Shaquille O’Neal deserves this hard lesson because it taught him about the value of investing

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They say experience is the name you give to the mistakes you make in life. However, this truism only works if you learn from experience. In keeping with this theme, NBA legend Shaquille O’Neal once told a story about a tough financial lesson he learned through a negative experience.

The story begins when a young O’Neal was plying his trade for the Orlando Magic. At the time, he was one of the biggest phenoms in all of sports and had the salary to prove it. O’Neal was earning a sizable salary from the Magic and also had several endorsement deals. He was making several million dollars a year and it seemed like the money train would never end.

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So it’s against this backdrop that Shaq went shopping for the ages. He told the story in an interview with the Earn Your Leisure podcast. Shaq said his agent called to inform him that a $1 million endorsement check had just been deposited into his account. It didn’t take long for Shaq to figure out what he was going to do with the money.

Shaq told the podcast, “You know me, I already had that black Mercedes lined up.” He immediately went to the local Mercedes-Benz dealership and bought himself a top model for $150,000. Then he decided to buy two more as a gift for his parents. Next is a trip to the jewelry store for lots of custom pieces made from high-quality diamonds. Then he needed a custom sound system for his car.

Shaq wrapped everything up by going to his tailor and getting some custom suits. When it was all tallied, O’Neal had spent over $1 million in a matter of hours. Then the other shoe dropped. A few days later, Shaq’s bank manager called to inform him that his account was heavily overdrawn. O’Neal was stunned. He wondered how that could be possible.

The story continues

He went shopping after depositing a check for a million dollars. Unfortunately, O’Neal failed to account for the fact that federal taxes are taken out of his “gross” earnings, and the remaining amount was his “net” pay. So does the agent’s commission (which usually runs around 6%). All in all, it means that a million dollar check for a professional athlete is being cut with blinding speed.

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In Shaq’s case, his net earnings were around $600,000. That was a nasty surprise. He explained, “I thought I was getting $1 million straight.” Luckily for him, he lived in Orlando and there was no state tax in Florida. Otherwise, he would have received even less.

Even so, his bank statement told an ugly story. “As I was reading it, I was $80,000 in the hole and I was looking and I was really embarrassed,” he said. Fortunately, Shaquille took this hard-earned lesson to heart. It motivated him to get serious about understanding his finances and taking control of his future. Shortly after the incident, O’Neal consulted a financial manager and has been building his fortune ever since.

O’Neal became an early investor in Google (now Alphabet). He has also used his visibility to leverage endorsement deals in exchange for stock with numerous companies, including Ring and PapaJohn’s Pizza. Today, O’Neal is worth an estimated $500 million, and he’s more than set for life. That said, it’s unlikely they’ll ever spend a million dollars in one day. A lesson in hard money paid off in this case. Well done Shaq.

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This article Shaquille O’Neal deserves this tough lesson for teaching him about the value of investing originally appeared on Benzinga.com