Leaving ‘Magic’ for Music Post
Kenneth Lombard, the former investment banker who helped Earvin “Magic” Johnson build a nationwide real estate development and entertainment business, said Thursday that he would leave the ex-Laker star to become president of the fledgling music and entertainment division of Seattle coffee titan Starbucks Inc.
Lombard, 49, will oversee Starbucks’ aggressive move into music retailing. The company is installing computer equipment that allows customers to burn their own CDs from a database of tens of thousands of songs. A prototype store has opened in Santa Monica and the company expects to add the service to 200 Starbucks by the end of the year.
Ultimately, Starbucks plans to sell music in all of its stores, which number more than 7,500 worldwide.
The loss of Lombard is a blow to Johnson, who has built one of the top urban development firms in the country with projects in several major cities.
Lombard is president of Johnson Development Corp. and Magic Johnson Theatres. He also is co-managing partner of the Canyon-Johnson Urban Fund, a $300-million pool of public and private investors that fund real estate development in urban areas.
Before joining Johnson in 1992, Lombard was executive vice president of Lynwood-based Economic Resources Corp., where he raised venture capital. Prior to that he was regional director of the investment banking group at commercial brokerage Grubb & Ellis Co.
Johnson said he would cheer for Lombard in his new role and “we can still run our companies and move forward,” Johnson said. “I would be really disappointed if we couldn’t continue” without him.
Lombard and Johnson became friends with Starbucks Chairman Howard Schultz almost six years ago when they started a joint venture called Urban Coffee Opportunities that opens Starbucks in ethnically diverse neighborhoods.
“Over the last five years, many people within Starbucks have worked with Ken, and have developed strong relationships with him based on mutual trust and respect,” Schultz said.
The move into selling entertainment “is a huge commitment on their part and a tremendous growth vehicle Starbucks expects to expand over the next five years,” Lombard said. “When the opportunity came up, we just felt on both sides that it was the right time.”
A trio of Johnson executives will pick up Lombard’s duties until a permanent replacement is named: Mark Scoggins, the recently hired president of Magic Johnson Enterprises; Kawana Brown, chief operating officer of Magic Johnson Enterprises; and Kimberly Thompson, development director of Johnson Development Corp.
The Hall of Fame guard has built a high-profile company with Lombard over the last decade; its annual revenue has grown to an estimated $80 million from $18 million in 1999.
Johnson’s companies operate five theaters and, in partnership with Starbucks, 67 stores in cities such as Washington, New York, Detroit, Denver, Seattle, Oakland and Los Angeles. Johnson plans to open nearly 60 more by 2005.
In addition, Johnson, in partnership with Carlson Restaurants, has opened two TGI Friday’s restaurants, in Los Angeles and Atlanta.
The Canyon-Johnson Urban Fund has invested in residential, retail and office properties in downtown Los Angeles, on Sunset Boulevard in Hollywood, at the site of Chicago’s former police headquarters and in New York, Milwaukee, Cleveland and Miami.
About 75% of the $300-million fund has been invested and a $500-million fund will be launched this year, said K. Robert Turner, co-managing partner of the fund with Lombard and managing partner of Canyon Capital Realty Advisors, a Beverly Hills real estate investment advisor.
In Starbucks, “Ken Lombard has been offered the opportunity of a lifetime,” Turner said, adding that Lombard “really struggled with the decision for an extended period of time” and tried to make the transition “as painless as possible.”
Lombard said he would begin with Starbucks on May 24. He will work in Seattle on weekdays and travel to Los Angeles on weekends to be with his family.
