Even for superstar basketball players, getting started in the business world isn’t easy.
“I had to take my ego out of it and say to myself, ‘I don’t know business,’” recalls Earvin “Magic” Johnson. “I met different CEOs and people like [Johnson partner] Bobby [Turner] who talked to me about how to get started.”
For years, Johnson had wowed basketball fans—first at Michigan State and later
with the Los Angeles Lakers—with his no-look passes and on-court skills. But after his basketball career ended in the mid-1990s, he pursued another goal: making his mark on the business world.
But, as Johnson remembers, it wasn’t easy. Early on, Johnson learned the importance of the joint venture. “The smartest move I made was to get into partnerships with people,” he says. “I have an expertise and they have an expertise.”
Johnson teamed up with companies like Starbucks and Loews Cinemas, working to establish the chains—co-branded with Johnson’s name—in cities throughout the US.
Working with K. Robert “Bobby” Turner, a managing partner at Los Angeles-based Canyon Capital Realty Advisors, Johnson was able to parlay his experience with urban retail development into a successful private equity real estate strategy. Like Johnson’s development work, his venture with Canyon focused on opportunities in inner city neighborhoods.
“Magic recognized this early on and captured the opportunity by providing a movie theater, by providing a coffeehouse,” says Turner. “He recognized that the urban consumer was no different from the suburban consumer, except that they didn’t have the options available.”
In 2001, the Canyon Johnson Urban Fund raised $300 million (€234 million) to pursue its strategy of urban investing in the US. The firm has since raised more than $600 million for a second vehicle, having invested in high-profile projects in Los Angeles, Miami, New York, Chicago and Baltimore.
Johnson and Turner point out that the fund pursues what they call a “double bottom line,” both making money for LPs and providing underserved neighborhoods with the sort of retail options and quality housing found in more affluent suburban neighborhoods.
“They don’t want less anymore,” Johnson says of people living in urban neighborhoods. “The problem had been people coming in and [offering] less. You can’t do that. We set the standard.”