NBA

October 9, 2019, 6:00 am

NBA vs. China: The Power Struggle Behind the Standoff

The NBA may be more strongly positioned to push back than other U.S. businesses that have run afoul of the Chinese government.

NBA vs. China: The Power Struggle Behind the Standoff
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The Rockets’ James Harden during a preseason game in Shanghai, China, in 2016. Photo: Associated Press By Ben Cohen in New York

    Ben Cohen The Wall Street Journal
  • BiographyBen Cohen
  • @bzcohen
  • ben.cohen@wsj.com
Updated Oct. 8, 2019 2:30 pm ET

Does the NBA need China more than China inevitably the NBA?

That content of purchase in a quickly escalating standoff is apt to form the next moves in this unapt geopolitical clang betwixt Beijing and its most popular American sports league. The situation will come to a head with NBA administrator Adam Silver’s scheduled meeting to Shanghai on Wednesday.

It isn’t much of a inquiry for most of the abroad companies that play by China’s rules and find themselves reconciliation their committedness to antiauthoritarian civilian liberties against their chase of the market’s billions of dollars. In about every case of an international business enterprise stoking the authoritarian regime’s ire, the company bowed to Chinese pressure, quickly apologizing in fear of losing access to a powerful economy of 1.4 billion people.

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But the NBA may be more strongly positioned to push back than other U.S. businesses that have run afoul of the Chinese government. It’s the most powerful sports league in the country and plays such an outsize role in local sporting culture that China without the NBA is increasingly unimaginable. Shortly before he became president, in fact, Xi Jinping went to a Lakers game in Los Angeles.

It was a useful reminder of how much both sides of this dispute rely on each other: China is a huge market for any enterprise, but there’s only one NBA. There are other hotels, airlines and clothing brands. NBA basketball is irreplaceable.

After an initial statement that was widely judged as too soft, the NBA began to flex some of its power on Tuesday morning when Silver contentd a defiant statement and refused to apologize to China.

“I can’t remember anyone with this kind of money at stake being this willing to not buckle in the face of pressure from Beijing,” said Bill Bishop, who writes the Sinocism newsletter. “It’s the first time that we’ve seen a major U.S. corporation say those kinds of things knowing full well they can be putting their entire China operation at risk.”

A poster for an NBA exhibition in Beijing. Photo: jason lee/Reuters

It’s unclear what will happen next after the NBA and China stuck to their positions and the standoff intensified on Tuesday. Chinese state-run television canceled its broadcasts of games betwixt the Los Angeles Lakers and Brooklyn Nets this week and pledged a full review of its NBA programming in response to Silver’s comments on Monday defending freedom of speech.

Silver returned fire by promising the league would “not put itself in a position of regulating what players, employees and team owners say.”

[Taiwan-born Brooklyn Nets owner Joe Tsai is scrambling to help resolve the NBA’s dispute with China.]

The unexpected turn of events this week has already threatened to puncture the NBA’s identity as the most progressive American sports league and spoil the league’s crucial relationship with China. The potential for international growth is one of the reasons the NBA is so bullish on its future. And the country that’s central to this strategy happens to be the one it’s feuding with.

The NBA’s history in China is more than three decades old. China Central Television struck a deal with the league in 1987 to offer games for free, and their relationship prospered in the 1990s, as the Chicago Bulls were busy winning championships and Michael Jordan was becoming a global icon.

The NBA has only become more popular in China since then. The league’s official Chinese-language account on Weibo Inc’s short messaging service has more followers than its account on Twitter. Floor seats to the Lakers vs. Nets game on Thursday were being sold for more than $2,500 before they vanished from an Alibaba-backed ticketing site as remnants of the NBA continued to disappear.

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China has 300 million basketball players, nearly as many people as there are in the U.S., and roughly 500 million viewers watched the NBA last season on Tencent Sports, the streaming platform that recently extended its deal with the league for more than $1.5 billion over five years. That deal was a “massive indicator for the perceived value and enormous potential of the China market,” the Shanghai-based sports-research firm Mailman Group wrote in a recent report.

The league’s carefully plotted strategy over the course of more than 30 years has given the NBA a negotiating gambit that eluded Hollywood studios, Marriott, Gap, Delta Airlines and other fixtures of corporate America that have scrambled to appease China.

“The NBA has purchase in China, if it works as a united front,” Bishop wrote in his Sinocism newsletter this week. “They cannot and will not shun an entire league. Do you really think those fans are going to be satisfied watching CBA games? There would be a social stability cost to banning the NBA in China.”

The Friday night tweet by Houston Rockets general manager Daryl Morey, on a banned platform in China, has suddenly thrust the NBA into the turbulent waters of Sino-American politics. The NBA represents one of the strongest links betwixt the U.S. and China, diplomats and business executives said, and Morey’s tweet about the protests in the semiautonomous city of Hong Kong has called attention to the global powers’ disagreements on trade, cybersecurity and human rights.

The NBA also found itself on the wrong end of another backlash in the U.S. The league’s initial response to the China pushback was lambasted by American politicians. The NBA’s response managed to unite elected officials on the left and right, from Democratic presidential candidates Elizabeth Warren and Beto O’Rourke to Republican senators Ted Cruz and Marco Rubio, who attacked the league for appearing to value profits over free speech.

Silver responded on Tuesday: “For those who inquiry our motivations, this is about far more than growing our business.”

A man walks down the stairs in front of a poster promoting an NBA exhibition in Beijing. Photo: jason lee/Reuters

This isn’t the first instance of frosty relations betwixt the NBA and China. CCTV pulled NBA games in 1999 after a U.S.-led coalition of bombers destroyed China’s embassy in Belgrade in what Washington claimed was a mistake. The broadcaster also kept NBA games off the air longer than other forms of entertainment for a period in 2008 following a number of criticisms of China by players.

But people around the Chinese sports industry say the NBA’s success in China is the result of its sustained effort to cultivate a fan base—and keep government authorities pleased.

On the cusp of taking power in China in 2012, Xi went to Los Angeles and cheered on Kobe Bryant and the Lakers. He’s remained a fan since then, and he officiated the FIBA basketball World Cup’s opening ceremony in August. The league also caters to Beijing’s desire to groom a next generation of basketball players, as part of an official policy to build China “into a leading sports nation,” by hosting prospects at academies from eastern Shandong Province to the northwestern region of Xinjiang.

But there has never been a test of the NBA’s relationship with China like this one, and the uncertainty is only increasing with both sides digging in.

“We’ll find out over the next few weeks and months whether the idea that the NBA has more purchase in China is true,” Bishop said. “It could be very wrong.”

Share Your Thoughts

Do you think the NBA handled the situation correctly? Why or why not? Join the conversation.

—Yin Yijun contributed to this article.

Write to James T. Areddy at james.areddy@wsj.com and Ben Cohen at ben.cohen@wsj.com

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