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Nash was born in Johannesburg, South Africa, to a Welsh mother, Jean, and English father, John, on February 7, 1974. His family moved to Regina, Saskatchewan when he was 18 months old, before settling in Victoria, British Columbia. He therefore holds British as well as Canadian citizenship. Before the family settled in Canada, his father played professional soccer in various parts of the world.

Although Nash's high school coach, Ian Hyde-Lay, sent letters of inquiry and highlight reels on Nash's behalf to over 30 American universities, Nash was not recruited by any university, until Santa Clara coach Dick Davey requested video footage of the young guard. After watching Nash in person, Davey said he "was nervous as hell just hoping that no one else would see him. It didn't take a Nobel Prize winner to figure out this guy's pretty good. It was just a case of hoping that none of the big names came around." However, Davey also told Nash that he was "the worst defensive player" he had ever seen.  Nash was awarded a scholarship by Santa Clara for the 1992-93 season. At that time, it had been five years since the Broncos appeared in the NCAA tournament. That changed when Nash led the Broncos to a WCC Tournament title and an upset win over the No. 2 seeded Arizona in the first round of the NCAA Men's Division I Basketball Tournament. In that game, Nash scored six straight free throws in the last 30 seconds of the contest. Although Santa Clara was defeated by Temple in the next round, the 1992-93 campaign was considered a successful one. However, the Broncos failed to sustain the momentum the following season, and only managed a 5-7 record in the conference. The team rebounded in the 1994-95 season, with Nash being named Conference Player of the Year and the Broncos topping the WCC. Featuring the league leader for scoring and assists in Nash, the Broncos returned to the NCAA tournament, but they were defeated by Mississippi State. After the season, Nash contemplated turning professional, and decided against it when he learned that he would probably not be considered as a first-round pick in the 1995 NBA draft.  In the 1995-96 season, Nash began attracting the attention of the national media and professional scouts. He had spent the summer before that honing his skills, playing with the Canadian national team and working out with the likes of established NBA players Jason Kidd and Gary Payton. Santa Clara again captured the WCC title, and for the second consecutive year, Nash was named Conference Player of the Year, the first Bronco to do so since Kurt Rambis. He scored 28 points in leading the No. 10 seed Broncos to a first round upset win over No. 7 seed Maryland, but then the Broncos were eliminated by Kansas. Nash's performances ensured that he earned an honourable mention All-America as a senior by The Associated Press and the USBWA. He also finished his career as Santa Clara's all-time leader in career assists (510), free-throw percentage (.862), and made and attempted three-pointers (263-656). He remains third on the school's all-time scoring list (1,689), and holds Santa Clara's single-season free-throw percentage record (.894). In September 2006, Nash had his jersey (#11) retired, becoming the first Santa Clara student-athlete to receive that honour.
Steve Nash