Magic Johnson walked away with just $40 million and what he did next changed everything
(Image Source — Getty Images)
While most athletes chase endorsement deals, Magic Johnson quietly locked in a 25-year contract with the Lakers and turned it into something no one expected. That early financial cushion helped launch one of the most diverse and powerful empires in sports and entertainment—from retail chains to high-stakes ownership in teams like the Dodgers and Commanders.
The 25-year
Los Angeles Lakers
contract that gave Magic Johnson long-term leverage
Magic Jackson's path from the basketball court to the boardroom kicked off with some smart financial decisions. After he inked that groundbreaking 25-year contract extension with the Lakers in 1984, which guaranteed him $1 million a year until 2009, his on-court earnings of about $40 million seemed small compared to what he was about to build. He took that financial security and launched Magic Johnson Enterprises in 1987, creating a $700 million business empire that includes movie theaters, Starbucks franchises, 24 Hour Fitness, and Burger King, showcasing his sharp business sense beyond the game.
With a strong base in retail and real estate, Magic Johnson transitioned into sports ownership. In 2012, he partnered with Guggenheim Partners to acquire the Los Angeles Dodgers for $2 billion, obtaining a 2.3% interest in the franchise. This investment proved lucrative as the Dodgers' worth more than doubled to about $4.8 billion by 2024. Concurrently, he invested in the Los Angeles Sparks (WNBA) and Los Angeles FC (MLS), clinching league titles at both levels.
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In 2023, the big moment arrived when Magic Johnson joined Josh Harris in the $6.05 billion acquisition of the Washington Commanders, putting in $240 million as a minority owner. This trade was particularly noticed not only because of the shocking price that was paid, but also due to the fact that the Commanders managed to recover: to 4-13 in 2023 and 12-5 in 2024 as they made the NFC championship game, which shows they are getting their money back quickly.
It was his business sense after retirement that really changed the game. From buying a share in the Los Angeles Dodgers in 2012 to putting in $240 million towards the record-setting $6.05 billion acquisition of the Washington Commanders in 2023, Magic Johnson's instincts turned his modest salary into a sports empire now valued at over $1 billion.
Also Read:
The Phoenix Suns will trade Kevin Durant soon but they don't care where he wants to go
Through the establishment of an eclectic business empire of his Magic Johnson enterprises, a host of investment-led retailing, and minority ownership of teams like in Dodgers and Commanders, he converted his fairly modest athletic earnings into the potential generational fortune.
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