Head of the Basketball Association: Is This Yao Ming's Failure, or Chinese Basketball's?

What has China's most famous basketball player actually done for basketball reform over the past year?

A year ago, Yao Ming set out to do something big. Had it worked, it might have mattered as much to Chinese basketball as Yao's own feat in 2002, when he became the first Chinese player taken first overall in the NBA draft.

In early 2016, Yao joined forces with 18 CBA clubs to found the China Professional Basketball Clubs Alliance (Beijing) Co., Ltd. — Zhongzhilian for short — hoping to use it as a base outside the system from which to challenge China's basketball establishment, and eventually to open the sport fully to the market.

This time, Yao failed.

He never got what he set out for. What he got instead was a title: president of the Chinese Basketball Association. Nothing has been announced, but it is now all but certain that Yao will be elected the Association's new president at China's national basketball congress in March. According to information obtained by QDaily, this was "the wish of the top leadership at the General Administration of Sport."

Amid wall-to-wall coverage, Yao has stayed noncommittal. He has neither confirmed nor denied it; in an interview with People's Daily, he described his future role only as "taking part in the development of Chinese basketball in an entirely new way."

From founder of Zhongzhilian to president of the Basketball Association, Yao has moved from outside the system to inside it. Call it "being co-opted by the General Administration of Sport," or call it "getting inside the system to wait for his moment" — either way, one thing is clear: Yao's year of effort did not succeed. If he still means to change how Chinese basketball is run, much of the work starts over.

Zhongzhilian was founded on January 16, 2016. During the 2015/16 CBA All-Star Game, Yao gathered the general managers of 18 CBA clubs, himself included, at a hotel in Dongguan, Guangdong, where the game was being played. Once everyone had signed the paperwork needed to register a company, Zhongzhilian was formally established.

The meeting was meant to be private. It became public only because hotel staff put a sign up in the lobby, and reporters covering the All-Star Game saw it.

The news set off an uproar in basketball circles.

As early as 2014, Liu Peng, then head of the General Administration of Sport, had proposed separating the governing and operating functions of the three major ball sports. A year and a half later, nothing seemed to have come of it. Against that background, the media read Yao's new company as an attempt to force the General Administration of Sport's hand on reform.

That may well have been part of why Yao decided to pull 18 clubs together, and he had been working toward it since the middle of 2015. One story gets told often: the moment Yao learned that the owner of a state-funded CBA club had gone from refusing to talk to being willing to, he booked a flight for the next day.

Through Yao's efforts, the owners of the 18 clubs reached a basic agreement in October 2015 and began the paperwork to form a company. On January 16, Zhongzhilian was confirmed as established and began filing registration materials with the Administration for Industry and Commerce.

Getting 18 clubs to move together was hard: some are state-owned, some sit under local sports bureaus, some are private companies. Yao's personal standing did much of the work.

As a player — with the Houston Rockets in the NBA and in the national team jersey — Yao put Chinese basketball on the world map. Off the court he gave the sport a great deal too. Before he had even retired from the NBA he bought the Shanghai Sharks, and had he not stepped in the team might well have moved elsewhere. Since 2007 he has held the Yao Foundation Charity Game every year, with all proceeds going to charity and to building basketball courts at schools in poor areas. And he used his international standing as one of the bid presenters who helped China win the right to host the 2019 FIBA Basketball World Cup.

Given his place in Chinese basketball and what he has done for it, Yao — in influence, in pull, in ability, in judgment — was the right man to lead Zhongzhilian.

The more important reason, though, was that Chinese basketball had reached the point where reform could no longer be put off. The finances of the CBA clubs in particular were putting enormous pressure on their shareholders.

The CBA club with the clearest financial disclosures is the Foshan Long Lions. On September 30, 2016, the club filed to list on the National Equities Exchange and Quotations, the "New Third Board," and the figures it disclosed showed unbroken losses from 2014 through May 2016. In 2014 it took in 26.93 million yuan and lost 30.53 million; in 2015 it took in 22.42 million and lost 26.18 million.

According to a 2013 report by NetEase, only five CBA teams — Beijing, Liaoning, Shanxi, Jilin, and Qingdao — made money. Gate receipts across the league were poor. The Shandong club, for one, sold its entire ticketing rights to an agency for 1 million yuan a year, and clubs still had to hand the Basketball Association 100 tickets a game. Most CBA clubs took in only three or four million yuan from tickets; only Xinjiang, Guangdong, and Beijing, the teams with the best records and the biggest followings, brought in anything substantial, around 10 million yuan.

The spending, meanwhile, kept climbing. In recent seasons CBA clubs have averaged around 70 million yuan a year. Xinjiang, the biggest spender, has topped 100 million; even the thriftiest, Bayi and Jilin, spend more than 30 million. To win more games, clubs keep bidding up the salaries of foreign imports. Norris Cole, who joined Shandong last year, earns $5.5 million a year, the most expensive import in CBA history. The year before, Xinjiang re-signed Andray Blatche for three years and $7.5 million, a record at the time.

The Shanghai Sharks, the club Yao owns, lose nearly 20 million yuan a season. "Since we took over the team, most of the advertising rights have been held by Infront" — the agency that holds the CBA's commercial development rights — "For the league to grow in a healthy way there has to be a mechanism for sharing: to put it bluntly, high-revenue clubs in big cities subsidizing money-losing clubs in small ones. If we ran these advertising assets ourselves, I believe our current revenue could at least double, and that is a conservative estimate. We could be fully profitable," said Zhang Mingji, head of Team Yao.

The clubs aimed their complaints at the way Chinese basketball is run, the CBA league included. As they saw it, a system built around the state-sponsored sports model was fundamentally at odds with clubs that had already begun operating on market terms, and the only way out of that conflict was to finish opening Chinese basketball to the market.

The complaint was not groundless. Judged by the CBA's own commercial value, the money coming in looked more than enough to cover what the clubs spend. In 2015, Infront China, which held the CBA's commercial operating rights, took in 720 million yuan. Split evenly across 20 clubs, that would have added 25 million yuan to each club's existing payout — enough to cut the Foshan Long Lions' losses sharply, or wipe them out.

As the clubs saw it, Infront China could collect such large profits while the teams actually playing the games scraped by for one reason: the CBA had never been run as a real business. The Basketball Association, which owns the league, simply sold Infront China the commercial development rights for a fixed price and never developed the league itself.

What Chinese football had already done stung all the more. At the end of 2015, the broadcasting rights alone for the Chinese Super League sold for 8 billion yuan over five years, before naming rights, sponsorships, and other commercial deals. The CBA clubs saw their league, weaker though it was, as China's second biggest, right behind the Super League. A gap that wide left them aggrieved.

Band together, force the Basketball Association into market reform, and earn more: a reasonable goal, and the ground on which Zhongzhilian could be built. "In the end these clubs want to make money, and on that their interests line up," said a sports reporter who has covered basketball for years.

Not everyone was convinced. Zhongzhilian ended up with 18 clubs rather than all 20 in the league because two, Shanxi and Zhejiang, did not trust Yao.

Fang Jun, general manager of the Zhejiang club, which stayed out, said publicly that Yao's plan would not work: "If we did this, how would Zhongzhilian differ from Infront? On experience in commercial development and running events, isn't Zhongzhilian actually behind Infront, which has been doing it for years?"

Wang Jianwu, executive deputy general manager of the Shanxi Fenjiu club, said: "As a state-owned enterprise, Shanxi Fenjiu Group will follow state-enterprise approval procedures strictly in taking part in the CBA's professionalization reform. Shanxi Fenjiu club actively supports and will take part in the professionalization reform led by the Chinese Basketball Association, and is willing to work lawfully alongside fellow clubs to safeguard a sound environment for the CBA's professionalization and marketization."

That left Zhongzhilian weak from birth. It was not, however, its biggest problem.

The day after Zhongzhilian was founded, Xin Lancheng, head of the Basketball Administrative Center, brought word that the General Administration of Sport had approved a plan for separating governing from operating. The approval set out two steps: first, set up a "CBA league company" and give it the market-promotion rights; second, hand over the competition-management rights.

Zhang Xiong, director of the Chinese Basketball Association's competitions department, said in Beijing on January 19, 2016: "Eighteen CBA clubs registering a joint company was meant to develop the league and energize the basketball market, and the move has some positive significance for exploring and advancing league reform." In the same breath he said Zhongzhilian was not the same thing as the CBA company that the Association would set up to advance the CBA's professionalization and the separation of governing from operating.

The statement drew a line between the parts the two companies would play in reform, and in that separation above all. The message: CBA reform would proceed on the Basketball Association's wishes, the Association's plan, and the Association's timetable.

That cast a shadow over CBA reform, the more so because Xin Lancheng — then head of the Basketball Administrative Center and a vice president of the Basketball Association — was a known conservative.

On taking over the Basketball Administrative Center in 2009, Xin Lancheng immediately issued the "Xin Eight Points," whose core principle put the national team above all. The most contested part scrapped the CBA's north-south divisions and shortened the season so the league would make way for national-team training camps. The regular season fell from 50 rounds to 34, and the season from six months to four and a half. The direct result: apart from a handful of national-team players, everyone else faced an off-season of nearly eight months. Some called the shortened CBA season a 20-year step backward.

It also wiped out most of what Xin Lancheng's predecessor, Li Yuanwei, had built.

Li Yuanwei's signature work was the reform known as the "North Star Plan." Li became a vice president of the Basketball Association in 2003, and the plan formally launched in the 2004/05 CBA season. Its core was abolishing promotion and relegation, forming a professional league, creating north-south divisions, and playing more games. With Mengke Bateer, Wang Zhizhi, and Yao Ming all absent from the CBA at the time, Li wanted to give homegrown young players more chances to develop and be seen.

On May 15, 2005, at the Fortune Global Forum in Beijing, Li Yuanwei declared that "in China, basketball is the No. 1 sport." Under his push, the CBA did draw steadily more attention: that year's finals were broadcast live in the United States for the first time, and the jewelry brand Diamond sponsored the Association, which introduced a championship ring and a championship trophy. By Li's own account, the Chinese Basketball Association's commercial development revenue was under 30 million yuan in 2003, and had nearly quadrupled by 2007.

In Li Yuanwei's last season in charge, 2008/09, the regular season grew to an unprecedented 50 rounds, foreign imports were allowed for up to eight man-quarters per game across the four quarters, and the CBA brought in Asian imports for the first time.

The Xinhua reporter Liang Xiyi also named what Li's reforms failed to do: the north-south divisions collapsed quickly, the spokesperson system existed in name only, and the China-Korea All-Star Game he created was dogged by controversy and fizzled out.

The system remained a cage no one could break out of. Su Qun, editor-in-chief of Basketball Pioneer, once wrote: Li Yuanwei was a romantic reformer, Xin Lancheng a conservative believer in the state-sponsored model. Li wanted to break out of the "iron cage"; Xin never expected the cage to open at all. Li was willing to bloody his head forcing his way out; Xin was content to stay inside and squeeze the most out of the state-run system.

Whether this round of reform, the kind that would actually touch the system, is serious remains an open question. The plan the Chinese Basketball Association has put forward sounds fine: a CBA league company led by the Association, with the Association holding 30 percent of the equity and the clubs 70 percent. There is just no timetable.

On Zhongzhilian the Association has said only, vaguely, that if the two sides can reach an understanding they can negotiate some shared model of cooperation.

That left Yao in an awkward spot. In any test of strength the Association is the stronger party, because it owns the CBA league and holds the right to run it; in the end everything turns on what it decides. Yao's only real leverage was the 18 clubs of Zhongzhilian.

In Su Qun's view, Yao had no chance in a confrontation with the Association. He told QDaily: "Yao's reform through Zhongzhilian was bottom-up, running into an old system. It could never have succeeded." The first clash between the two sides made that plain.

On April 20, 2016, Zhongzhilian and the Basketball Association held a round of talks. Zhongzhilian's proposal carried two demands — that it join the CBA company as a single collective entity, and that the Association hand it the right to operate the league — and the Association rejected both outright.

Yang Yi, deputy editor-in-chief of Titan Sports Weekly and a basketball commentary consultant for CCTV, wrote that if the clubs joined as a bloc they would hold 70 percent of the shares and become the largest shareholder, outweighing the Association; and that the right to operate the CBA league is the Association's single biggest earner, worth more than 400 million yuan a year over the past five years, a figure likely to double soon as television rights prices surge. Yao's two basic demands, Yang wrote, amounted to asking the Association for power and for money. "You don't even need your brain for this one. Think with your heel: is he going to give it to you?"

Yao would not let go. He said: "I believe the CBA company set up under the Association's corporatization plan is nothing more than the existing system dressed in a corporate shell. I will not agree to join a CBA company like that, and I believe some clubs in Zhongzhilian think the same. Basketball has always been, and still is, a cause I am willing to give myself to and fight for. However great the difficulties and obstacles, I will keep going."

That was Yao's most hopeful reading. What followed was out of his hands.

A month later, in May 2016, a symposium on "Advancing CBA League Reform" was held in Beijing. Yao attended, and as the reform camp's front man he found himself alone in the room. Afterward Li Jinsheng, vice president of the Chinese Basketball Association and deputy director of the General Administration of Sport's Basketball Administrative Center, said those present had agreed: CBA reform would first split off the league's commercial rights and, when conditions were ripe, split off the competition rights, ending in full separation of governing from operating.

In July, Zhang Xiong and Yao spoke at the same forum. Zhang said plainly: "The core of separating governing from operating in the CBA is the CBA company. The CBA company will first get the league's commercial rights; once its operations are stable, the Chinese Basketball Association will authorize it to organize competitions and handle other event rights."

In a media interview, Zhang said: "The CBA company and Zhongzhilian are two different companies with no relationship to each other. The investors behind Zhongzhilian's 18 clubs organized themselves in a spirit of friendly cooperation. They very much hoped Zhongzhilian would do something to advance the professional league. It has now done that."

The Association's dominance shows through in every one of these exchanges. All of it may be what finally led Yao to give up Zhongzhilian and take part in basketball reform alongside the authorities instead.

And so the big thing Yao set out to do at the start of the year — the China Professional Basketball Clubs Alliance (Beijing) Co., Ltd. — was declared a failure.

Twelve years earlier, in the previous Year of the Monkey, another figure with that kind of sway in Chinese sport, Xu Ming, had done almost exactly the same thing. His target was Chinese football.

Xu Ming and Dalian Shide led six other clubs — Beijing Guoan, Shenzhen Jianlibao, Sichuan Guancheng, Shanghai International, Liaoning Zhongyu, and Qingdao Yizhong — into the "G7 Alliance," which demanded that the Chinese Football Association set up a Chinese Super League company and separate government from enterprise, governing from operating.

As now, that push from below did not get its way. Yan Shiduo, then head of the China Football Administrative Center and full-time vice president of the Chinese Football Association, publicly accused G7 of "making a mess of things." After a loud spell of pressure, the G7 revolt fell apart.

Still, G7 did force reform through from the top down. A year later the Chinese Super League Co., Ltd. — the CSL company — was founded, with the Football Association putting up 36 percent of the capital and 16 clubs 4 percent each, for a combined 64 percent.

Twelve years on, on September 22, 2016, a preparatory meeting to found the China Men's Professional Basketball League Company, doubling as the CBA company's shareholders' meeting, was held in Jinan, where the company's board of directors and board of supervisors were elected.

As the largest shareholder, the Chinese Basketball Association nominated Li Jinsheng, deputy director of the General Administration of Sport's Basketball Administrative Center, as the CBA company's chairman and legal representative. The clubs, voting by secret ballot, chose Yao — an investor in the Shanghai Sharks — as vice chairman. Guangdong Southern Tigers, Shanghai Sharks, Shenzhen New Century, Beijing Shougang, and Liaoning Hengrun, together with directors sent by the Association, made up the company's first board.

Many read the founding of the CBA company as a first step toward separating governing from operating — the Association was at least formally acknowledging that the club investors are the league's real stakeholders. In practice, the company so far means more as a symbol than as a working body.

"In theory [the league's commercial rights] should go to the CBA league company, but no concrete plan has appeared. There is no way to know what powers the company will actually have," said a reporter who has followed the CBA for years. In the ideal case, he said, the Basketball Administrative Center, the Association, and the company would each have a clear job: "The Center sets macro policy, the Association handles the national team and the rules of the game, and the CBA company runs the league."

Yao taking office may move things that way. At the very least, the long-standing arrangement in which the Association and the Center are "one team of staff under two signboards" could be broken up. The sports reporter quoted earlier is not optimistic even so: "It's all empty talk and boilerplate. There's little of substance to point to."

A Chinese Basketball Association with no real room to act — even with Yao as president, even holding the imperial sword of "separating governing from operating" — could end up an ornament.

The Basketball Administrative Center and the CBA league company, meanwhile, may end up tightly bound to each other, much as in football today, where Cai Zhenhua, deputy director of the General Administration of Sport, is also president of the Football Association, and a former subordinate of his is chairman of the CSL company.

What may count as good news is that capital and the market really are coming. Infront China's CBA commercial development contract expires in 2017. Alibaba, Wanda, and Tencent are all trying to push into this market. As the field crowds, people in the industry broadly expect the CBA's commercial value to jump — television rights alone could go for something like 5 billion to 6 billion yuan over five years.

What the Basketball Administrative Center, which still holds the real power, and its future partner the CBA league company want is capital and a market that do as they are told. This capital that everyone loves is not supposed to take orders from some company called Zhongzhilian.

One question is left, and it is about Yao. What part will this fine athlete turned president of the Basketball Association play in the history of Chinese basketball: will he merge with the system and become its biggest winner, or turn out to be just a failed reformer?