Earlier in his career, Magic Johnson made a decision that, in hindsight, could have cost him in the long run.
That move was to leave an offer from an optimistic, budding shoe company. The once “budding shoe company” is now known as Nike and can be seen across the globe.
In 1979, the retired Los Angeles Laker chose to sign with Converse over Nike. At the time, the decision made perfect sense as that Converse was the leading shoe company for the league and was able to offer him the funds to match his lifestyle at that very moment.
On the other hand, Nike was still a new company that had only been operating for a little over six years and looking to make its big break. They offered Johnson an option in Nike stock to sign with them, but of course, he went with the cash.
What Was The Offer?
HBO’s “Winning Time: The Rise of the Laker’s Dynasty” is taking viewers on a trip through the past, detailing the journey of the popular sports franchise that the world knows and loves today.
While the show has been met with quite the criticism by the players it portrays, The Showtime Lakers (including Johnson himself portrayed by actor Quincy Isaiah), it does give the world an inside peek at what life was like for those OG NBA players.
One particular episode highlights the infamous Nike deal that Johnson walked away from which has folks buzzing about his decision. However, let’s break down what the offer looked like at the time.
According to Inc., the show “assumes” Nike co-founder Phil Knight offered Johnson $100,000 in Nike stock options. Plus, this was in addition to a $1 royalty for every shoe sold, “but that’s probably twice what the actual amount would have been,” the outlet speculates.
A graphic appears in the episode that estimates that Johnson lost out on $5.2 billion by turning down the offer. Although, Inc. also broke down the numbers, and “Winning Time’s” estimate may not be too accurate.
It isn’t clear what the exact numbers equal out to from Johnson leaving the deal on the table. However, the outlet provided a breakdown that you can check out here.
Again, when one thinks of the deal in hindsight, it’s easy to say that Johnson missed out on a fortune. But, it’s very important to note that the shoe company was not the Nike that the world now knows and loves. This was also the pre-Jordan era. So, there weren’t really any athlete endorsements to build upon, thus Johnson went with the deal that he knew could bless his pockets at that given moment. The Converse deal brought him $100,000 in cash during the time.
How It All Panned Out
“I never heard of stock at 19 years old, so I took the money,” Johnson once told reporters as he recalled the missed opportunity. “You know, usually [you think] ‘I gotta take this cash!’ Man, I would’ve been a trillionaire by now. You think about 1979, getting that stock then, and what it’s worth today? Yikes! So that kills me every single time I think about that. I’m like, ‘Man, Michael Jordan would’ve been making me so much money.’”
This sentiment is correct. The renowned Air Jordan shoes turned out to be a huge success for Nike. According to Forbes, “the Jordan Brand is easily worth more than $10 billion.”
Everything did indeed work out in the end because Johnson sits on a net worth that is well over an estimated $600 million. And, of course, he has been known to have his hands in several business ventures including ownership in the Los Angeles Dodgers as well as his own investment company, Magic Johnson Enterprises.