By 1986, the NBA’s all-time leading scorer, a man earning more than $1 million a year, was so overextended that, according to his own lawsuit, he had been borrowing money from his business manager just to cover his living expenses. Magic Johnson had a front-row seat.
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In his autobiography titled ‘My Life’, Magic Johnson recounted his experiences, seeing Kareem Abdul-Jabbar lose everything to unfortunate events in his personal life.
“He woke up one morning to find that virtually all his money was gone,” Magic Johnson wrote. “There had been some big problem with his business manager, and the situation was so bad that it looked like he would have to declare bankruptcy.”
After his longtime financial planner died, Abdul-Jabbar turned in 1980 to Thomas Collins, an agent who had represented NBA players since 1974. Collins openly told clients he had no financial background.
Abdul-Jabbar signed a short document that gave Collins broad control: he could sign checks and take out loans in Kareem’s name, and all Kareem asked for in return was a monthly report.
For six years, Collins ran his finances with almost no oversight. According to the $55 million lawsuit Abdul-Jabbar filed in July 1986, Collins put his money into hotels, restaurants, sports clubs, cattle feed, Arabian stallions, and limousines. The cattle-feed venture alone lost nearly $300,000.
The suit also said Collins filed Abdul-Jabbar’s taxes late, which brought penalties, and moved some of his money into an account Collins owned. By the time an independent audit was done, Abdul-Jabbar was liable for about $9 million in debt. He fired Collins in January 1986.
The money wasn’t Abdul-Jabbar’s first major loss of the decade. In January 1983, while the Lakers were on the road, a fire destroyed about 90% of his Bel Air home. It took his trophies, more than 3,000 jazz albums, and a collection of Oriental rugs, several of them largely uninsured and worth hundreds of thousands of dollars.
When the fire hit, Collins had already been in charge of Kareem’s finances for three years. Abdul-Jabbar said later that nobody had told him anything. Within three years, he would learn how bad things really were.
The lawsuit was settled out of court with details not revealed to the public.
Collins’ reputation, however, took a massive hit. When he reapplied to be a certified player agent in 1990, the NBA Players Association investigated his handling of Abdul-Jabbar’s affairs.
It denied his application, ruling that he was unfit to serve as a fiduciary for NBA players and that he had made false or misleading statements during the investigation. Collins sued the union over the decision and lost.
The life Magic Johnson learned to live witnessing Kareem Abdul-Jabbar
Johnson wrote about both of Kareem’s losses, the fire and the money, and about what struck him most was how Abdul-Jabbar carried himself through them.
“Twice during our years together, Kareem suffered a major personal loss. And yet his teammates couldn’t help but notice that he never took out his frustrations on us. And he never allowed his problems to influence his play on the court.”
That was notable because the two had been distant early on. In a 1987 interview, Johnson said they barely connected during his first five years with the Lakers. That changed after the 1986 playoffs, when Kareem called him to check in, and the two began talking about more than basketball.
Watching a teammate nearly lose everything by handing over control of his finances to someone else must have been difficult. Magic Johnson has never publicly tied his business approach to Kareem’s situation, but the way he built his fortune is the opposite of what happened to Abdul-Jabbar. He sought out successful executives to learn from, credited great mentors and taking his ego out of his decisions, and has said he checks every deal himself.
“You have to learn not only through books and through talking to people who own businesses and get their experience and get what made them successful,” Johnson said. “Pick their brain about what made them successful and what did I have to do to be successful.”
Whatever their differences over the years, Magic and Kareem’s partnership defined Showtime. Kareem’s story is also a reminder that even the league’s biggest star could lose almost everything by trusting the wrong person.