The Qingdao Eagles will not disclose the actual amount, but it is clear that the club thinks he is worth every penny, if his performance in the first two days after he arrived is anything to go by.
"He is the right player for us," says club manager Sheng Xishun.
For one, McGrady refused the villa the club rented for him downtown, but chose to stay in a hotel next to the stadium in the eastern part of the city, where his team is training.
He started playing with the squad a day after he landed and has fitted in well, with no requests for special board or lodging.
"People all know he is a high-profile player and some say he will put on airs while he is here. But he is totally professional, and he more than meets our expectations, and admiration," Sheng said.
"I want to tell you this: He is not a gold digger in China. He's here to play good basketball."
To cater for the expected flood of McGrady fans, the Eagles decided to move from their home court at Qingdao University to the much larger Guoxin Stadium, which has three times the 4,000-seat capacity of the old court.
But fans will have to pay more as well, but specific prices have yet to be worked out.
McGrady fans are already waiting in line to see him play.
"I started to love him since middle school," says Xu Haifeng, a sophomore at Qingdao Agricultural University.
"I like his character and skills. Although the ticket price will be higher this season, I will definitely still go and watch him play."
For McGrady himself, working well with his teammates is his immediate priority.
"These guys work really hard. They are in great condition. They are willing and eager to learn and we are just trying to build up our chemistry. I'm also trying to teach them certain tactics that I know from the game of basketball," says McGrady, whose ambition is to lead Qingdao to the CBA championship.
"Chemistry means knowing your roles, playing hard, everybody being one on the court and being good teammates: If we continue to grow and work hard and establish some sort of rapport and play hard every night, we will give our all to win."
Although the new CBA season schedule has yet to be officially announced, the team has disclosed its first match may be an away game against Yao Ming's Shanghai Sharks.
McGrady is a former teammate of Yao's at the Rockets and good friend with the Chinese basketball icon, but he says he did not consult Yao before coming to China.
"I'm a grown man. I can make my own decision," McGrady says, laughing. "I will see him when we play against his team. He's the boss, but he's not there to pose moves and jump hoops. That will be fine."
He is however, looking forward to playing against the Sharks.
No matter what his future with the CBA may hold, McGrady has decided to end his career here after his current stint.
"Yes, this is it. I'm not going back to the NBA. I retired from the NBA. So, CBA is it," he says.
"I play basketball here because the fans have been so loyal, so supportive and so passionate. They just show great support every time I come over here. This is the only thing I come to give to them before I stop playing."
Stephon Marbury has already set a good example in the Chinese league by leading the Beijing Ducks to the championship last season. As Marbury rose as basketball favorite in China, his brand, Starbury, also became popular among fans.
McGrady says he would like to follow the same course, but for him as a player, basketball is still his main focus.
"I'm sure there will be some good business opportunities coming along the way," he says. "Right now, I'll just concentrate on playing basketball. My agent and my attorney handle the business side of things. If a chance comes and it makes sense, then we will do something."
As for retiring from basketball, McGrady says it's early days yet.
"I don't look that far down the road. We haven't played a game yet," he says. "I may have retired from the NBA, but at CBA, I haven't even started."
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