on neighborhoods that have been overlooked and neglected by mainstream developers.
"We're not letting you just come into our community anymore without a partner or without one of us being a partner in that deal, " Johnson says.
Knowing your market
Because Johnson himself grew up in the inner city, he brings a unique perspective to the development of these areas.
"We want what everyone else has and a lot of times, what businesses do, they build us a second (or) third-rate store. They don't build the same store they build in the suburbs," he says. "They feel they don't have to do it. See, we don't demand that they do it, but I do demand that."
More than just demand it, Johnson decided to create businesses himself in what he believes are under-served neighborhoods. In 1992, not long after the Los Angeles riots following the Rodney King verdict, he formed the Johnson Development Corporation.
"At that time, everyone was trying to figure out what you could do to make a difference. And above all else, Earvin and I were tired of waiting for someone else to do it," says former venture capitalist Ken Lombard.
Lombard is president of the Johnson Development Corporation. He and Johnson form strategic partnerships with big businesses rather than tackling it alone. Their first partner: Sony Pictures.
"Everybody tried to tell us, 'You know, this is not going to work. You sure you know what you're doing?' And Earvin was wonderful because he was committed and he went to them and he said, 'I'm not really asking the question. This is what we're going to do. Will you support me? Will you give us film?' And in each case it was a 100-percent yes," Lombard recalls.
In 1995, the first Magic Johnson Theater opened its doors in Los Angeles -- a state-of-the-art 12-screen, 3,700-seat multiplex. Johnson himself put up half the money.
Clearly, he had home-court advantage, but he also came armed with research. Blacks and Latinos make up roughly 35 percent of the movie-going public. [317K WAV] or [317K AIF]
"We do about 1.5 million people a year coming through the doors," he says.
Sony wouldn't release the financial figures of the Los Angeles theater, but did say that it's among its top grossing theaters nationwide.
Making money, creating jobs
That's not all. The Magic Johnson Theaters have created at least 100 new jobs for local residents in each of their locations in Atlanta, Houston and Los Angeles.
"I feel as a young black man, I'm working for a black man that's trying to give inner-city youth a job," says corporate trainee Shawn Wallace.
"What I like about it, it's in the inner city. It's right here smack dead in the middle of our neighborhood -- which is good!" Wallace adds.
Johnson makes it clear his theaters belong to the whole community and lays down some ground rules. Among them, "no hats, no colors" - which are used to identify gang affiliation.
"Having that cap rule has ended the possibilities of any future trouble. I think it's brought people together of all different types -- Latinos and blacks -- it's brought us all together, you know," says Neilson Harris, a local resident.
As someone who grew up in the inner city, Johnson understands the market, and he's even given Sony some advice.
"We were doing inventory and I said, 'Okay, I know the inner city. I know how we do when we go to movies. These hot dogs are going to be gone the first week.' (They say,) 'No way, no way. We don't sell that much over at such and such.' What happens? We open on a Friday, the hot dogs are gone by Sunday… by Sunday!" Johnson says, laughing.
The same thing happened when he advised Sony to stock up on fruit-flavored drinks.
"I said, 'They're going to drink the Coke, but we need the flavors because minorities love flavors. So our sales were kind of low, so we said, 'Okay, let's try these flavors.' Shoot, we tried those flavors and sales went way up," he said.
Tapping the inner city's spending power
What Johnson brings to the table eventually ends up in the bank, according to L.A. economist Jack Keyser.
"In many cases, the business community doesn't think there is an economic base there. No customer base, no buying power," Keyser says.
Keyser speculates the untapped value to businesses in these under-served communities is quite high.
"It's tough to put an actual number on it but if you were looking at accounting you'd start in the billions," he says.
A new study by a Boston think tank reports the spending power of the nation's inner cities totals $100 billion a year.
That potential is attracting other partners -- among them Starbucks CEO Howard Schultz, who teamed up with Johnson to open the first inner city Starbucks in Los Angeles. [250K WAV] or [250K AIF]
Keeping in touch
Magic Johnson's celebrity status is just a part of the reason people support him. The other is his commitment to stay in touch with the community.
"I love sitting down … high-fiving the young kids, giving them autographs, letting them feel and touch me. I don't want them to feel that I'm this person that they can't get to or that they can't touch, or that they don't know," Johnson says.
For Magic, it's not just a business -- it's a mission and he challenges other blacks to invest in the inner city.
"I can't do it by myself. Hopefully, these other guys and ladies will come on out and invest in our community, because this is not good business, it's great business! You can make some money," Johnson says.
Johnson hopes to build a mini-empire of inner city businesses. He already owns three theaters and three malls, but he's adding to that number with new partnered ventures, such as the one he's got with the restaurant chain T.G.I Friday's.
Among his new businesses is an investment in a commercial bank -- one of about 35 owned by African-Americans in the United States.
Whether offering people a mortgage, a job or a great cup of cappuccino in their own neighborhood, Magic believes what he's doing yields more than just a return on his financial investment.
"I was around when my father finished the last payment of his house. I remember like it was yesterday. He had worked all those years to own that house and he cried. He was so excited and so happy and I want to see other people get that feeling, too," Johnson says.
He's willing to put a little bit of magic and a whole lot of his money on the line.
"What's at stake for me? A lot of millions that I invest. I know that I could probably lose right now about $25 to $30 million dollars," he says.
"But right now, that's not happening. God is blessing me, so we're going to continue to do what we're doing," Johnson promises.
|
|
|
|
|
 |
|
