First African American billionaire Bob Johnson shares wealth of wisdom. (Image: Courtesy of Subject)

This week on The Urban Business Roundtable, UBR Contributor Renita D. Young talks with master wealth builder Robert L. Johnson, founder of The RLJ Companies and America’s first Black billionaire. Johnson made business history when he took BET public in 1991, making it the first  Black-owned company traded on the New York Stock Exchange, 11 years after he founded the cable network in 1980. This would be far from the last of “firsts” Johnson would achieve on his way to being named No. 2 on Black Enterprise‘s list of Titans: The 40 Most Powerful African Americans in Business in the 40th anniversary issue of the magazine.

In 2000, after taking the BET private again, he sold the cable network to Viacom for $3.2 billion to become the first African American billionaire. He acquired the Charlotte Bobcats in 2003, creating the first Black-owned NBA franchise. Johnson sold the Bobcats to NBA legend Michael Jordan in 2010, but continues to hold a minority stake in the team. Johnson has also launched a plethora of other ventures under the RLJ banner, including RLJ Development, L.L.C., ranked No. 6 on the Black Enterprise 100s list of the nation’s largest Black-owned industrial/service companies with 2010 revenues of more than $578 million. In addition, Johnson is widely considered to be the No. 1 Black hotel owner in America, with hotels from the United States to Liberia.

In addition to joining Young at the Roundtable, Johnson will also be sharing his wealth building philosophy this Saturday, September 17, 2011, as the keynote speaker for the 18th Annual WVON1690 Financial Seminars at Malcolm X College in Chicago. You’ll also get the chance to meet me at the seminars; I’ll be there for an exclusive conversation with Ariel Investments CEO and legendary investment expert John Rogers. In fact, in my “Alfred’s Notepad” segment, I make the case for why entrepreneurs need to make their ongoing financial literacy a top priority, because there is a strong correlation between the effective management of personal finances and the smart investment of business resources. To register or learn more about the full agenda of free financial seminars, go to WVON.com or call 773-247-6200.

Productivity expert Peggy Duncan (Image: Courtesy of Subject)

Also, UBR Contributor Teria Seah sits down with award-winning productivity expert, author, speaker and trainer Peggy Duncan, founder of the Digital Breakthroughs Institute, about the importance of effective time management for business owners. Duncan has authored several books, including The Time Management Memory Jogger: Create Time for the Life You Want (Goal/QPC).

And finally, every week on UBR, you’ll get motivation and inspiration from author and entrepreneurial icon Farrah Gray, a weekly wrap-up of business news from USA Today business correspondent Charisse Jones, our Patient Investor Report from Ariel Investments and key economic intelligence for small business owners from our UBR economists Derrick Collins and Rasheed Carter.

If you have a question you want answered or a topic you want addressed on The Urban Business Roundtable, connect with me at BE Insider, the social media network for people who are serious about Black Enterprise. You can also find me on Twitter and Facebook.

Alfred Edmond Jr. is the senior VP/editor-at-large of Black Enterprise and the host of the Urban Business Roundtable, a weekly radio show, sponsored by Ariel Investments, airing CST Wednesdays at 8:30 a.m., Thursdays at 6:30 p.m. and Saturdays at 9:30 a.m. on WVON-AM 1690, the Talk of Chicago. You can also listen live online at WVON.com. Check back each week for UBR Spotlight, which features additional resources, advice and information from and about the topics, entrepreneurs and experts featured on the show.

Haitian President Rene Preval, Johnson, and Youri Mevs, president of the Haitian Economic Development Foundation. (Image: RLJ Companies)

This week on The Urban Business Roundtable, UBR Executive Producer TaQuoya Kennedy talks with BET founder, RLJ Companies CEO and billionaire Robert L. Johnson, who shares the business decisions and life philosophies that have helped him to become one of America’s most accomplished entrepreneurs.

VIDEO: Watch Robert Johnson’s Power Player profile on the Black Enterprise Business Report

Ranked among the BE “Titans: The Most Powerful African Americans in Business–and How They Shaped Our World” , Johnson made business history when he took BET public in 1991, the first time a Black-owned company was traded on the New York Stock Exchange. In 2000, he sold the cable network to Viacom for $3.2 billion, making him the first African American billionaire. He acquired the Charlotte Bobcats in 2003, creating the first Black-owned NBA franchise and launched four other BE 100s companies.

Last April, RLJ Companies announced a partnership with manufacturing company Global Building Solutions to develop quick and cost-effective mass housing in Haiti following the country’s January 2010 earthquake.

Kevin Ross (Image: Courtesy of Subject)

Also on this week’s edition of The Urban Business Roundtable, contributor Renita Young speaks with international speaker, author, business consultant and designer life coach Kevin Ross, who shares fundamental keys to success in business and offers tips on how to live what he calls a “designer life.”

In my “Alfred’s Notepad” segment, I share steps new and aspiring entrepreneurs should take to establish relationships with more experienced business owners who can provide the benefit of experience, helping them to avoid unnecessary mistakes as they launch and build their new ventures.

In addition, every week on UBR, you’ll get motivation and inspiration from author and entrepreneurial icon Farrah Gray, a weekly wrap-up of business news from USA Today Business Correspondent Charisse Jones, our Patient Investor Report from Ariel Investments and key economic intelligence for small business owners from our UBR economists Derrick Collins and Rasheed Carter.

And finally, great news: the deadline to use the special discount code for UBR listeners to register for the Black Enterprise Entrepreneurs Conference, scheduled for May 22-25, 2011 in Atlanta, has been extended. Just listen for when I share the code during the show, or connect with me at BE Insider to get the discount. You don’t want to miss the nation’s largest annual gathering of Black business owners; you need to be there and encourage others in your network and business community to attend as well.

If you have a question you want answered or a topic you want addressed on The Urban Business Roundtable, connect with me at BE Insider, the social media network for people who are serious about Black Enterprise. You can also find me on Twitter and Facebook.

Alfred Edmond Jr.

Alfred Edmond Jr. is the senior VP/editor-at-large of Black Enterprise and the host of the Urban Business Roundtable, a weekly radio show, sponsored by Ariel Investments, airing CST Wednesdays at 8:30 a.m., Thursdays at 6:30 p.m. and Saturdays at 9:30 a.m. on WVON-AM 1690, the Talk of Chicago. You can also listen live online at WVON.com. Check back each Wednesday for The UBR Morning Post, which features additional resources, advice and information from and about the topics, entrepreneurs and experts featured on the show.

Robert L. Johnson

VIDEO: Watch Robert Johnson’s Power Player profile on the Black Enterprise Business Report

In celebration of our 40th anniversary, Black Enterprise is taking a look both forward and backward at the world of black business. Our list of 40 “Titans: The Most Powerful African Americans in Business–and How They Shaped Our World” recognizes and pays homage to the entrepreneurs and business men and women who paved the way for all of us. Follow our countdown of the most important black business leaders of the four decades since Black Enterprise Magazine was founded in August 1970.

These are the men and women who fought the odds, suffered setbacks, regrouped, and eventually emerged victorious. Whether they conducted business from their own offices or the executive suite, their professional excellence, deal-making prowess, and unwavering advocacy converted promise into channels of prosperity and levers of power. These are the pioneers who withstood the elements—institutional racism, resistance from the business establishment, and lack of resources—to plant a flag on their own patch of territory.

These are the Titans: bold leaders who shattered conventional modes of commerce. Because of their contributions over the past 40 years, the world of business has been transformed forever.

Be sure to pick up the commemorative 40th anniversary August 2010 issue of Black Enterprise, which contains the entire Titans list.

Bobcats majority owner Michael Jordan. (Source: Bobcats.com)

Now that Michael Jordan’s $275 million bid to buy the Charlotte Bobcats from billionaire Robert L. Johnson has been approved by the National Basketball Association’s Board of Governor’s, the former basketball great’s MJ Basketball Holdings L.L.C. has a controlling interest in the team, the Time Warner Cable Arena, and gives him the option to change the team’s name.

“Purchasing the Bobcats is the culmination of my post-playing career goal of becoming the majority owner of an NBA franchise,” said Jordan, in an interview with NBA.com.

Johnson, the founder of The Bobcats Basketball Holdings L.L.C. (No. 40 on the 2009 BE Industrial/Service Companies list), became the first African American owner of an NBA franchise when he paid $300 million for the expansion team in 2002. Jordan, a six-time NBA champion and hall of famer, will be the second African American and the first NBA player to own a franchise. Johnson will remain a minority owner of the team.

“I am confident that Michael’s leadership will bring success to the Bobcats whether it’s measured by on the court performance, success as a business, or making a positive impact in the Charlotte community,” said Johnson, who also owns several companies including Maryland-based RLJ Development (No. 8 on the BE Industrial/Service list with $605.2 million in revenue) and Urban Trust Bank (No. 12 on the 2009 BE Banks list with $206.9 million in deposits).

Jordan is a five-time NBA MVP — notably for the Chicago Bulls — and 14-time All-Star who has made millions selling sneakers, apparel and other items, according to the Associated Press.

Johnson, the creator and former owner of Black Entertainment Television, put the team up for sale because poor on-court performance and little interest from fans have kept ticket sales low and caused the team’s debt to rise. The transaction involves Jordan taking on $150 million of debt, which might be more than his net worth of $400 to $500 million can handle, according to ESPN.

Jordan, 47, bought a minority stake in the Bobcats in 2006, which came with the opportunity to be manager of basketball operations. Critics at ESPN say that both Johnson and Jordan’s absence from daily operations in Charlotte and Jordan’s ineffectual draft picks produced the Bobcat’s lackluster financial performance. However, on the court, the team has improved and the franchise could make its first NBA Championship Playoff appearance this year.

“Now that I’m the principal owner, I understand the commitment I’ve made and know the responsibilities are different,” says Jordan, who resides in Chicago and Charlotte. “I’m up for that challenge. I’ll do whatever I can to make this team a success both on and off the court.

The team was represented in the transaction by GSP Securities LLP and Jordan was represented by Moag and Co.  and Wachtell, Lipton, Rosen and Katz.

The best–and even the only–avenue to real wealth for black Americans are through sports and entertainment. The majority of the “NEWBOs” featured on the program hit, run and jump for a living (the NFL’s Terrell Owens, Major League Baseball’s Torii Hunter and the NBA’s LeBron James) or perform on stage and in recordings (Cash Money Records co-partner and rapper Bryan “Baby” Williams, contemporary gospel artist Kirk Franklin). An exception is RLJ Development CEO and billionaire Robert L. Johnson—the only subject featured who can make a credible claim to being “uber-wealthy.” Of course, he made his fortune by creating and marketing a cable channel featuring black people singing, dancing and rapping. (Oh, and unless you’re Oprah Winfrey, black women need not apply—apparently there are no female NEWBOs.)

Black athletes and entertainers are among the richest black Americans and among the nation’s wealthiest Americans. The problem with this is that NEWBOs primarily focuses on the gross income of the subjects. However, the real measure of wealth is not gross income, but net worth—a person’s assets minus their liabilities. (Black Enterprise readers are familiar with the net worth tables accompanying our monthly Wealth for Life profiles.) Lee Hawkins, the host/interviewer of NEWBOs and a Wall Street Journal reporter who’s authored a forthcoming book about this group, goes to great pains to hype the fact that “black athletes in the NFL, NBA and Major League Baseball and the 20 highest paid hip-hop entrepreneurs” earn a combined total of $4.5 billion dollars. He quickly moves past the fact that this is the combined income of more than 1,000 people, and never mentions that the combined net worth—the real wealth—of this group would be a small fraction of that total. Athletes and entertainers earn good money—but they don’t even come close to being uber-wealthy, the term Hawkins repeatedly uses without ever defining what he actually means when he says it.

Aren’t these the stereotypes and false messages we’ve spent much of the past 40 years trying to deprogram from American thinking, and black American thinking in particular? In the age of Obama, why are we still telling each other—and worse, our children—that our best chance to become wealthy in America is through sports and entertainment? Especially when anyone who understands wealth and the American economy, as CNBC and Hawkins surely do, knows that is not true? Ken Fisher’s book The Ten Roads to Riches: The Way The Wealthy Got There (And How You Can Too!), correctly identifies sports and entertainment as the most difficult way to achieve serious wealth, with the longest odds. The primary reasons to pursue a career in sports or entertainment is because you are good at it, and you like to do it—not because you have more than a prayer of ending up with Bob Johnson money. There are no athletes or entertainers on the most recent Forbes 400 list of the wealthiest Americans. (You needed a net worth of at least $1.3 billion to make the most recent list. Their combined net worth? $1.57 trillion.) I’ve personally come to suspect that black people are intentionally steered toward sports and entertainment to keep us away from the real sources of wealth in America.

Forget the fact that, as a television interviewer, Hawkins is a great newspaper journalist. Forget that there is nothing remotely new about a tiny percentage of black people from poor backgrounds suddenly achieving fame and fortune in sports and entertainment, often fulfilling the role of financial saviors for entire extended families. Forget the fact that there is nothing unusual about most of these NEWBOs being under the age of 40: sports and entertainment are youth-oriented industries—it’s extremely rare for a recording artist or athlete to maintain his or her earning power past the age of 35. (By the way, Bob Johnson is 62.) And don’t even get me started on the poor taste, if not outright insensitivity, of Hawkins focusing—as millions of Americans struggle through a devastating economic crisis—on how his subjects spend their money. (How many black kids could be put through college on the half-million dollars Cash Money’s Williams told Hawkins that his grill is worth? Williams has the right to spend his money as he pleases. But what’s the point of Hawkins celebrating it? Why is it that when wealthy whites are interviewed, the focus is on how they made their money, but wealthy blacks are usually stereotypically profiled as profligate spenders? When did CNBC start airing MTV Cribs?)

To be fair, to really identify the wealthiest black Americans would take a lot of digging—after all, truly wealthy black people, (including many of the corporate CEOs, Wall Street executives and owners of Black Enterprise 100s companies featured in Black Enterprise) are not eager to draw attention to their wealth. They’re quite happy to let Baby Williams and Terrell Owens get all the attention—and aggravation—that comes when people realize you’re earning big money. But isn’t that the kind of thorough, hard-hitting, uncompromising financial reporting CNBC is supposed to be known for?

NEWBOs is of the kind of check-the-box, toss-the-reporting-standards programming that black Americans have come to expect—and too often, regret—starting around the King Holiday in January through the month of February. To me, it feels like the show was created to serve two purposes: as a barely disguised infomercial for Hawkins’ book and a quick and easy way for CNBC to offer programming for Black History Month (whew—made it with two days to spare!).

Sorry CNBC—that’s not good enough. And no using the flack you’re going to get, and deservedly so, for lowering the CNBC bar with NEWBOs as an excuse to do no programming about black people at all.

Johnson

“A recent study found that the wealth of African Americans is one-tenth that of whites, and when home equity is subtracted, it shrinks to less than 1%,” announced Robert L. Johnson, chairman of Urban Trust Holdings Inc., during a Dec. 8 speech. At the National Housing Forum sponsored by the Office of Thrift Supervision, he unveiled a plan to help curtail the drastic increase of foreclosures which instigated the country’s economic spiral downward.

“If this housing crisis causes African Americans to lose their homes, it will be a huge setback to personal wealth creation in the entire black community,” says Johnson, the founder and chairman of the RLJ Cos. who also created Black Entertainment Television (BET) in 1979 and sold it for $3 billion in 2000.

Through Urban Trust Bank, Johnson created a new entity, Homeowners First Bank. Homeowners First is an advanced lending facility or a bank designed specifically to provide temporary, advance funding to mortgage servicers. Mortgage servicers are the middlemen, who may or may not be the same company as the lender, but who retrieve money from borrowers on behalf of lenders.

Johnson has requested $1 billion from the U.S. Treasury Department’s Troubled Asset Relief Program—a $700 billion plan to strengthen the weakened credit markets—and hopes to raise an additional $7 billion to $8 billion from deposits and deposit interest from Urban Trust Bank. He proposes that the plan that will contribute to the stabilization of the housing market and save more than 200,000 people from losing their house in the first year.

“If you are a servicer for a securitization, you have to pay the interest and principle whether or not you’ve collected it,” says Alex J. Pollock, resident fellow at the American Enterprise Institute for Public Policy Research, a nonpartisan think tank. “In normal times when there aren’t that many delinquencies, it’s not that big of a problem, but in a time where there is a housing bust and widespread mortgage delinquencies, the more money they have to advance and the harder they have to work.”

In the past, when borrowers made payments late or missed them all together, loan servicers could borrow money from an advance lending facility and still pay the lenders. Unfortunately, as a result of the faltering economy, the banks that would traditionally make this type of loan to the mortgage loan servicers have stopped making them.

“Loan servicers are financially incentivized to push toward foreclosure because they can’t afford to work out loan modifications with the homeowners,” says Kathy Boden Holland, executive vice president of Urban Trust Bank, which has 16 branches located in Walmart supercenters throughout Maryland and Florida. Without advance lending facilities, the loan servicers are less willing to help mitigate foreclosures because they can recoup the outstanding balance once they resell the house.

“The kicker is this: If the mortgages are renegotiated, that means that the mortgage lenders would get anywhere from 15% to 25% less in the repayment of the unpaid balance of the mortgages,” says Bernard Anderson, a member of the Black Enterprise Board of Economists. “The question is why loan servicers would agree if they are going to take a 15% to 20% haircut on those outstanding mortgages?”

Given the costs loan servicers incur to foreclose and resell a house, and the increased difficulty for consumers to get a loan to purchase homes, there might be incentive for loan servicers to renegotiate the loan with the homeowner if they had access to advanced lending, explains Anderson, who is also a former professor of management at the Wharton School of Business.

Johnson believes that Homeowners First can drive an increase of 50% in modifications of delinquent loans, allowing upwards of 882,000 families to remain in their homes over five years, according to the Urban Trust news release. The timeline for executing the plan is dependent on whether the government approves their request and whether they can raise enough deposits.

“This is the most direct way to interact with the homeowner and at the same time protect the lenders or mortgage trustee,” says Johnson, who adds they will eventually pay all of the money back to the government. “This program is strictly aimed at providing loan modification help to homeowners through working with mortgage servicers.”

Anderson suggests that Johnson’s plan probably won’t be approved until President-elect Barack Obama’s administration is in office. Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, made a similar suggestion earlier in the year, but Treasury Secretary Henry Paulson, shot it down in favor of his plan to infuse capital into the banks. He had hoped that they would increase their lending to consumers and small businesses, something banks have been criticized for not doing.

“Bob is taking a risk, quite frankly…but it is a good idea, and he should be commended for stepping out front,” Anderson says. “It is significant that an African American businessman is coming forward to try to address the root cause of the financial crisis.”