It’s 2016, and the Cleveland Cavaliers and Golden State Warriors are battling it out in the NBA Finals. Game 7—everything on the line. I remember the three of us—me, my roommate Ernesto, and Jeff—glued to the screen, living and breathing every play. They weren’t even huge NBA fans, but that series? It had us all on the edge of our seats for every shot.
I didn’t know it at the time but this was the narrative peak of the NBA1then Kevin Durant kinda ruined it all by signing with the Warriors and upsetting the perfect competitive balance. Once down 3-1 in the series, LeBron and the Cavs came back to beat the 73-win Warriors. They gave us The Block and The Shot–two of the greatest moments in NBA history. I was a bonafide hoophead and the NBA was easily my favorite sports league.
A little while later, Jeff—knowing how much I was into hoops—hit me up about this new alternative investment at Meridian Investments: a basketball league startup called Champions Basketball League (CBL). It would going to be a summer league to give ex-NBA players a place to hoop during the dead months after the Finals wrapped up in June. Several well-known former NBA players were attached to the CBL, including: Al Harrington, Kenyon Martin, Corey Maggette, Cuttino Mobley, and Steve Francis. Then you had retired legends like Julius Erving, Mark Aguirre, and Earl Monroe involved as either advisors or executives. CBL had a TV contract with ESPN to show games.
I was intrigued, but a nagging skepticism lingered with me. As a sports fan who had watched a lot of 30 for 30 documentaries, I knew there was a deep graveyard of failed startup sports leagues–the XFL, the CBA, the USFL, the AFL, the NASL, and many others. The big four leagues have such a stranglehold on the industry that there’s barely a crumb left for anyone else. The new paradigm for a successful upstart sports league was to co-exist with the major player as either a minor league farm or as a supplementary viewing during the off-season.
Jeff heard my concerns and told me that I was looking at extremely favorable terms on my investment–that I would be signing up for senior convertible debt, with a maturity of two years, paying me 12% semi-annually.2Senior debt refers to debt that has the highest priority for repayment in the event of a company’s bankruptcy or liquidation. It is considered the most secure form of debt because it is paid before subordinated (junior) debt, equity holders, and other unsecured creditors. If the league took off and valuations soared, I’d have the option to convert my debt into team ownership, unlocking way more upside and giving me some solid positive tail risk.
Then he invited me to this fancy steak dinner at Clyde Frazier’s Wine and Dine, just a couple blocks away from Madison Square Garden. The dinner included the CBL’s CEO Carl George, the Meridian Investments CEO, accredited investors like myself, and several ex-NBA players who would be part of the league in some capacity.
I found myself sitting next to Syracuse basketball legend John Wallace, who was set to coach CBL’s New York team, the Gotham Ballers. Naturally, I had to ask…
Pete: Kobe or LeBron?3(not at that time because Kobe had just retired, but overall, career-wise)
John: I take Kobe. He’s a winner. LeBron ain’t all that.4(the guy just came back down 3-1 in the NBA Finals against a 73 win Warriors team! yet still no love??? it baffled me how seemingly the whole city of New York seemed to hate LeBron in the early/mid 2010’s)
I had a lot of fun rubbing shoulders during that dinner. They really sold themselves as more than just a basketball league—it was supposed to be a community-driven league. They had all these non-profit exhibition games lined up, golf outings, meet-and-greets, and partnerships with major kids’ charities like Boys & Girls Club of America and Make-A-Wish. They told me their strong connections with the NBRPA5National Basketball Retired Players Association would create a durable pipeline of players 1-3 years removed from the NBA. Later on, they’d eventually add WNBA players and senior retired NBA legends to their events. This investor’s dinner really sold me on giving this a try.
Nobody had convinced me that this was the greatest investment ever, that they would become the NBA’s permanent summer companion, or that my investment would make multiples of my initial capital or anything like that. Money wasn’t the driving motivation. What we really got me into this investment was the allure of access and how that tickled my vanity.
By this point in my life, I was a 20-something millionaire in NYC who wanted more from life than just staring at stock charts all day. So, over the past year, I’d been exploring new paths, trying to uncover a fuller, more complete version of myself—I signed up for a non-profit mentorship program for inner-city high schoolers, I did some low level angel investing into small companies, and I spent a lot of time on dating apps.
The idea of owning a sports team felt like it could intersect all three needs. I pictured it so clearly—courtside seats, a 14 year old inner-city mentee beside me, staring wide-eyed at the experience. “Pete, how do you know Carmelo? Then my date would show up, see me shaking hands with these gigantic NBA dudes. Isn’t that Joakim Noah? He’s so tall!6fun fact, Joakim Noah actually went to my apartment building once to play pool with some models That’s the vision. Peter isn’t just some dirtbag day trader scalping in his pajamas. He’s a community-driven man of the people.
Yeah, I know—vain, dumb, and completely self-serving.
Anyway. I talked myself into a $25,000 investment. Nothing too crazy. I figure with all these famous NBA players involved, it had to be a legitimate venture even if the business proposition itself was questionable. Worst case, they ball for a few years and fold like most alternative leagues but it’ll be a fun real life experience and financially speaking, I’ll be first in line to get my principal back. Best case, they’re a rousing success–they establish themselves as the perfect summer league niche when everyone is aching for more basketball–and I’m shaking hands with Kobe Bryant court side when he comes to watch his buddy Lamar Odom suit up for the Gotham Ballers.7I knew Kobe himself would never play in these leagues, he’s too good for them
They gave us a rough schedule–the league was set to begin next year (2017) in July and August. They’d play a short 14 game schedule as well as a tournament in Las Vegas. Sounds good, can’t wait.
And then the calendar turns…and slowly but surely, the red flags start popping up.
StartEngine — WTF is that?
While googling for updates on the company, I found out that the CBL was doing crowd-funded financing through StartEngine. 8StartEngine is an equity crowdfunding platform that allows small businesses to raise capital from everyday investors. It operates under Regulation Crowdfunding (Reg CF) and Regulation A+ and let’s private companies raise to the public without an IPO.
Nobody had ever told me that they planned to do this on top of their private placement with Meridian. This wasn’t convertible senior debt anymore, they were just selling straight up equity. Nonetheless, I thought raising on a public crowd-funding platform made this investment appear sketchy and low-tier. Legitimate companies typically don’t need to take this route; they should be able to pitch their vision and strategy to seasoned investors with substantial capital.
On a more superficial level, being an owner now no longer felt as special. Now, anyone with just $100 invested could call themselves an owner. It kind of threw cold water on the idea that accredited investors such as myself would have exclusive access.
The Big 3???? WTF is that?
As my worries start to accumulate, I would start querying for updates on CBL regularly. Later on in the same month, I stumbled upon this heaadline.
Uh… what the hell is this? Nobody—neither CBL nor Meridian—ever said a damn thing about another basketball league with ex-NBA players popping up and stealing the summer TV spotlight. And they’re running three-on-three like it’s NBA Jam—which, honestly, sounds way cooler? And Ice Cube is behind it? AND their biggest name is Allen Iverson?! Yeah… this is bad for CBL. I felt completely blindsided.
I looked up the players that were committed to the Big-3. Al Harrington. Kenyon Martin. Corey Maggette. Cuttino Mobley. Steve Francis. What the fuck, bro!? They’re even stealing all of our players! They just announced that same month that Kenyon Martin and Al Harrington would play for the Gotham Ballers.
There’s no way that both of these leagues could co-exist with the same players. It didn’t make any sense–surely there must be some kind of contractual obligation. I started sending e-mails to the CEO Carl George, demanding to know what his plan was and asking if there was anyway to recall my loan.
Hello–is anybody there? Are we going to hoop or not?
He would never respond. I would text Jeff about it and he said that Carl was also ducking their calls, claiming to be busy traveling around and finding more investors for a possible Reg A+ IPO on the OTCBB (?!). Supposedly, Tom Brady and Jimmy Kimmel were getting involved too.
Summer 2017 rolled around, and there was nothing—no official schedule, no confirmed rosters, just radio silence across all social media platforms. I reached out to every point of contact but no one got back to me. All we got were financial updates about how my debt coupon was getting paid out9(not really, it was just numbers updating on a financial portal, not actual money in my bank).
Pete (in e-mail): hey guys… when are y’all playing the basketball games?!?!
No games would be held and there weren’t any press releases during this time.
I call Jeff to explain WTF was going on. He told me there this background political battle going on–that Meridian had enough of Carl’s incompetence and were trying replace him and reboot the league. He told me the new CEO would be Byron Scott.
Byron Scott? *THAT* Byron Scott???
Alright, let me give you some context here that only a Lakers fan understands—Byron Scott coached the Lakers from 2014 to 2016, and to put it bluntly, he was a disaster—arguably the worst coach in the league at the time. His entire strategy was stuck in 2001 basketball, completely oblivious to the league’s shift into the pace-and-space era. On top of that, he had zero ability to communicate with, develop, or motivate young players.
Now, in a weird way, that actually worked out for us because, let’s be real—we wanted to lose so we could get a higher draft pick. Lakers fans even dubbed him “The Tank Commander.” But investing in a company helmed by Byron Scott? Hell no. That was never part of the plan!
Carl George finally responds
And just like that, 2017 comes to a close. The BIG3 pulled off its first season without a hitch—every game played as scheduled, highlight-reel dunks, fans loving the experience, and a champion crowned. A total win for an inaugural season. And the kicker? It all happened with players who were supposedly committed to the CBL.
Meanwhile, the only press that came out for the CBL was this negative article from The Ringer. Now instead of focusing their energy on holding games, they’re trying to sue Big-3 for taking all their players. I also learned that their awesome contract with ESPN was only to stream games online on ESPN3.
Great. Just great.
At this point, I was 99% certain that I would never recoup my $25,000 and just as certain that I’d never watch a single CBL game.
Then in summer of 2018–out of nowhere–I get this e-mail from embattled CEO Carl George. I am going to copy and paste it to you, only with the names of Meridian Investments execs blocked out.
What a shit show. Carl was now out here airing all the dirty laundry over some proxy battle with the execs at Meridian, fighting for control of the company. At this point, I didn’t care anymore.
My next move was to e-mail my accountant:
Pete (on e-mail): hey Phil, how do I write off a private investment to zero on my tax return?
Pete, humbled, an idiot investor
So there you go–my dumbest investment ever. Looking back, I can’t help but cringe at how naive I was. I absolutely should have known better than to get scammed like this. I really hate myself for the following three things:
A) getting sucked into my own delusions of grandeur
B) choosing not to care about the business viability of an investment despite totally being qualified to know the historical failure rate of alternative sports leagues as an informed sports fan, and
C) doing barely any research at all into the people running the company
Lesson learned.
As for the Champions Basketball League and its aftermath–here’s what happened:
Their $250 million lawsuit against Big-3 was dropped in 2018 and in 2020, a judge ruled in favor of the Big 3’s countersuit for defamation–awarding them a $21 million judgment against CBL. I doubt Carl had the money to pay it.
They also submitted a letter to the court that included a declaration from Tom Brady that he has never been involved with the CBL in any way–adding to the humiliation.
A relaunch helmed by Byron Scott the Tank Commander never materialized. The league is now effectively defunct without ever having played a single game.
In the meantime, the BIG3 continued to grow, solidifying itself as the premier post-NBA professional basketball league. Last year, they sold their LA team to a private owner for $10 million.10it’s a major benchmark for a new league to start selling teams to private owners. square 1 is usually collective team ownership by the league. I wish Meridian had called up a real business magnate like Ice Cube.
I still keep the private placement memo with me as a reminder of my own hubris.
