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

Tracey McGrady

Source: Ones Basketball League.

This time, Tracy McGrady trusts his ideas.

A member of the Basketball Hall of Fame has funded real estate projects, he supported sports and entertainment agency, and committed cryptocurrency partnership before the sector lost billions in value. McGrady is now investing in his own Ones Basketball League, or OBL, which will premiere this weekend in New York.

“I’ve always invested in other people’s ideas and vision,” McGrady said in an interview with CNBC. “I never trusted mine. I wasn’t sure mine was good enough. I didn’t trust my ideas or decision making when it came to my vision.”

He added, “This is the first time I’ve really trusted and believed that I could pull this off.”

McGrady, 43, is self-funding the OBL, an over-18 league that visits seven cities between April and July. It brings players together in one-on-one games, which is a staple of playground basketball. Imagine the Big Three Ice Cube league, but with fewer players and no former NBA stars.

In total, McGrady will pay just under $10 million, including a $250,000 prize for the eventual OBL champion. He partnered with longtime athletic executive and former XFL president Jeff Pollack to help with operations. Pollack says league-related costs are “minor” so far.

“It means that we will have the opportunity to develop this business and do it in a way that the economy is quite favorable at the beginning,” Pollak said.

McGrady wants to appeal to the mass audience of Generation Z, i.e. those born after 1997. Then, he believes media and sponsorship royalties will follow.

Actions during an OBL game

Source: Ones Basketball League.

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

“No disrespect to what these other ESPN things are putting into their programs – it’s more interesting,” McGrady told CNBC earlier this week at the Standard Hotel in Manhattan.

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

The terms of this agreement were not disclosed, but OBL has confirmed that it will split the advertising revenue.

McGrady Gets the Keys

Drafted in 1997 by the Toronto Raptors, McGrady played 16 seasons in the NBA, including a long spell with the Houston Rockets, and earned over $160 million. Spotrak, a website that tracks sports contracts. McGrady’s earnings include a $92 million deal with the Orlando Magic in 2000. His last season in the NBA was 2011–2012.

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

“Finally, I was handed the keys, and I blossomed in this [All-Star] player,” McGrady said. I didn’t see myself as such a guy. And I didn’t see [OBL] be it.”

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

Orlando Magic defenseman Tracy McGrady (1) scores past Washington Wizards defenseman Rod Strickland in the second period of a game at the TD Waterhouse Center in Orlando, October 31, 2000.

Tony Ranze | AFP | Getty Images

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

McGrady is not naive about startups. He expects OBL to falter and profitability is unlikely at first. McGrady and Pollack haven’t discussed the details of OBL’s money-making plan, but they expect to eventually profit from licensing deals, sponsorships and ticket sales, which will help provide a return on investment for potential sponsors.

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

He added that OBL will eventually look for investors, but at this stage “we want to make sure we’re clear on what it needs to be and then we’ll plan how to grow it.”

OBL is joining the crowded sports media landscape. Competitors include media company Overtime, backed by Drake and Jeff Bezos. This media company runs the Overtime Elite, or OTE, a league that pays high school students $100,000 with Generation Z installed.

Macroeconomic problems, including inflation, threaten early growth. When asked about these factors, Pollack suggested that the OBL was playing the long game.

“We are living in a tough economic time and it could get worse,” Pollack said. “But at some point we are going to get out of this and over the last couple of years we have all seen that the consumer appetite for sports content is as insatiable as ever.”

If OBL gets its target audience to watch sports content on social media, McGrady plans to expand the company around the world.

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

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