Jerry Buss is being eulogized as the owner of the Lakers and one of, if not the greatest sports owner of all time. I’m interested to know how a humble chemist came to own the Lakers in the first place. There doesn’t seem to be very much written about Jerry Buss the brilliant (?) real estate businessman. I found a couple of articles that gave me a glimpse which I’ve summarized here. Would love to read more about the subject if I can.
When Jerry became the owner of the Lakers in 1979, his real estate business that he ran with his partner Frank Mariani was said to be worth $350 million. The Mariani-Buss Associates enterprise encompassed three hotels, two office buildings, 1,005 single family homes, and 4,000 apartment units across California, Nevada, and Arizona. Buss purchased the Lakers, the Kings hockey team, the Inglewood Forum and the 13,000-acre Raljon Ranch in the Sierra Nevada mountains from Jack Kent Cooke for $67.5 million. The deal broke down to $33.5 million for the Forum, $16 million for the Lakers, $10 million for the ranch and $8 million for the Kings. Cooke, in exchange, received the lease to the Chrysler Building in New York, and properties in Virginia, Massachusetts and Maryland.
As the legend goes, Jerry had the humblest of beginnings. Born in the depression to a single mother who worked as a waitress, he remembered taking nothing for granted. At one point he aspired to be a pool hustler, but with a gifted intellect and the influence of a high school chemistry teacher, he turned to education to pull himself out of poverty earning a PhD in Chemistry from USC. He worked in the private sector and was miserable, and so while also teaching part-time at USC he started a career in real estate.
According to all accounts, his first investment was $1,000 in 1959 that he put into a West Los Angeles apartment house. In case you were wondering, in today’s dollars that would be a little less than $8,000 today adjusting for inflation, or $30,000 today based on economic cost or economic wealth. Regardless, he and five others including his co-worker Frank each put $1,000, or $6,000 total, towards this 14-unit apartment building which they purchased for $105,000. Jerry had squirreled away $83.33 per month over the course of a year to amass his initial investment. Then 20 years later he had a $350 million business, was worth an estimated $50 million personally, and bought the Lakers.
What did he do in the 20 years between 1959 and 1979? That I have not found much information on, and I would love to read more about it. Here is a glimpse into his personal philosophy:
“You have to get a part-time job on Saturday and do it for 10 years,” he says. “Then take the money you earn, invest it at 17 percent—meaning, for instance, real estate—wait 15 more years and you’re a millionaire. It’s an easy calculation and it’s true. But that’s where the easy part ends. Most people don’t want to give up their free time for 10 years, and when they get $80,000 or $100,000 it’s almost impossible for them to resist going to Hawaii for two months or getting a second condominium. The point is, you have to live below your means, not above, and make sure you keep a fraction of your salary for investment.”
So obviously right now 17% is not a typical return, this was a different environment. And it’s one thing to have the discipline to save, I know many people who do. But how did he know where to invest and how did he grow his business so quickly? Clearly not just rent increases and waiting for values to rise. In reading about the man, he is also recognized for having an eye for talent, team building in both sports and business, and though a late riser he was a hard worker who was willing to put in the hours.