Former basketball icon Magic Johnson has become the fourth sports star to reach billionaire status, with a net worth of $1.2 billion, according to Forbes’ calculation.
Johnson joins fellow NBA superstars Michael Jordan and LeBron James, as well as Tiger Woods, to join the exclusive 10-figure club.
But most of the 64-year-old former Los Angeles Lakers guard’s wealth doesn’t come from sports—he only earned a total of $40 million during his 13-year career with the Lakers, a far cry from LeBron’s $480 million.
Even during his prime playing years, Johnson only pulled in some $2 million-$4 million per year in endorsements, according to Forbes estimates at the time.
Instead, much of his fortune has come after his 1996 retirement, thanks to some smart investment moves outside of basketball.
How did Magic Johnson make his billion?
Johnson has a diverse portfolio made up of investments in fast food franchises, real estate, healthcare, and life insurance, as well as ownership stakes in various sports teams.
The five-time NBA champion has proven over the years that he is shrewd when it comes to acquiring assets, exiting at the right time, and then reinvesting that money to scale it.
Johnson bought a 4.5% stake in the Lakers for $10 million back in 1994 before selling it in 2010 to healthcare billionaire Patrick Soon Shiong for an undisclosed sum. Meanwhile, in 1998, he partnered with Starbucks to open more than 100 coffee shops in Black neighborhoods across the country.
He sold the shops back to the company in 2010 for a reported $75 million profit and used the money from that and the Lakers sale to write a $50 million check to join the Dodgers ownership group in 2012. His 2.3% stake has now more than doubled in value, worth an estimated $110 million.
At the same time, Johnson made a small investment in Simply Healthcare and when the company sold for $1 billion in 2015, he used the money to buy a 60% stake in EquiTrust Life Insurance—and it’s that investment that pays him the big bucks.
Now, the Iowa-based life insurance company makes up the majority of Johnson’s personal net worth and it’s also the biggest asset in the Magic Johnson Enterprises portfolio.
Since becoming the company’s majority shareholder, Johnson has grown the company’s total assets from $16 billion to $26 billion, with annual revenues hovering around $2.6 billion, according to Forbes, highlighting his business acumen.
Today, Johnson has money in everything from NFTs to real estate development and PepsiCo.
Last but not least
Johnson thinks he could have become a billionaire sooner had he not turned down shares in Nike when he was entering the NBA in the 1970s. He took a deal with Converse, which offered him $100,000 a year, instead.
“My family didn’t come from money, that’s one thing that hurt us sometimes. When you don’t come from money, you don’t know. I didn’t even know what stocks [were] at that time,” Johnson revealed on the All The Smoke podcast earlier this year.
“So I passed on the stocks. Can you imagine? 45 years, $5 billion that stock would have been worth today.”
Instead, James was the first active NBA player to become a billionaire when he joined Forbes’ ranking last June with a slightly smaller net worth of $1 billion at the time. Woods joined the club just a week prior with a net worth of $1.8 billion.
Meanwhile, Jordan recently made history as the first athlete ever to sit among the likes of Elon Musk and Jeff Bezos on Forbes’ list of America’s 400 wealthiest people with a net worth of $3 billion.
Like Johnson, Jordan made his billions outside of his day job, including from a lucrative licensing deal with Nike and from selling his majority stake in the NBA club Charlotte Hornets.