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Magic's Kingdom
Richard Hoffer
December 03, 1990
Laker star Magic Johnson owns L.A., and someday he plans to own a lot more
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December 03, 1990

Magic's Kingdom

Laker star Magic Johnson owns L.A., and someday he plans to own a lot more

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This one was born at courtside with Joe Smith, who told Michael Ovitz, another Lakers fan, that he ought to get involved with Magic. "We can have some fun with this kid," Smith said. Ovitz likes to watch basketball, Magic in particular. But the representation of athletes is, for him, kind of lightweight stuff. As a matter of fact, says Ovitz, Hollywood's top dealmaker, "We don't represent athletes."

Still, he agreed to meet Magic, who was awed. "It seemed to me," Magic says, "that [Ovitz] was very reluctant. I got the feeling he did not want to take me on. But over four or five meetings, after he asked me questions dating back to my childhood, he finally said, 'O.K., I'll take you on.' Happy day!"

Ovitz insisted on an entirely nontraditional approach for Magic. "The architecture for the business career that we created," says Ovitz, "was to put him in a position where he would be doing a lot fewer endorsements but developing a closer relationship in a continuing business. Many athletes have multiple-endorsement deals, but that's not what we were interested in."

To distance Magic from athletic goods and services, Ovitz turned to bottling companies. Both Coca-Cola and Pepsi were interested in Magic as a spokesman. But Magic was interested in more than endorsement money; he also wanted equity. It was a long courtship. Ovitz prepared Magic with little coaching clinics and simulations and showered him with business reading. There was eventually a series of meetings with each company, and who knows what prepared Magic best for them—Ovitz, or all that daydreaming in Joel Ferguson's office?

"As soon as I go into their office," says Magic, "I'm reading the situation. Where's he sitting, where's he gonna make me sit? Are his feet on the desk? Is he gonna make me wait?"

Ovitz says Magic's instincts are as good in the corporate suite as on the basketball floor. He charmed both outfits. Smith says Magic can be in a room with 50 businessmen, "and they all think they've been touched." Pepsi offered him the more attractive deal. Magic went into partnership with Earl Graves, a prominent black businessman, and became executive VP and one-third owner of a Pepsi distribution-and-sales company in Forestville, Md., just outside Washington, D.C. Magic's investment in the company was reported to be as high as $20 million, though Rosen says it was lower.

Magic's idol, Dr. J, made a similar deal with Coke in 1985, while he was still in the NBA, and he has run up his investment considerably, according to Magic. Magic fairly salivates at the prospect. But this is not just an investment—it's not like a limited partnership, or celebrity ownership. General manager and vice-president Gary Allan-son was surprised and pleased to learn he had a hands-on owner to work for.

"I had no idea [Magic] had this high sense of urgency about getting things done," says Allanson. Magic's visits to the plant and to customers involve long and unusual days. After taking a red-eye to Washington this summer, Magic—"He's Earvin around here, actually Mr. Johnson," says Allanson—met with many of the 170 plant and administrative employees, beginning at 5:30 a.m.; went to dinner with some key customers; and then, at 8:15 p.m., slipped in a workout with the New York Knicks' Patrick Ewing at Georgetown University. The next day, starting at 5 a.m., Magic met with the plant's 16 drivers, took notes during his conversations with forklift operators, talked with all the account managers and then visited two universities to impress upon them the importance of having Pepsi machines in every dorm. "I've been with Pepsi for 13 years," says Allanson, "and Earvin can run with anybody I've worked for. I mean, he's in Hawaii on vacation and I get a call from him about a vending proposal. He's for real."

There are two questions that suggest themselves when an active athlete shells out millions of dollars to become executive VP in an industry of which his only knowledge comes from stacking ginger-ale cases in Lansing. Number one: Where does he get that kind of money? "I'm a big saver," says Magic. O.K., never mind. Number two: Where does he get the time?

Listen to his schedule for a month during the off-season and you'll see that the money is easier to come by than the time. From June 24 to July 28, Magic played in Larry Bird's all-star game in Indianapolis, appeared at former Laker Michael Cooper's basketball camp in New Mexico, conducted four five-day camps (two for adults in Maui, two for kids in the L.A. area), had one full day of business meetings at his L.A. office, did one of his four free basketball clinics in the L.A. inner city, spent four days with Pepsi people in New York City and Washington, and appeared at the Chicago Super Show to promote Converse shoes and his own apparel.

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