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The Bet Shaq Lost That Made Him $500 Million Richer — Transcript

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0:00In 1992, Shaquille O'Neal walked into a
0:02bank and deposited his first
0:04million-dollar check. By dinner that
0:06same night, he was $80,000 in debt.
0:09Today, Shaq is worth close to half a
0:11billion dollars, but almost none of that
0:13money came from playing basketball.
0:15There's even a good chance you spent
0:17money recently at one of his companies
0:19without even knowing it. So, how do you
0:21go from blowing your first million in an
0:23afternoon to building a
0:24half-a-billion-dollar empire? Shaq
0:26figured it out with a simple investing
0:28blueprint that made the good decisions
0:30huge and the bad ones survivable. All
0:32right, let's get into it. Phase one, the
0:34$1 million check that left him $80,000
0:37in debt. Shaq would go on to win four
0:39NBA championships and earn 15 All-Star
0:41selections. That said, [music]
0:43basketball never taught him how money
0:44actually worked. In June 1992, Shaq left
0:48LSU as the number one overall draft
0:50pick, and every major shoe company
0:52wanted to sign him. At the time, rookies
0:54didn't walk into the league expecting
0:55signature sneakers. You earn that over
0:57years after you proved yourself on the
1:00court. Shaq asked for one anyway. Nike
1:02passed. They had Michael Jordan already
1:04and had just signed Alonzo Mourning, the
1:05number two pick. By Shaq's own
1:07retelling, Nike told him they had enough
1:10stars. But, Reebok saw things
1:11differently [music] and gave Shaq
1:13exactly what he asked for, a signature
1:15shoe, creative input, and a contract
1:17reported at around $15 million. It was
1:19the largest shoe deal ever and it was to
1:21a player who had not yet made his NBA
1:23debut. Shaq still flew out to Nike
1:25afterwards, only because he had promised
1:27he would, and showed up wearing Reeboks
1:30head to toe. Then, a second brand check
1:31arrived, and that one taught him
1:33something far more expensive. A trading
1:35card company paid Shaq roughly $1
1:37million for an endorsement. One summer
1:39afternoon, his agent called to say the
1:41money was ready. Shaq picked up the
1:42check, drove straight to the bank,
1:44deposited it without reading any of the
1:46details, and started spending on the way
1:48out the door. His first stop was a
1:50Mercedes dealership. Shaq had wanted a
1:52black Mercedes since he was a kid. He
1:54walked into the dealership, wrote a
1:55check for $150,000, and drove off the
1:58lot in the dream car he'd wanted his
2:00whole life. When he got home, his father
2:01took one look at the car and asked where
2:03his was. So, they drove back and bought
2:05a second one. Then, his mother wanted
2:07one, too. So, they went back a third
2:08time. Then, came the jewelry, the
2:10tailored suits, and everything else that
2:12a 22-year-old suddenly believes he can
2:14afford after depositing a million-dollar
2:16check. By the end of the afternoon, the
2:18million dollars was effectively gone. A
2:20few days later, the family's bank
2:22manager called and asked Shaq whether he
2:23actually knew how to read a bank
2:25statement. Shaq was negative $80,000 in
2:27the hole from that spending spree. And
2:30the spending was only half of it. Shaq
2:31had no working understanding of taxes
2:33and didn't understand one basic
2:35component about his million-dollar
2:37payday. That $1 million was never $1
2:40million. Shaq would owe multiple
2:42hundreds of thousands to the IRS. Making
2:45money, Shaq would later say, is one
2:47skill. Keeping it is separate one. And
2:49that's true. So, Shaq started taking
2:50meetings with financial advisers, but
2:52walked out of nearly all of them. Shaq
2:54commented later that every single
2:56adviser he met with was pitching
2:57guaranteed large return on investments
2:59with little to no supporting information
3:02to back their claims. Then, Shaq met an
3:04accountant named Lester Nisbet, [music]
3:05who pitched him the most boring
3:07investment strategy in the book. Instead
3:09of selling Shaq on guaranteed returns,
3:11he picked up a $100 bill and tore it in
3:14half and told Shaq $50 could saved and
3:16told Shaq that $25 of it had to be saved
3:19for taxes, as well. It is an absurdly
3:22simple wealth-building strategy, and
3:24Shaq has run it for the last 30 years.
3:26Today, Nisbet is still Shaq's business
3:28manager and has been a driving force in
3:30Shaq's entire empire. Six years after
3:33they met, Reebok offered Shaq a $40
3:35million deal. But Shaq turned it down
3:37for a reason that didn't make sense to
3:39anyone else at the time. But, it turned
3:41out to be a turning point in Shaq's
3:42business ventures off the court. Phase
3:45two, the stranger who convinced him to
3:46turn down $40 million. By 1998, Shaq had
3:49turned [music] into exactly what Reebok
3:51had hoped for. The shoes were selling
3:53and Shaq was constantly performing on
3:55the court. Reebok came back with a new
3:56offer worth $40 million over 5 [music]
3:59years. Almost any athlete alive would
4:01sign that deal without giving it a
4:02second thought, but Shaq walked away
4:04from it. The reason why was a single
4:06conversation outside an arena in
4:08Orlando. A woman stopped Shaq after a
4:10game and complained about the price of
4:12his sneakers. She said kids in her
4:13neighborhood could not afford them and
4:15wanted to know why athletes kept putting
4:17their names on shoes that families like
4:19hers would never be able to afford. Shaq
4:21reached into his pocket and offered her
4:23$2,000 [music] in cash that he was
4:25carrying. She slapped it away. She
4:26didn't want his money. She wanted Shaq
4:28to build a shoe her family could afford.
4:30Shaq passed on the Reebok money and
4:32launched his own line under the Dunkman
4:34logo. The shoes went into Walmart at $20
4:36a pair. Every other superstar in the
4:38league was racing to build the most
4:39premium basketball shoe on the market.
4:41Shaq ran at the opposite end of the
4:43market and by his own account, the brand
4:45has moved over 400 million pairs to
4:48date. Now, look at how Shaq financed it
4:50because [music] this is the part that
4:51matters. Shaq did not put up the capital
4:53to fund the project. ACI International
4:56and Warner Brothers funded the shoe
4:57line, handled manufacturing, and carried
4:59all of the downside [music] if it
5:01failed. Shaq contributed to the demand
5:03and marketing and kept a share of the
5:04upside. Shaq would run that same
5:06structure again and again for the next
5:0820 years. Bring the most valuable asset
5:10that only you have to the table and let
5:12someone else's balance sheet carry the
5:14risk. Meanwhile, the company Shaq walked
5:17away from was making [music] a bet of
5:18its own. In 1996, Reebok signed Allen
5:21Iverson, skinny rookie out of Georgetown
5:22[music] to a 10-year deal worth a
5:24reported $50 million.
5:26Iverson gave Reebok everything it could
5:28have ever wanted. Crossover, the
5:30cornrows, and a signature line that
5:32still sells and is talked about today.
5:34[music] And in 2001, Reebok gave Iverson
5:36something no athlete in company history
5:39had ever received. A lifetime deal
5:40[music] reported at $800,000 a year plus
5:43a separate $32 million trust that
5:46Iverson couldn't touch until he turned
5:4855. Iverson earned more than $200
5:50million
5:51across salary and endorsements from
5:53Reebok. By 2012, court filings revealed
5:56that most of that fortune was gone. The
5:58trust survived and it survived for
6:00exactly one reason. Iverson was
6:02contractually prevented from touching it
6:03no matter how [music] bad his spending
6:05habits got. Reebok's lawyers had
6:06accidentally built Iverson in the only
6:08structure that could outlast his own
6:10poor spending decisions. In 2021, Adidas
6:13sold Reebok to Authentic Brands Group.
6:15Two years later, [music] Shaq came back
6:16to the company he had walked out on as
6:18president of Reebok basketball. Remember
6:20the name Authentic Brands Group. It
6:22shows up again and again later in the
6:24biggest deal Shaq ever signed. But
6:26before we get to that, Shaq spent an
6:28entire decade quietly acquiring some of
6:30the most mundane businesses in America.
6:33Real quick, if you're getting something
6:34out of this, hit subscribe. [music] This
6:36channel breaks down operators and the
6:37money systems behind them. New
6:39breakdowns every [music] single week.
6:42Now, the biggest deal of Shaq's life
6:43started with him giving away the rights
6:45for his [music] own name. What he asked
6:47for in return is what turned that
6:48decision into a nine-figure return.
6:51Phase three, [music] the franchise king.
6:53In June 2011, Shaq retired from the NBA
6:56after an epic 19-season career. Now,
6:59most retired NBA players see their
7:01biggest check stop coming the moment
7:03they retire. But Shaq's NBA retirement
7:05ended up being a promotion. Turner
7:07Sports signed Shaq to Inside the NBA on
7:09a deal reported at roughly $10 million a
7:11year. That check covered his entire cost
7:14of living and it came from a job Shaq
7:16would have done for free if he could.
7:18Every dollar of his NBA career could now
7:20sit inside his portfolio and grow while
7:23his Turner Sports money could fund his
7:24lifestyle. This is the floor for
7:26everything Shaq's post-NBA empire was
7:28built from. Shaq had been putting money
7:30to work long before he retired. First
7:32big one was actually an accident. In the
7:34early 2000s, Shaq [music] sat down for a
7:36lunch at the Four Seasons Hotel with a
7:38table of businessmen. The table would
7:40not stop talking about a new search
7:42engine company called Google. Shaq knew
7:45nothing about search engines, but
7:46trusted the room. Through one of those
7:47connections, Shaq invested in Google
7:49pre-IPO [music]
7:50in 2004. And it's safe to say that
7:53investment would go on to pay off. The
7:54question Shaq started asking after that
7:56lunch matters more than the return. And
7:59he has run it on every deal since. Where
8:01does the money go that people stop
8:03noticing because they use it every
8:04single day? That question pushed Shaq
8:07into franchising. Shaq spent his last
8:09playing years in the decades after
8:10assembling one of the largest franchise
8:12portfolios any athlete has ever known.
8:15At the peak, Shaq controlled 155 Five
8:18Guys locations. The portfolio also
8:20contains 17 Auntie Anne's stores, a
8:22Krispy Kreme in Atlanta, several fitness
8:25centers, and 150 car washes. A car wash
8:28does not care who won the championship.
8:30And a pretzel store does not have a bad
8:31quarter because the roster got rotated.
8:34Boring businesses throw off cash in good
8:36years and in bad ones. And that
8:38steadiness buys you the right to never
8:40or sell anything at the wrong moment.
8:41Then, in 2015, an $80,000 security quote
8:45reminded Shaq of the same thesis. A
8:47contractor wanted $80,000 to wire up the
8:50security at one of Shaq's Atlanta homes.
8:52Shaq thought the number was ridiculous.
8:54So, Shaq drove to Best Buy, bought a set
8:56of Ring cameras off the shelf, and
8:57installed them himself. Weeks later,
8:59Shaq was in China when somebody rang his
9:01doorbell back in Atlanta. He opened the
9:03app on his phone and spoke to them from
9:04the other side of the planet. A doorbell
9:06that Shaq set up himself had just done
9:08the job a contractor wanted $80,000 for.
9:11This is the moment Ring stopped being a
9:13gadget for Shaq and became a business.
9:16At CES, later in Las Vegas, Shaq spotted
9:19the Ring booth on the show floor and
9:21walked straight up to the founder. Ring
9:22had been turned down on Shark Tank 2
9:24years earlier when Jamie Siminoff had
9:26asked for $700,000 for a 10% stake and
9:29priced the whole company at 7 million.
9:31Shaq did not ask Siminoff for a discount
9:34or a free unit. By his own retelling,
9:35Shaq wanted to invest directly and that
9:38Ring was going to pay him to do the
9:40commercials on top [music] of that. Now,
9:41look at what Shaq just built. Shaq took
9:43a fee for the promotion, which cost him
9:46nothing, and equity for the upside,
9:48which cost him a check. Richard Branson
9:50put $28 million into Ring in 2015, and 3
9:53years later, Amazon bought the company
9:55for a reported $1 billion. Jeff Bezos
9:57once told Shaq to put money into
9:59businesses that change how people live.
10:02Shaq has said that that single reframe
10:04of judgment quadrupled his net worth.
10:06So, by 2015, Shaq had the floor, the
10:08capital, and the pattern. What Shaq did
10:10with those three things over the next 10
10:12years is what turned a basketball
10:14fortune into a balance sheet. Phase
10:16four, the deal bigger than everything
10:17else combined. By 2015, Shaq had
10:20investments all over the place. He had
10:22real estate, franchises, an NBA
10:24franchise, and then Shaq signed one deal
10:26that quickly outgrew all of them
10:28combined. For years, Shaq had been
10:30licensing his image one contract at a
10:32time. Clothing here, footwear there,
10:34toys, consumer products. Each segment
10:37was negotiated separately, each one
10:39expiring on its own schedule. Then,
10:41Authentic Brands Group came to Shaq with
10:43a different structure. ABG proposed that
10:45Shaq could move most of his licensing
10:47rights into a joint venture called ABG
10:49Shaq LLC. ABG would run the inventory,
10:52the contract negotiations, the
10:54manufacturers, the global distribution,
10:56and would also push Shaq's name into
10:57categories he had no infrastructure
10:59[music] to reach by himself. Upon
11:01hearing ABG's speech, Shaq didn't ask
11:03for a bigger fee. Shaq asked for equity
11:05in the company itself. Shaq bought a
11:07share of the company that licenses
11:08everybody's name, including his own.
11:10Every brand ABG acquired after that,
11:13every big deal that they signed anywhere
11:15on Earth, quietly worked on Shaq's
11:17behalf. Own the licensor, not the
11:19license. Write that one down. When Shaq
11:21signed in 2015, ABG was a mid-size
11:23licensing business, but ABG went on
11:26pitching Reebok, Forever 21, Brooks
11:28Brothers, Eddie Bauer, Sports
11:29Illustrated, Elvis Presley, Muhammad
11:31Ali, Marilyn Monroe, all their brands
11:34and estates and companies signed under
11:36the ABG brand. Then in 2019, BlackRock
11:39bought into ABG at a reported $4 billion
11:41valuation and became the largest
11:43shareholder. In November 2021, CBC
11:46Capital and HPS Investment Partners
11:48bought stakes at a $12.7 billion
11:50enterprise value. And in June 2023,
11:53General Atlantic put in another 500
11:55million with ABG valued above $20
11:58billion. In 2016, the franchise
12:01portfolio came due. Shaq sold the entire
12:03Five Guys position. The restaurants were
12:05doing fine, but a buyer simply arrived
12:07with a number that Shaq did not want to
12:09argue with. Shaq converted a decade of
12:11operating grind into one large block of
12:13deployable capital. It landed at the
12:15exact moment he had somewhere better to
12:17put it. The structure Shaq signed in
12:192015 started collecting on its own 4
12:21years later. In 2019, Papa John's was in
12:24the worst stretch of its corporate life.
12:26Founder John Schnatter had stepped down
12:28after a series of controversies, sales
12:30had slowed, and customer trust had taken
12:32real damage. The company went looking
12:34for a face it could rebuild around. Read
12:36Papa John's own SEC filing and you can
12:38see who actually signed it. The filing
12:40says the endorsement agreement was
12:42executed with ABG Shaq LLC, an entity
12:45affiliated with Shaq for the personal
12:47services of Shaquille O'Neal. The joint
12:49venture got the contract. Shaq [music]
12:52got the paycheck. Papa John's agreed to
12:53pay ABG Shaq $4.125 million in cash over
12:573 years and granted 87,000 136
13:01restricted stock units. [music] Shaq
13:03separately put in 840,000
13:05for a 30% position in a joint venture
13:08that [music] took over nine Atlanta area
13:10restaurant Papa John's had owned
13:12directly. Endorser, shareholder, [music]
13:14franchisee, and director out of one
13:17single negotiation. The partnership
13:18produced the Shaq-a-Roni. Papa John's
13:21renewed Shaq in 2022 at 5 and 1/2
13:23million in cash plus 55,000 plus
13:26restricted shares worth more than 11
13:28million dollars combined. Shaq then left
13:31the board in May 2024. The brand
13:33ambassador deal and the nine restaurants
13:35stayed. By that point, the pizza company
13:37had already done its job in the
13:38portfolio. One business ran alongside
13:40all of it, and Shaq built that one from
13:42nothing. Shaq and his longtime partner
13:44Perry Rogers turned a conversation into
13:46Big Chicken. Authentic Brands Group and
13:48JRS Hospitality came in on the launch.
13:50Big Chicken had no playbook. Every
13:52recipe tested, every supplier found,
13:55every location teaching them something
13:57the last one had [music] not. Big
13:58Chicken now runs about 50 locations with
14:00more than 350 in development. Seven
14:03years of grinding to build what Shaq
14:04could [music] have bought a piece of in
14:06an afternoon. One system sits underneath
14:08all of it, and Shaq has been running it
14:10since the day he walked out on Reebok.
14:12Phase five, [music] the system you can
14:14actually copy. Shaq's portfolio might
14:16look a little random on paper. Google,
14:19Ring, Five Guys, Papa John's, car
14:21washes, an NBA team, a global licensing
14:23conglomerate, but the three rules
14:25connect every single one of them. Rule
14:27one, buy the habit, not the headline.
14:29Shaq puts money into products he uses
14:31himself and can explain to a stranger.
14:33[music] Ring, Five Guys, and the car
14:35washes were all safe bets with high
14:36customer retention and were already
14:38working when Shaq bought into them. Rule
14:40two, [music] build the floor before you
14:42reach for the ceiling. Celebrity
14:44investors often chase one exciting
14:46[music] startup, throw money at it, and
14:47hope it prints. Shaq spent a decade
14:50buying businesses that generated cash
14:52even on the ordinary days. That cash
14:54flow did two jobs. It [music] funded the
14:56next purchase, and it meant his best
14:58assets never had to be sold to cover a
15:00shortfall. When Shaq retired, Turner
15:02paid for his life while EBG and Ring
15:04compounded in the background. Rule
15:06three, buy the machine instead of
15:07[music] building it. Google already had
15:09users. Ring already had customers. Five
15:11Guys already had lines out the door.
15:12Papa John's had decades of operating
15:14history, and ABG already knew how to
15:17buy, grow, and license global brands.
15:19None of those required Shaq to build a
15:21business model from scratch. Somebody
15:22else had already done that work.
15:24>> Big Chicken is the one exception to this
15:26rule and also cost Shaq the most time,
15:27capital, and trial and error. Starting a
15:29business from zero is brutally hard even
15:31when your name is Shaquille O'Neal. In
15:331992, a 21-year-old spent 1 million in
15:37an afternoon and went $80,000 into debt
15:39because he didn't understand tax
15:41withholding. 34 years later, he owns a
15:43piece of the company that owns Marilyn
15:45Monroe's estate. And if you want to see
15:47another operator run this exact same
15:49playbook in a completely different
15:51industry, that breakdown is on screen
15:53now. Different business, same structure.
15:55>> I'm Buster and I'll see you next time.
15:56Peace.

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