Introduction
Shaquille O’Neal is a 50-year-old retired basketball player with a net worth of $400 million. He played in the NBA for 19 years and was a rookie of the year, won four NBA championships, was a three-time NBA Finals MVP, and won an Olympic gold medal. He earned nearly $300 million in salary throughout his career, averaging about $16 million per year. After retirement, he earns about $60 million per year. He owns a 10% stake in a group that includes 150 Five Guys restaurants, 17 Auntie Anne’s Pretzels restaurants, 150 car washes, 40 24-hour gyms, a large shopping mall, a theater, and was an early investor in Google. He is also a DJ known as DJ Diesel and has released several platinum records with sales exceeding one million copies. He is also the host of the TNT NBA program “Shaq in the fool.”
Source of Wealth
Shaquille O’Neal’s wealth comes from a combination of endorsement deals, franchise businesses, and using his image rights. His endorsement deals have earned him over $200 million, with brands such as Burger King, Pepsi, and Taco Bell. O’Neal is selective about which companies he endorses and only chooses products that he personally uses. He hosts an annual event called the Shaq Summit for his endorsed companies, where each company has 15 minutes to present and network. O’Neal also has nine franchise locations of Papa John’s Pizza, where he is a brand ambassador and member of the board of directors. In 2019, the company paid $8.5 million for the use of O’Neal’s image rights for promotional purposes, with half of the payment being in cash and the other half in stock.
O’Neal’s largest investment is in the brand management company Authentic Brands Group (ABG), which owns over 50 brands such as Forever 21, Reebok, and JCPenny, as well as the image rights of celebrities like Muhammad Ali, Elvis Presley, Marilyn Monroe, and Michael Jackson. In 2015, O’Neal sold his own image rights to ABG for an undisclosed amount and reinvested half of the proceeds in ABG stock in order to retain some control over his own image rights. He is now the second largest individual shareholder in ABG.
The start of his investment adventure
After joining the NBA, Shaq received his first check for $1 million before playing his first game. He used the money to buy three cars, one for himself and two for his parents, and also bought jewelry. A few days later, the bank called him to warn him that if he continued to spend money like this, he would end up bankrupt like many other NBA players after retirement. Shaq listened to the bank’s advice and hired a wealth management expert to help him manage and plan his finances.
Biggest Investment Mistake
Shaquille O’Neal’s biggest investment mistake was not investing in Starbucks. Howard Schultz, the founder of Starbucks, had approached him and another retired basketball player, Magic Johnson, to invest in the company. O’Neal turned down the opportunity because he had never seen his family drink coffee and believed that “black people don’t drink coffee.” Starbucks is currently valued at $9 billion. O’Neal learned from this mistake and established his own investment and financial management rules.
Investment Rule #1: Not investing just to make money
Shaquille O’Neal says that when he makes investments, it is never about making money but rather about changing people’s lives. He cites his experience as Chief Fun Officer of Carnival Cruise Line as an example. O’Neal initially thought that cruise vacations were only for older people, but after experiencing a Carnival Cruise himself, he found that there were a variety of activities such as mobile games, spas, theaters, casinos, and basketball courts that changed his perspective and he wanted to share that with others. O’Neal says that he now makes investments in order to build new partnerships and improve people’s lives.
Shaquille O’Neal decided to invest in the home security startup, Ring. When he moved to Atlanta, he wanted to install a security system in his home, but the prices quoted by local security companies were exorbitant. He ended up installing a Ring security system in his own home and was impressed by how it worked. He saw a need for affordable home security systems and decided to invest in Ring. The company was later acquired by Amazon for $1.2-1.8 billion, further confirming O’Neal’s investment acumen. The company was originally called Doorbot and had appeared on the popular American TV show Shark Tank, seeking to sell a 10% stake for $700,000 to the Sharks, but the deal was not ultimately completed.
Investment Rule #2: Save Up 75% of What You Earn
Shaquille O’Neal says that one of the reasons he has been able to become a millionaire is because he saves 75% of the money he earns and only spends 25%. This is in contrast to many other professional athletes who end up going bankrupt, despite earning large amounts of money. O’Neal attributes his success in managing his finances to this practice of saving the majority of his earnings.
Investment Rule #3: Importance of Education
In addition to saving money, O’Neal places a strong emphasis on education and has himself earned several degrees, including a bachelor’s degree from Louisiana State University, an MBA from the University of Phoenix, and a doctoral degree in human resource development from Barry University. He also plans to study law in the future. O’Neal is also dedicated to his children’s education and has a motto for them, “In order to touch my cheese, you have to present me two degrees,” meaning that they must earn a bachelor’s and a master’s degree before they can access his wealth.
Latest Investments
Shaq’s latest investment is in NBA’s Sacramento Kings as a minority shareholder in 2013. However, he had to sell some of his shares due to NBA regulations. He gave it up and instead invested heavy in WynnBet because he believes that online sports betting will be a large untapped market.
Reference
Shaquille O’Neal Discusses Investing, Franchising, and Donuts | WSJ
How Shaq spent $1 Million in one day
