How Magic Johnson convinced Howard Schultz to partner with him and build more Starbucks stores

FAN Editor

With five NBA Championships, an Olympic gold medal and various MVP awards to his name, Earvin “Magic” Johnson will go down as one of the greatest basketball players of all time. But the former Laker may be remembered for his business skills as well as his signature hook shot.

Since retiring from basketball in 1991, Johnson has focused on building Magic Johnson Enterprises, a billion-dollar conglomerate he formed in 1987 that invests in a variety of companies and owns Burger King restaurants, health clubs and professional sports teams. From 1998 to 2010, Johnson’s company owned more than 100 Starbucks stores.

The deal he struck with the former Starbucks CEO Howard Schultz “is what really stamped me as serious businessman,” Johnson tells Maverick Carter in an episode of “Kneading Dough,” presented by Uninterrupted. But the deal took work — and a bit of creativity.

Johnson wanted to bring Starbucks to the inner city, and he had to convince Schultz that his coffee shops would prosper there. His boardroom pitch wasn’t enough to win Schultz over, so he changed his strategy and invited the CEO to one of the movie theaters he owned at the time.

It happened to be opening night of “Waiting to Exhale” starring Whitney Houston and the theater was packed, Johnson recalled during a 2010 Wharton presentation: “Our biggest screen had 500 women inside. All of a sudden every woman thought she knew Whitney Houston personally and started talking to the screen. So Howard grabs me about 20 minutes in and says, ‘Earvin, I never had a movie-going experience quite like this.’

“Guess what happened? That got me the deal.”

The business partners created Urban Coffee Opportunities and, in 1998, the first UCO store opened in Ladera Heights, California.

“That deal changed everything,” Johnson says on “Kneading Dough.” “We built 125 stores. We made that deal happen and that’s what really put me on a path of success. … It showed everybody that I could drive ROI in urban America.

“When you think about African Americans now — over $1 trillion spending power — Latinos, over $1 trillion spending power, and moving even higher — there was nobody really building businesses and going after their disposable income. So my company was able to provide jobs and access to these retailers who were not coming in before, but now they hit a home run when we partnered and they came into the inner city.”

The 1998 deal with Starbucks is what Johnson calls a “game-changing deal,” and those are the only deals he’s after these days.

“I don’t want to do a regular deal,” Johnson tells Carter, adding that everybody gets mad now when he passes on a partnership or business opportunity.

After all, the key to getting really rich is being selective with how you invest your money and waiting until the “game-changing deals” comes around, he says. It’s something he’s absorbed from working alongside the super rich: “You can learn a lot from billionaires. They say: The same amount of time it takes to make $1 million is the same amount of time to make $100 million.”

Don’t miss: When a competitor tried to buy Starbucks, Howard Schultz was rescued by Bill Gates Sr.

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