CNBC Examines The New Black Millionaires

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    Wall Street Journal reporter/CNBC correspondent Lee Hawkins has spent the past three years interviewing droves of black entrepreneurs in the sports, entertainment, and media industries. His subjects include Sean “Diddy” Combs, LeBron James, Chris Lighty (manager to 50 Cent, Missy Elliott and Busta Rhymes), Lil’ Wayne, Nelly, and Bob Johnson.

    Interested in covering the Rise of America’s New Black Overclass (or “NEWBO” in his own terms), Hawkins was in search of discovering what it takes for African-Americans to maximize their opportunities. GIANT got the chance to speak with Hawkins about his study and upcoming television special (watch the preview below).

    GIANT: You’ve spent the last three years researching for this project? What made you want to get involved?

    Lee Hawkins: I’m a reporter for the Wall Street Journal and I cover business. I look at the hip-hop industry as a business and I look at the sports world as a business, and I had a hunch that African-American athletes-in a society where there’s so much emphasis on the negative statistics surrounding black men in America-were something that had not been studied. I had a curiosity about how much they were earning and what the impact of wealth was on their life. I did some research and found out that in 2007 the salaries of all black athletes in the NBA, NFL, and MLB totaled nearly $4 billion. I was interested because I grew up in the hip-hop culture. The young people see the business side of hip-hop a lot more clearly than America does. If you’re part of the hip-hop culture, you’re looking at these individuals as entrepreneurs and not just caricatures. There’s a reason that Sean Combs is worth more than 300 million dollars, and it’s because, whether society accepts it or not, he’s a very legitimate, gifted business man. This is our generation, these are our stories, and I felt it was important to chronicle this black history.

    GIANT: Can you explain “NEWBO?”

    LH: I coined the term. You don’t have to be a multimillionaire to be a NEWBO, but you do have to think-not like an employee, but like an owner-and look at the sports media and entertainment industry as areas where you can grow. I’ve adopted some of that in my own career. I started out as a newspaper reporter but I’ve added television, books, and the lecture circuit. There are many opportunities for African-Americans to diversify. Not just celebrities, but entrepreneurs and people that work behind-the-scenes. The original BlackPlanet.com was formed by NEWBOs and any business that’s looking to the youth culture and black culture as a core audience and is using entertainment, sports, or media as a platform, are using NEWBO concepts. We have stylists, publicists, people that are representing athletes and hip-hop moguls, branding experts like Chris Lighty and Steve Stoute. And there are women coming up, too: Marvet Britto is a publicist out there, Melody Hopson, and I have quite a few sisters in my book.

    GIANT: The book contains statistical data about black uber-wealth. What’s the most outrageous one you’ve discovered so far?

    LH: I think the $4 billion number was probably the most significant because that doesn’t include corporate endorsements; that’s just salary. Also, the average salary for a black NBA player is more than 4 million dollars. I think the other statistic that shocked me was Lil’ Wayne and Cash Money Records sold a million CD’s in one week. No executive, and that includes Tommy Mottola and Clive Davis, is doing that in this environment. While it’s easy to just dismiss the Williams brothers because they don’t look like Fortune 500 CEO’s, you can’t discount the entrepreneurial acumen of these guys. You can’t.

    With Bob Johnson, Founder of BET and Charlotte Bobcats owner
    With Bob Johnson, Founder of BET and Charlotte Bobcats owner

    GIANT: In the clip, you stated that the black overclass group has been criticized. What or who do you credit this to?

    LH: You have to be careful with generalizations and stereotyping. I think that’s what happens, not only in America, but also in black America. When people don’t know, we do a lot of talk, but we don’t always have the facts. Yes, there are individuals that have been criticized-some for not getting their education and just pursuing basketball or hip-hop music as their hope for the future, but I think that that’s an empty hope. My book and television special focuses on: “How do we get celebrities, and the millions of young people in America that view them as role models, to really take advantage of opportunities?,” like mentorship, economic collaboration, education, social awareness, and overall economic empowerment. The ultimate goal of the Civil Rights Movement was not just for civil rights equality, but for economic equality, but the truth is, black people make 74 cents to the dollar, compared to white people with comparable credentials. So, when I found out that black men were making 4 billion dollars in these leagues, I saw an opportunity for them to start businesses. And many of them are-you can’t find an NFL or NBA player that won’t tell you about a business venture they’ve launched. But that story doesn’t get out into the public. What I’m trying to do is foster a national conversation in black America about how to create more Magic Johnson’s and more Willie Davis’.

    GIANT: Do you think these people have always had the entrepreneurial spirit or that it was something that came with wealth?

    LH: Entrepreneurship has always been part of the black experience in America because we have traditionally been disenfranchised and not accepted in the professional class or corporate world. You see the “last hired, first fired” method, especially in difficult economic times. Economic times and the unemployment rate have always been difficult for black America, not just in times of an American crisis, but we’ve struggled, in general. Entrepreneurship from the era of segregation to now has always been part of our community. The idea of working more than one job has been something that’s been part of our community, so it doesn’t surprise me that someone like Sean “Diddy” Combs or Jay-Z or any number of these athletes would diversify beyond just basketball or beyond just music, because it’s part of our culture.

    GIANT: You’ve stated that there are sociological implications that newfound wealth can have on young African-Americans who are acquiring it quickly. What are they?

    LH: I’ll start with the negative ones. When people come into this kind of wealth, and I’ll use Torii Hunter as an example, there are a lot of responsibilities that are thrust upon them. If their family is still struggling financially, they become the income generator for everyone. In Torii’s case, the electricity in his mother’s house was cut off at the time he received his first minor league contract, so the first thing he did was turn the lights back on. He purchased a home for his mother and condos for each of his bothers. Things like car notes don’t exist anymore because he takes care of those things. But these young people can find themselves in a position where it’s not always practical to do that, especially if you consider today’s economy. If you purchase a home for your mother and yourself and a few cars in this economy, what happens if you get traded? And now you have to move? You have to figure out how you’re going to sell. And undoubtedly, you’re going to sell it at a vast discount. Financial planning and tax planning are part of wealth building and if you’re the first generation or individual holding this kind of wealth, it’s a challenge. It’s not just for black people, it’s going to be a challenge for any 21-year-old to come into a $10 million signing bonus. And what happens is, when you haven’t had some of these luxuries-if you haven’t had a car in your life-the first opportunity that you get, you’re going to buy the best car you can get, even though the depreciation is going to be immense the minute you drive it off the lot. Rims, windows, TVs, and DVD players in the car are all just a function of never having some of these amenities. There’s an enjoyment stage that people go through and it’s not until they got out of that enjoyment stage that they can really start to build the wealth that they hope to leave behind to their children.

    With Torii Hunter, Los Angeles Angels of Anaheim outfielder

    The positive is that when you go through struggle, there are two ways you can deal with it. It can stop you or it can motivate you. Most of these people don’t like to lose. These are people who are incredibly motivated, that will work 100-hour weeks, and are, almost to a fault, some of the hardest-working people you’ll ever meet. It’s not just talent. Talent isn’t enough. You have to be willing to put in the time, you have to be smart, you have to be connected, and then when you get there, you have to maintain it. And that’s a lot of pressure, to stay on top.

    -DANIELLE CHEESMAN

    “Newbos: The Rise of America’s New Black Overclass” will air on Thursday, February 26 at 9pm on CNBC. A book, of the same name, will be released later this year. For now, go to blackoverclass.cnbc.com

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