When then NBA-commissioner David Stern came to China in 1987, he arrived with an offer.
“Stern was armed with NBA games that he was going to give away to the Chinese government for free,” said Brook Larmer, author of Operation Yao Ming: The Chinese Sports Empire, American Big Business, and the Making of an NBA Superstar. “(But) nobody in the state apparatus or the government had really any interest in the NBA… China’s sports system was not meant for entertainment, as the NBA was, but it was more for showing that China was rising in the world and creating Chinese athletes.”
The game eventually caught on, and the NBA has now become China’s most popular sports league. The league now has over 500 million Chinese fans, and a booming business in the country that is estimated to be worth over $4 billion.
But today the NBA and China are at loggerheads, not because Chinese consumers need to be convinced that the NBA is worth watching, but precisely because the game has been so successful.
China is now the NBA’s largest global market, and this impacts every aspect of the NBA’s bottom line. From lucrative player sponsorships and shoe contracts with Chinese companies to a multi-billion dollar broadcast deal, everyone from NBA team owners—whose team valuations have grown—to lower-level players with an increasing salary scale have benefitted.
Yet since the Houston Rockets general manager Daryl Morey tweeted in support of protests in Hong Kong, the NBA and China, it seems, have reached another fundamental impasse.
In the U.S., the NBA is considered the country’s most outspoken and progressive sports league. NBA coaches Steve Kerr and Greg Popovich consistently weigh in on U.S. politics; L.A. Lakers star LeBron James is a vocal critic of structural racism and police brutality, and the league has defended player Enes Kanter in his battles with Turkey’s president. The organization has meanwhile maintained a booming business.
This emphasis on social activism, however, is now being put to the test, as the NBA is now firmly entrenched amidst an escalating crisis between Hong Kong and Beijing.
In Hong Kong, protesters have been willing to go to increasingly extreme lengths to protect what they view as Beijing’s infringement upon their most fundamental democratic rights. One of their five demands, for example, is for full universal suffrage, as currently only about half of their legislators are democratically elected. To Beijing, these demonstrators are seen as separatists challenging the country’s territorial integrity. As Brooklyn Nets owner and former Alibaba executive Joseph Tsai wrote, Hong Kong has become a “non-negotiable… third-rail” issue for Chinese citizens.
While taking center stage right now, this inherent mismatch in values isn’t sudden. The NBA’s relationship with China is fraught with complications and contradictions.
Building the NBA in China
David Stern was eventually able to convince China to start showing NBA games on television. And this deal happened to fortuitously coincide with two important phenomena of the 1990s: televisions in China and Michael Jordan.
“As television ownership rapidly expanded in China… the NBA was ahead of other international sports leagues in connecting to Chinese fans and markets,” said John Nauright, a dean and business professor at Lock Haven University who has studied the NBA’s rise in China. “The NBA looked to China as a potential growth market, particularly to leverage the tremendous popularity of Michael Jordan.”
Though basketball was not widely played in China at the time, the ability to watch Michael Jordan on television developed into a strong emotional connection to the game, particularly amongst Chinese youth.
“(Basketball) felt young, hip, and cool, and younger people in China were just starting to learn about these things outside of China,” Larmer said. “Michael Jordan was the embodiment of that kind of freedom… this guy who flew through the air and was this amazing athlete.”
After developing a devoted basketball fan base in the 1990s, the NBA firmly understood that their connection to the Chinese market would be predicated upon having a marketable Chinese star. To a far greater extent than other U.S. sports leagues, the NBA knew that training and developing players abroad was a crucial component to expanding their business outside of the United States.
Wang Zhizhi was the first Chinese player to reach the NBA in 1999, and while his stint in the league was short, he broke down barriers to pave the way for Yao Ming’s success. Wang, who played on a few teams before being bounced from the league in 2005, had trouble from the beginning while playing with the Dallas Mavericks. One summer, Wang wanted to stay in the U.S. to work on his game. In China, however, this request was seen as prioritizing individual aims above the Chinese state.
“There was always a tension between individual values and aspirations, and the needs of the state,” Larmer said. “This is a theme that has run through the relationship between the NBA and China since the beginning.”
But when the Houston Rockets drafted the 7’6″ center Yao Ming as the number one overall pick in the 2002 draft, China finally had its star.
“Yao Ming coming to the Houston Rockets was the primary piece of securing popularity for the NBA in China,” Nauright said. “He also allowed for many sponsors to leverage entry into the Chinese marketplace and for China to gain better visibility in the USA.”
Yao went on to become an eight-time NBA all-star and, in many ways, the father of Chinese basketball. His success also cemented interest in basketball in China as a whole, as new Yao fans also began to identify with other teams and players around the league.
Other stars like Kobe Bryant and LeBron James began making annual trips to the country, inspiring legions of devoted fans and millions of dollars in ensuing business deals. In seeing basketball’s popularity in China, dozens of other NBA players have followed suit and have signed lucrative shoe deals with companies like Anta and Lining.
There have been few other Chinese players in the league since. While Yao didn’t inspire a huge wave of Chinese basketball stars to come to the U.S., he was fundamental to creating an emotional and financial connection to the NBA in China.
Rockets, boycotts, and de-escalation
Rockets star Yao’s success ensured that the Houston team was foundational to China’s current relationship with basketball.
“(China’s) love affair with basketball bloomed and flourished around the Rockets,” Larmer said. “A love of the Rockets was something innate in every Chinese basketball fan, even if they identified more with skilled players.”
That Morey worked with Yao during the center’s final years with the team, might make his comments feel especially cutting to Chinese fans.
One Weibo user who runs a Rockets fan account and said he has been a fan for the last 14 years wrote, “My country comes first… I will not tolerate any person, thing, or words intended to split my country.”
Shuan Rein, founder and managing director of the China Market Research Group (CMR), said that a feeling of betrayal may have contributed to how intensely Chinese consumers and companies lashed out against the team and league as a whole after Morey’s tweet.
“The boycotting is really an organic movement from the Chinese consumer…If you say anything that will enrage them, you will be dropped,” Rein said.
For China, however, replacing the NBA is not as simple as it is for other foreign businesses. China doesn’t necessarily need Google, Amazon, or even Starbucks, because there is Baidu, Alibaba, and Luckin Coffee. Combined with China’s massive market, this is in part why foreign businesses, like Apple this week, so often comply with demands imposed by Beijing.
However, the Chinese Basketball Association – China’s domestic basketball league headed by Yao Ming – simply cannot compete with the NBA’s product.
“The CBA never developed a brand of basketball that was appealing to a Chinese market,” Larmer said.
The Shanghai Sharks, one of the most valuable franchises in the CBA, is estimated to be worth around $150 million. The average NBA team is worth $2 billion.
So even though there’s a lot on the line financially for the NBA with the Chinese market, the league’s relative strength may in part explain why commissioner Adam Silver refused to apologize for Morey’s comments and protected his employees rights to express their opinions.
“The vast majority of foreign companies apologize profusely at the first sign of discontent from Chinese consumers, which makes the NBA’s response all the more remarkable,” said Mark Dreyer, who runs the China Sports Insider website.
At the same time, there seems to be little interest among players and other NBA representatives alike to further escalate the situation. While U.S. politicians and the creators of a well-timed TV show have criticized China’s response, NBA representatives have warned players not to speak about the situation, and many that have spoken simply reiterated their desire to work with China.
“We apologize. We love China,” said James Harden, current star of the Houston Rockets. Even the notoriously outspoken NBA coaches Steve Kerr and Gregg Popovich only went as far as saying that Morey had a right to speak freely – drawing the ire of U.S. President Donald Trump.
While not backing down, China seems to also be taking steps towards de-escalation. Hu Xijin, the top editor of the Global Times – a nationalist tabloid in China – said that his newspaper would tone down their coverage of the events.
Amidst canceled community events and a social media outcry, the Los Angeles Lakers and Brooklyn Nets pushed through and laced up for a preseason game in Shanghai on Thursday evening. And while sponsor logos were wiped from the court, the stadium was still nearly full and loudly cheered from the moment LeBron James starting dunking in warm-ups.
So as the NBA and China have navigated decades of an improbable yet increasingly strong relationship, the simplest solution to its current crisis might be the quietest. While both sides might not back down, they may let basketball do the rest of the talking.
More must-read stories from Fortune:
—Why you can’t (easily) stream the MLB playoffs without cable
—Broadcasting rights, ticket sales, sponsorships: NBA’s Hong Kong crisis risks its massive China business
—Two top college basketball coaches differ on ‘Fair Pay for Play’
—Will paying student athletes save college sports—or kill the NCAA?
—Behind the rise in “stadium” bags—and why you’ll need one at football games this fall
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