*Magic Johnson might not be the best public speaker, but arguably he is one of the best when it comes to making a dollar out of fifteen cents. Last month Magic lead a group of investors in the purchase of the Los Angeles Dodgers. The $2 billion price tag is the largest amount ever paid for a sports franchise. That has some so-called experts saying it’s not the most financially sound deal, but Magic has a track record of beating the odds.
He’s a NCAA Champion, a 5-time NBA Champion, a 3-time league MVP and a 12-time NBA All-Star team player. All that happened more than twenty-five years ago. Since then he has turned the $25 million in salary and endorsements that he earned as a pro athlete into a billion dollar business and a personal net worth of more than $500 million. A dumb retired jock he is not.
NFL Super Bowl Champion and (some say) future Hall of Famer Warren Sapp, on the other hand, counts hundreds of pairs of Jordan sneakers, designer jewelry and other household collectibles among his assets. No wonder he filed for bankruptcy last week despite his current six-figure salary as a sports commentator. Maybe this is just an attempt to hide his real money from creditors. I hope he really isn’t that financially inept.
It would do 99 percent of pro-athletes well to use Magic as an example of what to do before and after retirement. He even turned the HIV virus into something you can live with after his diagnosis abruptly ended his pro-ball career. What Johnson knows about money and business ownership I doubt he learned at Michigan State, especially since he left after just two years to enter the NBA.
Current NBA players spent a good part of 2011 arguing for more money, even though the average player earns nearly four times that of a comparable NFL or MLB athlete. Some NBA top earners make more in one season than Johnson earned during his entire career. They live the dream everyday of winning the mega lottery and still some of them leave the game without a game plan. Obviously Magic Johnson has figured out the formula for making his money work for him long after his playing days ended.
Even though non athletes don’t have the advantage of a million dollar contract to jump start their entrepreneural endeavors there still are some rules to business everybody should follow. The first lesson is to learn the difference between assets and liabilities. Assets such as a chain of movie theatres, coffee shops or even vending machines make money for you; liabilities such as clothes, cars and child support payments to a bunch of baby mommas take money from you. This lesson alone can make a few hundred thousand dollars difference in the income or expense column of you bank account. Just ask Sapp, or Dennis Rodman, or Evander Holyfield, or Terrell Owens to name a few.
Magic should share his knowledge of wealth creation with other former pro atheletes who obviously need to know the importance of wealth creation when it comes to life after pro sports. It could help them to continue living the dream instead of a nightmare.
Steffanie is a freelance journalist living in the Dallas, Texas metroplex. Send comments, questions and speaking requests to [email protected]