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“ ‘I didn’t even know what stocks [were] at that time. So I passed on the stocks.’”
Earvin “Magic” Johnson is viewed as one of the most successful athletes-turned-businessmen of all time, but even he has at least one business deal that he regrets passing on.
When Johnson left Michigan State for the NBA in 1979, he was seen as one of the most talented prospects to enter the league in its then three-plus-decade history, and shoe companies were lining up to sign him to an endorsement deal.
This, ultimately, was a $5 billion decision, Johnson told Showtime’s “All the Smoke” podcast.
In that recent interview, Johnson recalled his rookie season with the Los Angeles Lakers in 1979, and how he was courted by three shoe companies: Converse, Adidas
ADS,
ADDYY,
and Nike
NKE,
So how did he choose which one to team up with? He went with the brand paying the most upfront.
“Converse offered me the most money. So, you know, when you grow up broke, you take the money,” said Johnson, born in Lansing, Mich., 64 years ago Monday. “[Nike co-founder] Phil Knight came in and said, ‘Hey, I can’t offer you the same type of money, but I can offer you stock.’ “
Nike was far from a premier basketball brand in 1979, and Converse had a far larger presence in the NBA, including endorsement arrangements with top players Julius “Dr. J” Erving and George Gervin. Nike was still five years away from signing its breakthrough deal with a Chicago Bulls rookie named Michael Jordan and creating the Air Jordan, and nine years away from the introduction of its iconic “Just Do It” slogan.
From the archives (June 2020): Nike’s Jordan brand gets a boost from ESPN/Netflix doc ‘The Last Dance’
Also see (May 2020): Michael Jordan memorabilia explodes amid ‘Last Dance’ popularity
Plus (April 2020): Michael Jordan documentary: ‘Former Chicago resident’ Barack Obama among those appearing in ‘The Last Dance’
“I didn’t know nothing about it,” Johnson recalled in the podcast interview. “My family didn’t come from money. See, that’s one thing that hurt us sometimes. When you don’t come from money, I didn’t even know what stocks [were] at that time. So I passed on the stocks.”
And what happened next? Nike Inc. had its initial public offering the following year on the New York Stock Exchange. The stock debuted at $22 a share in 1980, but it has had several splits since — the split-adjusted per-share price of those initially issued shares would be 17 cents, according to Dow Jones Market Data. Shares of Nike sit at just under $110 per share as of Friday’s close.
See also: When LeBron James chose Nike in 2003, he gave up $28 million — it could end up making him $1 billion
Johnson’s claim that his Nike’s total offer, including the equity component, would be worth $5 billion today cannot be fully verified for several reasons. And some reports have indicated that the actual value of the offer was much lower than Johnson’s estimate.
Regardless, Johnson expressed regret. “Can you imagine? Forty-five years. Five billion dollars, that stock would’ve been worth today,” Johnson said, putting his hands on his head.
Representatives for Johnson did not respond to MarketWatch’s request for comment for this story.
Johnson’s deal with Converse was reportedly valued at $100,000 per year. Decades on, Converse doesn’t have a major presence in the NBA or the basketball-shoe market. In a further twist, the then–privately held Converse was acquired by Nike in 2003 for $305 million.
While it’s likely accurate to say that Johnson would have been better off agreeing to the deal offered by Nike, he’s done quite well, businesswise. He has a net worth in the hundreds of millions, according to estimates.
In a recent development he’s become a part-owner of the NFL’s Washington Commanders.
Read on: LeBron James vs. Michael Jordan: Who is the GOAT when it comes to net worth?
