Magic Johnson Turned Down Phil Knight’s Nike Stock Offering In 1979

Magic Johnson Turned Down Phil Knight’s Nike Stock Offering In 1979
  • Tanya Ray Fox

In his first ever appearance on Ellen DeGeneres’ long-running daytime talk show, Magic Johnson shared one of his biggest regrets as an uber-successful business man. It’s a regret that he said “still haunts me today”, and it takes us all the way back to 1979 – the year he was drafted first overall out of Michigan State by the Los Angeles Lakers.

Via EllenTube.com:

“When I first came out of college, all the shoe companies came after me.” said Johnson. “And there was this guy Phil Knight, who just has started Nike. All the other companies offered me money, but they couldn’t offer me money because they’d just started. So he said something [about] stocks – ‘I’m gonna give you a lot of stocks.’ I didn’t know nothing about stocks, I’m from the inner city. We don’t know about stocks, you know, at that time. Boy did I make a mistake.”

Obviously there are plenty of people, most in fact, that would’ve made that same “mistake.” Especially as a young kid getting their first shot at wealth. Still, for a guy who turned out to be as business savvy as Johnson, it’s nearly impossible not to second guess that decision.

“I’m still kicking myself. Every time I’m in a Nike store I get mad. I could’ve been making money off of everybody buying Nikes right now.”

According to Investopedia, if you had invested $1,000 during Nike’s initial public offering (IPO) back in Dec. of 1980, without reinvesting dividends, your investment would be worth $729,575 today. This represents a compound annual growth rate (CAGR) of just over 20.7 percent.

It’s unclear how much of a stake in the company Knight was offering, but from the way Johnson makes it sound, it would’ve been significant. Ellen pointed out that the NBA Hall of Famer couldn’t have known that Nike would become one of the most recognizable brands in the world, to which Johnson joked, “thanks, you didn’t make me feel better.”

Since retiring from basketball, Johnson has built and impressive business acumen. In addition to co-owning three pro sports teams in Los Angeles, he is the founder of Magic Johnson Enterprises. The investment company was described by Fortune in 2014 as a “billion-dollar conglomerate.”

He’s also credited with helping Starbucks CEO Howard Schultz expand the company to urban communities, convincing Schultz to go 50-50 with Johnson to develop a chain of Starbucks in under-served locations. He’s quoted by Business Insider as saying, “look Howard, Latinos and black folks. We like coffee too.”

Per Business Insider, Johnson built 105 locations and in 2010, after a 12 years, Starbucks acquired the other half of the business from Magic Johnson Enterprises. At the same time, Johnson sold his 4.5% stake in the Lakers, and the two deals reportedly netted him about $100 million.

So yeah, I think it’s safe to say that he would’ve flipped that Nike stock into more than he ever made from those first endorsement deals.

You can watch the full video clip below:

Tanya Ray Fox

Tanya Ray Fox is a sportswriter and producer who has worked for nearly 7 years in both digital and television sports media. She has previously worked in TV production experience for Comcast SportsNet New England, NFL Network and Time Warner Cable Sports. In addition to her work for SportsGrid and appearances on the affiliated FNTSY Sports Network, she is also a contributor for USA Today's Rams Wire.