Profile
Magic Johnson: Putting People in the Game
Kellye Whitney, 11-21-2008
Earvin “Magic” Johnson has amassed a lot of accolades. There are three Most Valuable Player awards, and three more for Finals Most Valuable Player, five NBA championship wins for the Los Angeles Lakers and his spot on the U.S. Dream Team that won Olympic gold in 1992. Johnson was voted one of the 50 greatest players in NBA history in 1996, entered the Naismith Memorial Basketball Hall of Fame in 2002 and, in 2007, ESPN rated him the greatest NBA point guard of all time.
That’s only a few sentences worth of his accomplishments, and it is by no means a comprehensive list of notables from his stellar NBA career. For many, that would be more than enough achievements to last a lifetime. Not for Magic. The chairman and CEO of Magic Johnson Enterprises has made it his mission to put urban America to work.
“I always — since I was 15, 16 — dreamed of being in the NBA, but I also dreamed about being a businessman. And I’ve been in business over 25 years,” Johnson said.
While he was playing in the NBA, Johnson owned a Pepsi distributorship with Earl Graves, the chairman and CEO of Black Enterprise magazine, had a stake in a radio station and was a licensee of the NBA. Afterward, things sped up, and he added author, NBC commentator and NBA coach to his resume.
“When I retired, I was going maybe 10 miles an hour. I said, ‘Now it’s time for me to go 100 miles an hour because I’m retired, and I can really get into my business life.’ That’s when I decided I wanted to invest in urban America,” he said.
Johnson said, after looking around, he decided to bring all the things that were missing, especially in retail, to urban America. The work began with the Magic Johnson Theaters in L.A. and then migrated to Seattle, where Johnson approached Starbucks Chairman and CEO Howard Schultz about bringing the popular chain to urban communities.
“After seeing so many minorities travel — and I was one of those — into suburbia to get Starbucks, that was a natural move for me. When Howard said yes, that really catapulted me into being a serious businessman. From there I went to Dallas to TGI Friday’s because a woman after church told me, ‘Young man, it’s great with the theaters and the Starbucks, but I can’t get a salad in my own community.’ From there I approached Mark Mastrov, who was running 24 Hour Fitness. We didn’t have really quality fitness clubs in our community, and now we’re in over a dozen 24 Hour Fitness clubs.”
Johnson said he wanted to go even bigger, so he raised money to start his first real estate firm in 1998, called the Canyon-Johnson Urban Funds.
“We raised $300 million and gave our partners a great return on their money: over 25 percent. Then we said, ‘OK, our partners are happy, so let’s do fund number two.’ We did $600 million, and we were running right around 22-24 percent on the second fund. We just closed our third fund three months ago, and we raised a billion dollars in a tough economy. We’re growing in a slow and disciplined manner, but we are excited about having that type of capital to invest in urban America.
“People don’t realize we’re over 2 million homes short in urban America, and there’s 70 percent less retail options there than in suburban America. We build mixed-use housing and retail, so we really address the needs of urban communities across the country.”
Johnson said he turned his attention to private equity next. Then came a partnership with food and facilities provider Sodexo Inc., called SodexoMagic LLC, in which he is more than 51 percent owner.
“We provide food-service and facility management to different corporations and hospitals and school districts. We have an American Airlines contract, we have Disneyland, Abbott, Mount Sinai Hospital in New York,” he said. “We’ve been able to really grow our business, and we’re excited about the future, but we saw the direction of the country with people losing jobs.
“In my home state of Michigan, the automotive industry just devastated the whole state, and I said, ‘Wow, I’ve got to put people back to work.’ I’m already putting people to work: We have over 30,000 employees across the country. But I said, ‘I’m really going to start putting people to work’ by starting Magic Workforce Solutions.”
Magic Workforce Solutions will provide organizational staffing solutions and career services for qualified residents in underserved communities. Johnson said this new recruiting arm of Magic Johnson Enterprises, formed in partnership with workforce solutions provider Adecco USA, will train those who need it and will retrain those who have lost jobs and need to shift directions in their careers.
“It’s exciting. Nicole Ganier-Cosme, who is heading up Magic Workforce Solutions, has a wealth of knowledge and contacts. I pride myself on getting the best of the best to come in and run the different entities because they are really, truly the key. With her as the president, we’re going to be able to put a lot of people to work.”
Given the 30,000 people Magic Johnson Enterprises already has employed — a number that is growing quickly — Johnson said his greatest challenge is to maintain the organization’s status as the No. 1 brand in urban America.
“The greatest challenge is not to grow too fast. The second greatest challenge is making sure we always bring in qualified people who believe in the brand and believe in the mission — never dilute the brand and always bring in top people who can manage the portfolio,” he explained.
“There’s a lot of people out of work all over the country. It’s time for us to really put minorities to work, and we have to train them to do those jobs and we’re going to do just that.”
On the subject of diversity, Johnson said there is no need for a specific philosophy around the subject at Magic Johnson Enterprises because that’s what he’s been about from the beginning.
“If you look at my office, the 30 or so people that work there, they’re all minorities except one. And for the people we hire across the country, it’s the same thing. We’ve always believed in minorities, so diversity for us is something to live by. That’s who we are, and that’s how and why I built my company: to give minorities who have been overlooked in corporate America that opportunity to be presidents and vice presidents. They already have the skill sets; it’s just giving them the opportunity to work and letting them do what they’ve been trained to do through their college educations and backgrounds in private corporate America.
“If you look at the contracts we have with different companies, whether it’s cleaning our buildings or some of the line contracts, we always look for minority vendors. Diversity for us is a way of life.”
Johnson said he has been able to recruit for his organization without much effort because potential candidates believe in the brand and the company’s mission.
“They believe in what we’re doing in urban America. They believe in growth opportunities within the company. That’s it in a nutshell,” he said. “There’s growth potential for them, and they are affecting the community, basically, that they grew up in. It’s also a great learning curve for them. The people who work inside Magic Johnson companies get to rub elbows with the brightest and the best from other corporations.”
