Shaquille O’Neal, a former NBA superstar known for his lucrative contracts, recently shared insights on the significant impact of taxes on NBA players’ earnings. On the “Owned With Rex Champan” podcast in October 2023, Shaq broke down the financial reality behind Anthony Davis’s eye-catching $360 million, six-year contract extension with the Lakers.
Shaq emphasised that despite the impressive headline figure, Davis wouldn’t pocket the full $360 million. The culprit? Taxes. According to Shaq, 50% of Davis’s earnings would be swallowed by taxes, making it crucial for young athletes to grasp the tax landscape. Drawing from his own experience, Shaq recalled signing a $120 million extension in 1996 but realizing that only $60 million would find its way into his pockets.
Shaq (@SHAQ) – 4X NBA Champ
Net Worth: $400 Million
On Court Earnings: ~$292 Million
~27% of wealth made from Cashflow Investments such as:
• 150 Car Washes
• 17 Auntie Anne's
• 40 – 24 Hour Fitness Centers— Codie Sanchez (@Codie_Sanchez) June 5, 2022
Shaq’s Crucial Advice to Young Players on Taxes
During the podcast, O’Neal urged young players to understand various taxes, including FICA and jock tax, applicable to athletes. Despite admitting that players needn’t become tax experts, Shaq stressed the importance of being aware of where their money goes and the tax deductions they face.
At this rate, Anthony Davis will be making over a million dollars per game with his new contract extension pic.twitter.com/0PRDo10miU
— Barstool Gambling (@stoolgambling) August 4, 2023
NBA players, often signing contracts in the hundreds of millions, encounter staggering amounts of taxes. The federal tax rate of 37% applies to any US citizen earning over $610,000. State taxes further impact players, with California’s 12.3% state tax rate being notably high. Using Anthony Davis’s contract as an example, Shaq illustrated that after federal and state taxes, including Medicare, Social Security, and SDI, Davis’s take-home salary would shrink to $29.2 million.
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Shaq’s advice extends beyond the superstars like Davis, as players across the salary spectrum face similar tax rates. Understanding the basics of taxes, according to Shaq, enables players to strategise and retain as much of their hard-earned money as possible. With Shaq’s wealth of experience, his insights serve as valuable guidance for young athletes navigating the complex financial terrain of professional sports.
