NBA Hall of Famer Shaquille O’ Neal’s motivation to be financially literate and avoid being broke in part ties to a “big house” he says he gifted his mother and not wanting her to lose it.
In an episode of the “Be Better Off” podcast of Kelly + Partners dated for Sept. 5, the former NBA player explains that he didn’t become victim to the stereotype of the broke superstar athlete due to a desire to make sure his mother was financially stable.
“So in the NBA, 65 percent of NBA players end up broke within five years at the end of their career. Why aren’t you one of them?” Partners asked Shaq, who has a net worth of $400 million.
“Because if I do that, the big house that I bought my mother, she loses it. And I can’t have that,” Shaq replied.
“So I had to learn about financial literacy. I had to learn about how to take what I learned from basketball and apply the teamwork structure to my business,” he added.
Shaq’s “Team Members” Off the Court
Shaq said he has a team that works in five phases. There’s phase one, “when we get approached with a business proposition,” he said. Phase two is that the team has to win Shaq’s approval. Phase three is when a panel of Shaq’s team consisting between four and six people discuss the deal. During phase four, Shaq’s lawyers review the deal. In phase five, after negotiating final costs and payments, Shaq gives the final yay or nay.
“And you always need great partners and great people around you, smarter people around you,” Shaq added.
During his first year in the NBA, Shaq admitted he was irresponsible with his finances, not factoring in how much money would be left after taxes.
Out of a $20 million contract he signed, he reportedly spent $10.9 million in one year. He bought a house with cash for $3 million, a couple of Rolls-Royce vehicles and went on expensive trips, to name a few things. (In 2005 he signed a $100 million five-year contract with the Miami Heat, paying him $20 million per year.)
The NBA legend said he quickly learned his lesson after being reminded by his accountant that the government’s take, including taxes and FICA, would amount to about 50 percent of his contract.
He would shift to splurging only using his earnings from his endorsements.
“So every now and then it’s okay to splurge and have fun. But, you know, the guys at that are in the 65 percent of being broke,” Shaq said.
The NBA Player’s Passion for Learning About Business
Shaq received his MBA at the the for-profit University of Phoenix so he can better understand and communicate with his lawyers and accountants, Finurah previously reported, saying prior to obtaining that degree, in meetings, businessmen thought his “team members” were in charge.
“I noticed that every time I’d go to a business meeting that the guys who we’re doing deals with would be like, ‘Hello Shaq, how are you doing?’ And then they would turn away and look at my lawyers and my accountants and all those guys,” Shaq said. “So, I said, ‘Oh, you guys don’t think I’m in charge. You guys don’t think I understand the lingo.’ So I went and got my master’s [degree] from the University of Phoenix.”