Tracy McGrady bets millions on 1-on-1 OBL basketball startup

This time, Tracy McGrady trusts her ideas.

The Hall of Famer basketball player funded real estate projects, backed a sports and entertainment agency, and entered into a cryptocurrency partnership before the industry lost billions in value. Now McGrady is investing in his own company, Ones Basketball League, or OBL, which premieres in New York this weekend.

“I’ve always invested in other people’s ideas and vision,” McGrady told CNBC in an interview. “Not once did I trust mine. I didn’t have the confidence to think mine was good enough. I didn’t trust my ideas or my decision-making when it came to my vision.”

He added: “It’s the first time that I have confidence and that I think I can succeed.”

McGrady, 43, self-funds OBL, an 18-plus league that travels to seven cities from April through July. It pairs players in one-on-one games, a staple of playground basketball. Imagine Ice Cube’s Big 3 league, but with fewer players and no former NBA stars.

McGrady will pay just under $10 million, in total, including the $250,000 price tag for the eventual OBL champion. He partnered with longtime sports executive and former XFL president Jeff Pollack to help with operations. Pollack says the costs associated with the league are “not significant” so far.

“That means we’re going to have the opportunity to grow this business and do it in a way where the economy, at the start, is quite supportive,” Pollack said.

McGrady wants to appeal to a mass Gen Z audience, meaning those born after 1997. So, he thinks press and sponsorship costs will follow.

While OBL is new to the minor league sports scene, he pointed to other amateur leagues such as cornhole and bowling that attract niche audiences on the networks and believes OBL can do the same.

“With no disrespect to what these other ESPN things put into their programming — it’s more entertaining,” McGrady told CNBC earlier this week at the Standard Hotel in Manhattan.

The OBL has already found prominent media support. It has a digital distribution deal with the Paramount-owned Showtime network that allows the network to air OBL content on its YouTube channel as well as cross-promotions.

The terms of this pact were not disclosed, but OBL confirmed that it would split ad revenue.

Drafted in 1997 by the Toronto Raptors, McGrady played 16 NBA seasons, including a long one with the Houston Rockets, and made more than $160 million in revenue, according to Spotrac, a website that tracks sports contracts. McGrady’s earnings include a $92 million contract with the Orlando Magic in 2000. His final NBA season was 2011-12.

He compared OBL to his time with the Magic. It only lasted four seasons, but it was the start of seven straight All-Star appearances and McGrady’s transition to “a household name” in the NBA.

“I finally received the keys and I flourished in this [All-Star] player,” McGrady said. “I didn’t see myself being that kind of guy. And I didn’t see [OBL] being this.”

OBL was launched in February. The league plays regional games with 32 players in seven cities, including New York and Los Angeles. Players who win regional games earn $10,000. The top three players in the games can compete for the biggest payout of $250,000.

McGrady praised his two teenage sons for sparking his interest in one-on-one basketball. They don’t really watch live NBA or NCAA games, he said. “What they’re going to watch: YouTube, short-form content, highlights,” McGrady added.

McGrady isn’t naive about the start-up. He expects OBL to misfire and early profitability is unlikely. McGrady and Pollack did not discuss the details of OBL’s plan to make money, but they expect to eventually profit from licensing deals, sponsorships and box office, which would help create a return on investment for potential sponsors.

“It will come from the audience that we ultimately reach and engage,” Pollack said. “We have a long way to go.”

He added that OBL would eventually be looking for investors, but at this stage “we want to make sure we have a clear understanding of what it should be, and then we’ll plan how to develop it.”

OBL joins a crowded sports media landscape. Competitors include Drake and Jeff Bezos-backed media company Overtime. This media company operates Overtime Elite, or OTE — the league that pays out $100,000 to high school students with an established Gen Z.

Macroeconomic concerns, including inflation, threaten early growth. Asked about those factors, Pollack suggested that OBL is playing the long game.

“We are going through tough economic times and it could get worse,” Pollack said. “But we’re going to get out of it at some point, and what we’ve all seen over the last two years is that the consumer appetite for sports content is as insatiable as it’s ever been. .”

If OBL attracts its target audience to watch sports content on social media, McGrady plans to expand the business globally.

“I have the right team to make it happen,” he said. “I think we’ve identified a pattern where it’s very entertaining.”