What Has the NBA Got Wrong in China All These Years?

Even a record 3-billion-yuan deal cannot hide the commercial mistakes NBA China has made.

Regular article

February, which has just ended, is the month the NBA draws the most attention every year. The trade deadline approaches, the race for playoff spots heats up, and the All-Star Weekend arrives. Because it falls during winter break and the Spring Festival holiday, it is also when Chinese fans watch the most NBA games, and watch them in the greatest comfort.

This past month was also the NBA's busiest in the Chinese market in years. A run of big moves brought it exposure and attention it had not enjoyed for a long time.

The campaign had one theme: the Year of the Sheep. The NBA notched up several "firsts" for it. It teamed up with Didi to hand out red envelopes on social media and to pay for round-trip airfare, for the first time; it made its first official Spring Festival TV commercial; and for the first time it had NBA teams wear jerseys printed with their Chinese names in official games, a first in the history of America's four major sports leagues.

In the past, the league simply asked stars Chinese fans knew well, such as Kobe Bryant, LeBron James and Tim Duncan, to record New Year video greetings. This year it spared no effort in promoting its games and brand around the Lunar New Year. The lavish spending has something to do with the huge "red envelope" it has just collected in this market.

On January 30, 2015, the NBA and Tencent announced that they had signed a five-year partnership. Tencent gets exclusive rights to stream the NBA online in China, the right to show every game of all 30 teams, and the "remaining rights" to sublicense NBA content to other online platforms.

Neither side disclosed the price. But according to earlier reports in several media outlets, Tencent wrote a check for as much as US$500 million (about 3 billion yuan), the largest international digital media deal in NBA history.

Counting from 1994, when CCTV first broadcast an NBA game live, the league has more than 20 years of history in China. Chinese fans have been lucky enough to witness Michael Jordan's second three-peat, the rise and fall of the Lakers dynasty, the reigns of the golden draft classes of 1996 and 2003, and the NBA's "golden decade" in China, driven by Yao Ming and Yi Jianlian.

In that sense, the NBA's 20 years of effort in China have paid off: it made tens of millions of young Chinese fall in love with the game. But treat the NBA as a business, and its commercial results in this country fall well short of the attention it has won here.

The NBA China Games, held for ten years now, lack highlights, and attendance stays weak. Since Yao Ming and Yi Jianlian, no outstanding Chinese player has earned a place in the punishing NBA. The title of "NBA China partner" is no longer hard for companies to get, so its brand value has begun to slide. As for NBA China's early vision of building a professional league system in China and fostering local basketball education and culture, it has never mentioned it again.

Nike, Peak and other brands rode the NBA's profile in China to sell piles of signature shoes and player merchandise. Sina and Hupu used live games and fan debate to become the places NBA fans gather online. Tencent drew in large numbers of fans and gamers with its basketball game NBA 2K Online. Through all of this, NBA China never found a clear, distinctive "Chinese image" for itself, and never formed a deeper bond with the mass of its fans.

Looking back, the mistakes it has made and the chances it has missed in China are every bit as many as the attention it has gained.

Yao Ming Kept the NBA From Being Cool in China

Why say this? Look back at how the NBA caught on in the United States and it is easy to see that the game is ruled by Black players and their subculture. The 1960s and 1970s, when racial conflict in America peaked, were also the years the NBA rose to become a top sports league.

Black Americans who won status in sports through their physical gifts kept pushing a marginalized subculture into the American mainstream, until mainstream society came to accept Black culture fairly well.

When stars such as Julius Erving, Michael Jordan, Kobe Bryant and LeBron James came to rule the court, the "cool" they had absorbed from Black culture became part of their aura, and fans loved and copied it: the tattoos, the clothes, the way they talked, the music they listened to. The best example is surely Allen Iverson. In the small guard from Philadelphia you can find every "answer" to how Black culture helped make the NBA the coolest sport.

Now look at the NBA's face in China: Yao Ming, a fair-skinned, 2.26-meter center, modest, funny and polite on every occasion, offending no one, a textbook "model student." The image clashed with the NBA's own character.

One detail sums up this hidden contradiction. Early in his NBA career, Yao once tried to help up an opponent who had gone down after a collision. Steve Francis, then the team's leader, saw it and yelled at him, warning him to treat opponents as "enemies" and never do anything that "stupid" again.

Yao's image and temperament were a perfect miniature of the image the NBA projected in China. When the league entered China, then-commissioner David Stern planned to use Yao as a launch pad, follow up with a series of measures to put down roots, and build a product that suited both the NBA's upscale, entertainment-driven style of basketball and the tastes of Chinese audiences.

"Upscale," "sunny," "healthy"... Grafting these words onto a sport built on Black culture doomed the effort from the start.

To a degree, Yao opened China's commercial door for the NBA. In his prime, the league's influence, market share and number of sponsors in China all grew fast. Rockets games with Yao were long a sure ratings hit for TV stations and the slots advertisers fought hardest for, and this was the NBA's biggest bargaining chip in holding its strong position in China.

But his natural mismatch with the sport's temperament also kept the game from being presented to this market in the right way. Fans followed Yao mostly out of "national pride." His Reebok shoes never sold well, and Chinese fans preferred to play in Jordan or Kobe jerseys, even the tall players who worked in the paint.

Using a local player to open a new market did bring the NBA more viewers in the short run. But Yao's injuries and retirement, and Yi Jianlian's slump, proved that neither could be the NBA's real edge in China. And NBA China, having already toned down its American character, became a brand with a blurry image, built around nothing but the game of basketball.

The NBA Wanted Too Much, Too Fast in China

There is a story about former commissioner David Stern that shows how badly the NBA wanted to break into China.

In 1989, Stern, only five years into the job, made his first trip to China. To win a CCTV broadcast deal, he waited more than an hour at China Central Television. He explained to the CCTV officials, who turned up late, what the NBA was. He offered the broadcasts for free and paid out of his own pocket for a CCTV crew to broadcast the All-Star Game and the Finals live, so that the NBA could get onto state television.

This may also help explain the string of aggressive decisions Stern later made about this market, and the commercial boom that Yao set off lit the fuse for them.

Starting in 2002, during Yao's ten years in the NBA, NBA China could earn nearly US$50 million a year from its 18 official partners, and each sponsor's rights were spelled out in fine detail so that none overlapped.

In October 2004, Yao, at the height of his fame, brought the Rockets home to play, and that year's NBA China Games peaked right from the start. The average ticket cost as much as 760 yuan, courtside seats went for more than 20,000 yuan on the scalper market, and tickets were almost impossible to find. The annual game between Yao's and Yi Jianlian's teams was dubbed the "China Derby" and became one of the most-watched regular-season games each year.

Stern then drew up an ambitious "five-year plan": open 1,000 NBA Store outlets in China selling clothes, shoes and accessories, and stretch the range to lifestyle goods such as USB drives, tissues and chewing gum; and build 12 NBA-standard arenas to bring more players and NBA games to China.

In 2012, NBA China CEO David Shoemaker even proposed the world's first "NBA Center." It would sit not in Beijing or Shanghai but in Wuqing, Tianjin, covering 12,000 square meters and offering fan experiences, training and fitness centers, children's entertainment, interactive games, shopping and dining.

All of these plans fell far short.

Three years on, only 5 of the planned 1,000 NBA stores have opened. NBA China appears nowhere among the investors and operators of the only three arenas in China that meet NBA standards. After the Beijing Olympics, no one spoke of commercial reform of Chinese basketball again, and the Chinese Basketball Association played it safe in forming a new league.

It Promoted Games, Not Basketball Itself

In an August 2014 article, How Nike Sells Basketball Culture in China, we described a marketing campaign Nike built on its NBA stars: the NBA star Athlete Tour of China.

From David Robinson 17 years ago to LeBron James and Kobe Bryant today, Nike brings its top signed stars to China every summer. They tour large and mid-sized cities across the country, and wherever they go they set off a wave of "basketball fever."

Huang Xiangyan, Nike's senior communications director for Greater China, told QDaily at the time: "For any sport to become a mainstream value, it needs cultural roots, the way running and soccer have them in the US and the UK. What Nike Basketball does in China is hold events that bring over the foreign experience of combining sport and culture, and create a local basketball culture in China. So staying down-to-earth is very important."

Kobe even set up his own training camp, where the young players chosen are coached by the NBA star in person. They go by a rousing name: Kobe's "disciples."

While Nike worked to promote the sport in China, the NBA kept its focus on promoting and running games: the China Games, held for ten years, and more preseason games brought to China. Such events win attention and make money right away, but the games themselves have little to do with the most important group in this market: the fans.

Even KFC, a seller of hamburgers and fried chicken, understands better than the NBA how to use basketball to promote a brand. Its KFC 3-on-3 basketball tournament, once held every summer, was the most widespread and best-known amateur basketball event in China. (My college roommate once talked me into signing up with him.)

Only a few years ago did Stern see the problem. On October 13, 2010, on his sixth trip to China, he stopped trumpeting his plan for an NBA league in China and began talking about cooperation with the CBA and youth development.

In Choosing Tencent, the NBA Did Something Right

CCTV still holds a monopoly on NBA TV broadcasts in China, and no one expects it to hand the NBA a sky-high contract like the US$24 billion over nine years that American networks signed. For NBA China, whether for revenue or for the future of the business, the internet is the ground it must win.

In fact, this is one of the few things NBA China has done fairly well: in every period, it has found the strongest platform of the day to partner with. From Sohu and TOM to Sina and now Tencent, this is the fourth major online partner the NBA has chosen in China.

What the NBA earns from these partners has also risen steadily. When it signed the official website deal with TOM, it asked for only about US$2 million a year; its three-year deal with Sina brought in only about US$7 million a year.

In this round of renewal talks, Sina showed the most sincerity, straining to match Tencent's offer. But held back by its broader business and limited funds, Sina had run out of steam after winning the rights a second time: it did little to package live broadcasts, produce NBA programming or develop new ways to make money. That was a key reason the NBA decided to leave it for Tencent.

For the past two years, Tencent has already been one of NBA China's partners, airing around 60 live games a season. Meanwhile, it has kept pushing NBA 2K Online, the online basketball game it runs.

Compared with Sina, Tencent looks both more able and more willing to invest in NBA broadcasts over the long haul. The 3 billion yuan is the best proof of that.

Tencent's strength in social networking, led by QQ and WeChat, is a big reason we are optimistic about the deal. Until now, NBA China's biggest problem was that it could not make its presence felt where young people, and fans in particular, gather. Tencent has deep experience in exactly that. Even a single WeChat Moments ad like the ones BMW and OPPO ran would surely work better than any marketing NBA China has done in the past few years.

Under the agreement, NBA games and shows will run across a range of mobile and PC platforms, including Tencent's portal QQ.com, Tencent Video, QQ, mobile QQ and WeChat, and Tencent will also build a dedicated NBA app. At last we can say that NBA China is catching up with the mobile internet wave.

In the Long Run, the "Ultimate Question" Still Needs an Answer

Three billion yuan over five years gives NBA China a solid base for the next few years, and Tencent's arrival will give the NBA a louder voice where young people gather. But in the long run, to truly move this huge market, the NBA still needs to find a "fulcrum."

Twenty years ago, that fulcrum was Jordan and the reach of state television. Ten years ago it was Yao Ming, around whom the first round of commercial development of the NBA was built.

Both attempts were at once successes and failures. CCTV brought the NBA into China but could pay less and less in proportion to the influence it delivered. Yao made the NBA a household name and drove the brand's early commercial growth in China, but he also left the NBA's business in China badly dependent on him, and it all collapsed when he was unlucky enough to retire early.

More important, the NBA is a sport that leans heavily on the aura of its stars, and it lacks a "bridge" to the Chinese market like Jordan, Yao Ming or Kobe, who is about to retire. Neither LeBron nor Kevin Durant can fill that role for now.

While it waits for the next Jordan and the next Kobe, the NBA also needs to think hard about the "ultimate question" we raised earlier: What is the NBA? Why did it become popular?

Twenty years ago, on March 18, 1995, Michael Jordan returned to the court after his first retirement. Facing a mob of reporters, he said: "I'm back." Short and powerful. That is the sport's original appeal.