In 2009, Sports Illustrated estimated that 60% of NBA players are broke within five years after retirement. A lot of time has passed since the study, and probably the percentage isn’t as high as it was, but it shows that a lot of players don’t know how to handle their earnings.
One of the reasons could be that many players didn’t figure out their occupation after they stopped playing basketball. Most NBA players spend the prime years of their lives trying to be the best they can, but they don’t seem to realize that they have 40 or more years left to live after they decide to retire. And that was one of the topics that Shaquille O’Neal talked about with Steve O and the Wild Ride! podcast.
“I had a contract worth $100 million, but in real life, it was worth $50 million. So when I first got to LA, I got a check for $20 million. So I go to the Rolls Royce store in some sweatpants. And I asked a guy how much does this car cost, and he said 250 [thousand]. And in my mind, I didn’t want to spend 250 for a car, so this guy says to me, ‘Can you afford it, sunny?‘, and I then I bought three cars right there which were a million dollars. And then I’m riding through Beverley Hills, and I see a beautiful house in the mountains which was seven million, and I bought the house. I’ve spent eight million in two days. So then my guy calls me and says to me that I’ve spent my whole check. I’ve said to him that I’m getting 20 million, and he says no; in California, 20 million is 10.5. So after that, I really had to slow down”Shaquille O’Neal, Steve O and the Wild Ride! podcast
One other thing that leads to players going broke is they aren’t accustomed to taking good care of their money. With todays’ paychecks being thrown at them, they don’t see the point in doing that. Money becomes just a number on a piece of paper. That way, players like Allen Iverson file for bankruptcy.
“A lot of times we get these big numbers, and we focus on that big numbers, but we don’t focus on reality – tax, family, employees, spending and wasting. It’s really easy to go broke. So some guys are smart, and some aren’t.”Shaquille O’Neal, Steve O and the Wild Ride! podcast
According to Shaq, he didn’t save much money in his first few years in the NBA, but he became smarter with his money after that.
“Firstly, I wanted to financially secure my family. But after that, when you get the extra money, you invest, and you have to invest in the right thing. I put a lot of money in blue-chip companies like Apple or GE, and you try to invest in the right business.”Shaquille O’Neal, Steve O and the Wild Ride! podcast
We have great examples in the modern NBA. For instance, Jayson Tatum only spends money he earns from sponsorships. All his NBA money goes into a bank account. The league gives young players seminars and brings in NBA veterans who share their stories that help them learn from other people’s mistakes.
Still, $8 million in two days was a lot, even in the 90s. Gotta love Shaq.