USA TODAY International Edition
China stakes high for NBA
In the late 1980s, when the NBA began making inroads into China, the league sent CCTV NBA games on videotape and told the state- run TV station it could air games at no cost. By 1992, the league had opened an office in Hong Kong, and by 2004, the NBA was playing preseason games in China.
Today, the NBA has billiondollar deals in China.
And its business relationships are in tumult after Rockets general manager Daryl Morey sent a pro- Hong Kong tweet that offended China and ignited a geopolitical crisis between the league and the communist country. As commissioner Adam Silver has apologized while underlining the league’s stance on free speech, CCTV has pulled the plug on showing the NetsLakers preseason games in Shanghai and Shenzhen.
At stake in the standoff: billions of dollars for both sides and a strong four- decade- long relationship that began with a Washington Bullets exhibition game in 1979.
It is a relationship that has multiple layers, including Chinese- related business partnerships with NBA players in the millions; a friendship with Basketball Hall of Famer and former NBA AllStar Yao Ming, who is the president of the Chinese Basketball Association and is a vital goodwill ambassador for the NBA in Asia; and millions of fans.
“If all of a sudden China decided it was no longer going to broadcast the NBA, clearly that would hurt CCTV and Tencent ( an internet conglomerate offering multiple e- services), but it would hurt
the NBA more,” Syracuse University professor John Wolohan, who specializes in sports law and U. S.- China sports relations, told USA TODAY Sports. “If one of these sides is going to lose, it’s going to be the NBA.”
NBA revenue from China – and a conservative estimate puts that at $ 500 million annually based on deals that are publicly known – is part of basketball- related income that affects the salary cap and how much money is available to players on an annual basis.
In July, China’s Tencent reached a five- year, $ 1.5 billion deal to remain the league’s exclusive digital partner in China, and it is the NBA’s largest partnership outside of the U. S. CCTV has a lucrative financial partnership with the NBA televising multiple games live each week, including coverage of the playoffs.
NBA China, a separate business arm of the NBA, was valued at $ 5 billion by SportsBusiness Journal last month.
Separate from the NBA’s partnerships in China, players are invested in the country, too. Several of them, including stars LeBron James and Steph Curry, make annual visits to sell apparel products from Nike and Under Armour.
Chinese apparel companies have also signed NBA players to endorsement deals: Klay Thompson and Gordon Hayward with Anta, CJ McCollum with LiNing and Lou Williams with Peak. Thompson’s deal with Anta could reach $ 80 million over 10 years, according to ESPN.
This controversy comes against the backdrop of a much larger issue: the trade war between China and the United States and human rights abuses in China.
On Monday, the U. S. blacklisted 28 Chinese entities because they have been “implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high- technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups in the XUAR,” according to the U. S. Department of Commerce.
The NBA is not alone when it comes to China’s heavy- handed negotiating tactics.
Gaming company Activision Blizzard banned an esports player for a year on Tuesday after he expressed support for Hong Kong, and in August, high- end fashion brand Versace apologized for making a T- shirt that listed Hong Kong and Macao as separate countries rather than part of China.
Silver understands the inherent issues for a global company doing business in countries that might not share the same political values. Before Game 1 of the NBA Finals, he was asked about the potential for problems amid the trade policy rift between China and the U. S.
“I am not concerned at this time. Of course we are not immune from global politics,” Silver said.
The fallout from the Morey tweet has been swift and harsh. Chinese celebrities have withdrawn from NBA- related events this week, a visit to a local school by the Nets has been canceled and there is concern the games could be scratched.
“For CCTV to all of a sudden pull the plug on them that shows how serious it is,” Wolohan said.
‘ NBA is big product to China’
The NBA and basketball are entrenched in China.
The league has offices in Beijing, Shanghai, Taipei and Hong Kong, and nearly 500 million fans watched NBA programming on Tencent during the 2018- 19 season and 21 million fans watched Game 6 of the 2019 Finals, according to NBA data.
The league also has more than 200 million followers on social media in China. In March, the league opened the second- largest NBA store outside of North America in Beijing.
A growing middle class with expendable income and massive technological growth that allows fans to stream games on phones and watch live on TV has allowed the NBA to thrive in China.
“It’s hard for us in the United States to imagine how much the NBA is involved in China and how much the people of China really like the NBA,” Wolohan said.
Silver conceded the economic impact – as Chinese companies suspend business ties with the league and the Rockets – is dramatic. He is trying to salvage relations in China, where more than 300 million people of the nation’s 1.4 billion play basketball, according to the Chinese Basketball Association.
“I’m a realist as well, and I recognize that this issue may not die down so quickly,” Silver told reporters in Tokyo on Tuesday.
Already in Asia for preseason games in India and Japan, Silver will visit China this week and plans to meet with Chinese business leaders and Yao, who is “hot” right now, according to Silver. But Silver’s in a difficult position, trying to placate mainland China, which wants Morey fired, and championing U. S. and NBA values, such as free speech.
“We’ve seen how Adam Silver operates, and if both sides want something done, you’re going to find a compromise,” Isaac Benjamin, a crisis communication strategist at PRCG Sports, told USA TODAY Sports. “That might not mean you go around touting a win, but it means you’re going to have a beneficial partnership moving forward.”
After the NBA’s vague statement regarding Morey’s tweet fell flat and drew criticism in the U. S. and China on Monday, Silver left no ambiguity in a statement Tuesday.
“It is inevitable that people around the world – including from America and China – will have different viewpoints over different issues. It is not the role of the NBA to adjudicate those differences,” Silver said.
“However, the NBA will not put itself in a position of regulating what players, employees and team owners say or will not say on these issues. We simply could not operate that way.”
He also acknowledged there is a cost to that position that the NBA is willing to absorb.
“I understand that there are consequences from that exercise of, in essence, his freedom of speech. We will have to live with those consequences,” Silver said.
While the NBA is at risk financially, so is China and its companies that are willing to spend money on the NBA to make money.
“The NBA is a big product to China,” Benjamin said. “China has been able to grow its basketball presence, and China wants to be associated with the NBA. There won’t be easy conversations. But there are plenty of organizations that get into these issues with China.”
‘ Players starting to look disingenuous’
There’s no denying basketball’s popularity in China. The game is huge and has been played there almost as long as it has been played in the U. S. Dr. James Naismith, who invented the game, helped introduce it to China on a missionary trip in the late 1800s.
Now, the NBA and its stars are on a similar mission, this time trying to preserve the lucrative relationship the love of basketball has brought both countries.
While some NBA players have prided themselves on refusing to shut up and dribble, will they follow that philosophy regarding China and Hong Kong and risk alienation and dollars?
“The players are already starting to look disingenuous,” said David Carter, a sports marketing consultant and executive director of the University of Southern California Marshall School of Business. “On one hand, they are social justice warriors of a certain bend. But at the same time, they are quick to come out and talk about the support of China, which means Beijing and others view as the oppressors in this case. They are walking a fine line.”
Rockets star James Harden apologized to China in a news conference on Monday and on Tuesday, Bucks star Giannis Antetokounmpo, who has an endorsement deal with Nike, said he believed the sides would “find a way to solve” the situation.
Clippers coach Doc Rivers, Golden State coach Steve Kerr and National Basketball Players Association president Chris Paul declined to comment on the situation until they knew more about it.
However, Spurs coach Gregg Popovich weighed in, as he often does on political topics.
“It wasn’t easy for him to say,” Popovich said of Silver. “He said that in an environment that is fraught with possible economic peril. He sides with the principles that we all hold dearly – or most of us did until the last three years – so I’m thrilled with what he said. The courage and leadership displayed is off the charts by comparison.”
Before the Lakers and Nets play, what will LeBron James, Anthony Davis, Kevin Durant or Kyrie Irving say? Will they speak out as they have on President Donald Trump’s divisive rhetoric or will they worry those words could hurt their global popularity and bottom line?
On one hand, they might be concerned about offending their Chinese fan base and hurting their endorsement deals. On the other, they arguably have a bigger pulpit to exert influence than a general manager or a commissioner.
“They have to be careful not to be penny wise and pound foolish. They too have to protect their core constituencies, which is fans that not only follow them and admire them for their play but for what they represent and speak out about,” Carter told USA TODAY Sports. “If they compromise their beliefs, that is an issue that will make things difficult for them going forward.”