Pride at stake for both China and NBA over $4 billion fallout

(CNN)Five days after Houston Rockets general manager Daryl Morey deleted his now famous tweet with the words “stand with Hong Kong,” the most popular sports league in the most populous country in the world is getting an earful from all directions.

After an initial league statement was criticized for being too beholden to the Chinese authorities, NBA Commissioner Adam Silver defended Morey’s right to send the tweet in a statement Tuesday in Tokyo. He said that the league would not pursue profits over principles.
But the timing of this conflict could not be worse for the NBA, with two highly anticipated preseason games between the Los Angeles Lakers and Brooklyn Nets scheduled for Thursday and Saturday in China.
    Two NBA developmental games have already been canceled, as well as a fan appreciation night, with mounting speculation that the showcase games may also be called off.
    At the heart of this dispute lies an issue of pride from both sides, said Gregory Stoller, a senior lecturer of strategy and innovation at Boston University’s business school, who has been consulting in China for 15 years.
    “The Chinese are the most patriotic nation on the earth, and the second most patriotic by a nose has to be the United States,” Stoller told CNN Sport.
    “The Chinese are really proud of their culture and proud of everything that they stand for. If you want to interact with that country, then you have to respect that,” he added. “Most countries, including China, would want an apology; they want people to respect their relationship.
    “It’s sort of like being in a long-term marriage and realizing that you’re going to have some bumps in the road,” he added, “but I’m 100% certain that the ship will be righted.”
    Not helping matters for the NBA is the current trade friction between Washington and China. “It’s a very fragile time for US-China relations across the board,” Stoller said.
    On Monday, the US placed 28 Chinese companies on a blacklist for allegedly facilitating human rights violations. Chinese smartphone giant Huawei was blacklisted earlier this year, while Washington has placed billions of dollars of tariffs on Chinese goods since 2018.

    ‘First-mover advantage’

    With the league’s presence in China worth an estimated $4 billion, there is plenty at stake for both NBA teams and their players — a number of whom have lucrative sponsorship deals in China — should the spat escalate.
    The Houston Rockets, whose games have been banned indefinitely by state-run CCTV, were the most popular team in China before Moray’s tweet.
    Hall of Famer Yao Ming — who now runs the Chinese Basketball Association (CBA), and who Silver described as “extremely hot” about the situation — played his entire career in Houston.
    On the NBA’s side is its longstanding presence in China, giving it a nuanced understanding of the country that other sports entities like the English Premier League arguably lack, according to Simon Chadwick, professor of sports enterprise at the UK’s Salford University.
    “The NBA has a first-mover competitive advantage in China,” he said. “When China was going through its economic reform in the 1990s, the NBA was the first league to market there. They’ve spent nearly three decades and millions of dollars on establishing a market presence in China; to have that undermined by a tweet is a big issue for them.”
    Today, over three hundred million people play basketball in China, according to the CBA. More than 600,000 courts have been built, while the NBA said in 2015 it would spend $1.6 million to help refurbish and build more courts throughout the country.
    “The NBA has always been very careful with how it has approached engagement,” Chadwick explained. “It has not been framed that the NBA and the United States are making money from China, but that this is about the NBA and China working for the mutual benefit of Chinese basketball.
    “The narrative is quite different from the smash and grab cash raids that European football clubs are typically making,” he added.

    ‘Very bad gesture’

    Left mostly unsaid thus far is how NBA fans in Hong Kong are reacting to the fallout.
    Daphne To, a Hong Kong-native and legal executive who grew up watching the NBA, said seeing a Knicks game was a “must-do” event when she visited New York in 2016.
    But she thinks the NBA’s stance could also impact its popularity in her homeland. “I don’t understand why the NBA has to come out and apologize,” she said.
    “The NBA is not only big in China, but in Hong Kong and Taiwan as well,” she noted, adding that the NBA “overreacted” to the incident.
    “It’s just a very bad gesture that they’ve made. The fact that they are apologizing, at least for a short period of time in both Hong Kong and Taiwan, there will be some effect.
    “For me as a casual fan, my passion will cool down a bit on the NBA. Whenever you think about them as a brand in the future you will remember they were willing to kowtow to China.”

    ‘Thirty years of hard work’

    Silver has come under fire in China for defending Moray’s freedom of expression, while also taking heat from politicians in the US.
    Among several voices, Democratic senator Elizabeth Warren said the league chose “its pocketbook over its principles” and Republican senator Marco Rubio called the league’s stance “disgusting.”
    “We are, at the end of the day, an American based company,” Silver told CNN Sport while in Tokyo for a preseason game between the Rockets and Toronto Raptors on Tuesday. “Of course, we do business all around the world, but those values, those mores travel with us.”
    “The NBA will not put itself in a position of regulating what players, employees and team owners say and will not say on these issues,” Silver added in a broad statement released on Tuesday. “We simply could not operate that way.”
    State-run CCTV and Tencent, the NBA’s online partner in China, have also suspended broadcasts, causing the NBA to miss out on showcasing its biggest star, LeBron James, on the home floor of its largest fan base.
    Last season, nearly 500 million people in China watched NBA programming on platforms owned by Tencent, which recently signed an extension with the league estimated to be worth $1.5 billion.
    On Wednesday, CCTV released a scathing commentary on Silver on its official Weibo page, saying he had “double standards” of freedom of expression, and accused him of “twisting the facts.”
    “Thirty years of hard work was destroyed in three days,” the CCTV added in the post, saying Silver should “see their mistakes and mend their ways by retracting their wrong remarks and sincerely apologizing to the Chinese fans.”
    “I’m a bit surprised that CCTV canceled the telecasting of preseason games, and specifically named me as the cause,” Silver said. “It’s interesting. While, at the same time, in the US media, there’s some suggesting I’m not being protective enough of our employees.”

      China censors a lot, from Winnie the Pooh to the NBA

    As if that weren’t enough, Nets owner Joe Tsai — the Alibaba cofounder who last month completed a record $2.25 purchase for the team — weighed in on social media, saying “the hurt that this incident has caused will take a long time to repair.”
    Silver arrived in Shanghai on Wednesday, and said he hopes to meet with the “appropriate” officials to discuss the matter and put Morey and his remarks “in an appropriate context.”
    “But I’m a realist as well, and I recognize that this issue may not die down so quickly,” he added.
      NBA players were scheduled to meet with the media on Wednesday, but the league abruptly canceled press events in light of the situation.
      For his part, Moray has stayed silent since issuing a retraction on Monday. But with Silver acknowledging that his tweet has already caused “economic impact” to the league, it remains to be seen whether he’ll take the fall to restore order in China.

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