The New York Times recently reported that former NBA stars Tracy McGrady and Jermaine O’Neal are starting a sports agency (Seven1 Sports Group and Entertainment). The duo sees “the lack of information that [young basketball players] are getting” and believes there is an opportunity to pass on the knowledge acquired during their combined 34 years of pro basketball. It is undeniable that both McGrady and O’Neal had distinguished careers (the two made a combined 13 All-Star appearances) and that they would be valuable mentors to today’s players. What is far less apparent is how they plan to break into a cutthroat player-representation business that is controlled by a small group of well-established agents. While McGrady says, “at the end of the day [those few agents] can’t get all the players,” the numbers tell another story. Happy Walters (CEO, Catalyst Sports & Entertainment) pointed out, “There are only 450 active players and +/- 300 of them are represented by a half-dozen [shops].” That leaves the other +/- 3,000 agents competing for just +/- 150 players .
Our Take: McGrady and O’Neal will be co-owners in S1SGE, but only one has aspirations of being a registered player agent (O’Neal). The former Pacers star plans to take the NBPA test in January. McGrady will serve the company in an ‘adviser’ capacity.
In theory, S1SGE’s co-founders could help fill that void they perceive exists; they are already mentoring kids within their youth programs. But with high school players unable to go directly from high school to the NBA (at least until the CBA is ratified) , any investment made in those athletes (whether it be time or money) is going to take time to mature. And even once the NBA inevitably grants high school players the ability to once again make the leap straight from the preps to the pros, it’s not as if there are going to be a ton of kids worth investing in. Walters said there are only “two or three [players each year ready to play in the NBA]—and the parents of those players tend to be very well-informed.” Of course, McGrady and O’Neal are more than qualified to share advice on the subject. Both players made the jump themselves back in the late 1990s.
Assuming McGrady and O’Neal aren’t forced to divest their interests in their existing player development programs (certainly no sure thing), the access they have to young players should provide a leg up in terms of developing meaningful relationships. But any advantage the duo might currently have is likely to be short-lived. There’s a strong possibility that the NBA alters its eligibility requirements following the 2024 season. Should that occur, everyone would be playing on an even playing field again (i.e. every registered agent would have the opportunity to communicate directly with high school prospects).
While McGrady and O’Neal were successful NBA players (the former is seven-time All-Star; the latter a six-time), it’s hard to imagine they are going to land clients based on their names alone; today’s 17-year old basketball prodigy was 11 when O’Neal last put on an NBA uniform (McGrady left the NBA 2 years earlier). Walters suggested the transition from players to agent/adviser might have been easier for the duo had they entered the space immediately upon retirement. “Like any business, [the agency business] is a business [built around] relationships with teams and GMs—and a trust that [the agent] finds players early and that [they are able to] develop those players.” It’s fair to assume both McGrady and O’Neal had a better grasp on talent around the league a decade ago.
The pair’s ability to orchestrate a successful second act will ultimately be determined by “their expectations, how much are they willing to spend to be in the game and [ultimately if] they can get players,” Walters said. He explained that managing expectations is important because it is going to take time for S1SGE to establish itself. Remember, “Free agency and the draft are just once a year. Even if [McGrady and O’Neal] are great [advisors/agents], it’s going to take them three-to-four years to build a book.”
The duo is planning to recruit current pros in addition to those eligible for the 2021 NBA Draft (O’Neal wouldn’t be licensed in time for the ’20 draft). Walters said that is a smart approach: “Everybody wants to focus on the draft, but that’s the area [of the business] that is the riskiest [in terms of capital expenditures].” Draft-eligible prospects are also likely to be the hardest to land at the outset. One must imagine it won’t be easy to convince a kid’s parents they should turn over their son’s career to agent who “hasn’t done it, doesn’t have a history [of negotiations under his/her belt] and doesn’t have the relationships yet.”
S1SGE’s pitch will become easier “if they can get a couple of vets—guys they might have played with or know well—to go with them” and they can achieve some early success in terms of negotiating deals for those players. Walters said, “If they can take a guy who is a $5 million player, find him a great situation and get him $8 million—that’s something [they would] be able to show people and talk about.”
Few NBA players have successfully made the transition to agent in their post-playing days. Former Bulls guard B.J. Armstrong is among the notable exceptions. Armstrong, an Executive Vice President and Managing Executive for basketball at Wasserman who represents Derrick Rose (among others), had the opportunity to learn from the likes of Arn Tellem, Bob Myers and Thad Foucher while building his client list. It certainly sounds as if O’Neal is planning to follow a similar path. He’s said to be intent on adding “seasoned partners” he can lean on as he learns the business and develops relationships. Armstrong said the duo’s lack of negotiating and/or marketing experience shouldn’t hamstring their efforts (assuming they hire the right people). “That’s why they call it a team,” he said. “I’ve never been on a team where one person has been capable of doing everything . Everybody brings what they do best to give the team an opportunity to succeed.” And it’s no different in the agency business.
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