Category: Boardroom News

NBA’s growth in China is creating a blue print for all other American sports

By: Matthew J Walker

“Nothing or no one can be No. 1 in the world unless it is No. 1 in China.” NBA Commissioner Adam Silver made this statement to the Chinese media during this year’s ‘Global Games’ tour in China. 2016 was the 10th edition of the China Games, where the Houston Rockets and New Orleans Pelicans swept into Shanghai and Beijing for a pair of preseason games. The tour brought all of the glitz, glamor and excitement — including NBA stars James Harden and Anthony Davis — to the most populous nation on the planet, with 1.4 billion people. With record numbers, fans packed the stands to watch informal practices, 3-point and free throw shooting competitions. The league also conducted ‘NBA Cares’ and ‘Jr. NBA’ community events and league partners hosted numerous interactive fan activities.

“Overseeing our business here in China, I now see over 300 million people playing basketball – the same population of the United States.” NBA China CEO David Shoemaker highlights the growth of the NBA in China has been a calculated journey. The NBA was one of the first American media companies that started ‘live’ broadcasting on Chinese television, which at the time was unprecedented. Once the Internet became popular in China, the NBA created a specific Chinese-language website that featured live game statistics in simplified Chinese that has now grown to over 70 million subscribers. During the 2016-17 season, over 400 regular season NBA games will be shown free and Tencent will stream the rest for a fee. Tencent is one of China’s top Chinese Internet services providers and China’s most valuable brand. This strategic partnership becomes the league’s largest international digital partnership with the NBA to receive a guaranteed $500 million with an additional $200 million to be earned through revenue sharing.

The first Asian player ever drafted in the NBA was China’s Sung Tao by the Atlanta Hawks in the third round in 1987.  The first to play in an NBA game was 7-footer Wang Zhizhi, who played five games with the Dallas Mavericks in 1999.  There was Mengke Bateer, who joined the Denver Nuggets in 2002. Although, it was the 7-foot-5 Yao Ming, who threw the doors wide open as the 1st overall pick in 2002 with the Houston Rockets. Yao played nine seasons, became an eight-time All-Star, a worldwide celebrity and in September was inducted with Allen Iverson and Shaquille O’Neal into Class of 2016 Basketball Hall of Fame. Chinese fans loved him—so much so that Yao carried the Chinese flag into the Opening Ceremony at the 2008 Beijing Summer Olympics.

Now every NBA club is scouting China, hopeful of finding the next star.  Forward Yi Jianlian was drafted No. 6 overall by Milwaukee in 2007 and spent five seasons in the NBA. When Yao and Yi met for the first time in an NBA game during the 2007-08 season, the game drew a TV audience of more than 200 million – equivalent to the super bowl. For American media companies looking to gain presence in China, the NBA serves as the blueprint. This season, the Rockets have scheduled a ceremony to retire Yao Ming’s No. 11 jersey and hang it from the rafters of Houston’s Toyota Center on 2nd February 2017 – coinciding with the Chinese Lunar New Year celebration and hoping to get over 300 million viewers.

While China’s fondness for basketball is more than a century old, it was Yao that turned that interest into real addiction.  Yao now living and working as a businessman in his hometown of Shanghai, as become the owner of the Shanghai Sharks of the Chinese Basketball Association (CBA). Rockets team president Tad Brown has said,  “Yao has opened up incredible doors on the market front for the NBA.  He’s opened up incredible opportunities for the league to continue to expand and grow”. The Chinese government has earmarked basketball as one of its key growth sports in the coming years. Yao has lent his hand and his name to another venture called ‘The Basketball Tournament (TBT)’. A winner takes all, five-on-five tournament, with a mix of former elite college stars and players with NBA experience, which concludes in New York with a final Tuesday night on ESPN. “The partnership between TBT and China is exciting, with the goal of extending the growth of basketball beyond the terrific work done by NBA China at the grass roots level,” said Ray Katz, a veteran sports marketer and professor at Columbia University.

Other leagues can learn from the NBA’s game plan to build a massive audience in the world’s most populous country. The NBA announced a first in its ownership history, when a Chinese investor, 35-year-old businessman Lizhang Jiang, acquired a 5% stake in the Minnesota Timberwolves. What’s more, when exploring international playing opportunities, there are now 34 former NBA players in the CBA this season – including Josh Smith and Carlos Boozer – where the pay is better than those offered in Europe. It’s worth noting, the establishment of offices in Shanghai and Beijing were brilliant moves made by the NBA to garner interest through exhibition games, family-oriented interactive experiences, and meet-and-greets to familiarize the Chinese with American sports stars.

Finally, the NBA has long had a big fan base in China and now the league hopes to start recruiting talent there as well. The NBA announced it’s opening a set of training camps in China for elite male and female players. The “NBA Academies” are slated to launch in Hangzhou, Jinan and Urumqi, China in 2017. Players will get instruction from NBA-trained coaches in addition to attending school and learning about leadership and character development. “NBA Academies are the logical next step in the league’s global grassroots basketball activities,” said NBA Commissioner Adam Silver. “Top international prospects will benefit from a complete approach to player development that combines NBA-quality coaching, training and competition with academics and personal development.” As the first American professional sports league to compete in China, the NBA’s has already achieved significant return on investment, with unprecedented levels of popularity and securing meaningful partnership opportunities to leverage into the future.

 

Reference List

Blinebury, F (2016). ‘Politics, lack of clear direction stifle China’s basketball talent’. Retrieved on 11/09/2016 from: http://www.nba.com/article/2016/10/11/chinas-lack-nba-talent-remains-mystery

Greenburg, J (2016). ‘What the NBA Knows About China That Silicon Valley Doesn’t’. Retrieved on 11/09/2016 from: https://www.wired.com/2016/06/nba-knows-china-silicon-valley-doesnt/

NBA.com (2016). ‘New Orleans Pelicans and Houston Rockets Headline 10th Edition of NBA Games in China’. Retrieved on 11/09/2016 from: http://www.nba.com/pelicans/new-orleans-pelicans-and-houston-rockets-headline-10th-edition-nba-games-china/

Patterson, D. (2016). ‘NBA China and the Globalization of Basketball’. Retrieved on 11/10/2016 from:

https://businesssideofsports.com/2016/02/24/nba-china-and-the-globalization-of-basketball/

Simkins, T (2016). ‘Can new American basketball venture succeed in China?’ Retrieved on 11/09/2016 from:

https://asiasports.business/can-a-new-american-basketball-venture-succeed-in-china-with-help-from-yao-ming-its-a-million-dollar-question/

Tuchman, R (2016). ‘China Can’t Get Enough Of The NBA’. Retrieved on 11/10/2016 from:

http://www.forbes.com/sites/roberttuchman/2016/07/07/how-china-and-the-nba-are-bridging-together-the-global-sports-community/#89e02bd8825f

Can A New American Basketball Venture Succeed In China With help From Yao Ming? It’s A Million Dollar Question…

by Tanner Simkins @TannerSimkins

The Chinese government has earmarked basketball as one of its key growth sports in the coming years, and with a push at the marketing and grassroots level by the NBA, the sport has never been more popular in the country. NBA stars like Kobe Bryant and Dwayne Wade, Shane Battier and Jeremy Lin have made massive marketing inroads in the country, while Stephon Marbury has made his move to the country bigger than anyone with his

Now another Chinese mega-star, Yao Ming, has lent his hand and his name to another venture, this one based more on the grassroots than on the NBA. It is called The Basketball Tournament (TBT), a winner take all five on five tournament open to anyone who can out together a team in the United States. With a mix of former elite college stars and players with NBA experience, the 64 team field, which concludes in New York with a final Tuesday night on ESPN, has captured the imagination and attention of thousands of basketball fans, and now may do the same for millions in China.

One Monday, the owners of the event announced a partnership with Yao Ming and Starz Sports International to develop TBT China. TBT China’s event will incorporate a fan first, social media driven, open basketball tournament model similar to the one now three years old in the US. China’s winning team will play into the American tournament in 2017, although the winning purse, which is an amazing $2 Million for 2016, has yet to be determined.

“Yao Ming and Starz Sports really are perfect partners to introduce TBT to the Chinese people,” said Jon Mugar, TBT founder and CEO in a Monday press release.. “Our vision of TBT has always been a global event that brings together cultures, styles, and people through social media and the international game of basketball. Ultimately we will have millions of people around the world, both players and fans, actually participating in an annual sports / media event. We are incredibly excited to work with Yao and his team on realizing this vision.”

The importing of Chinese interests into American sport has been booming in recent months, but brining an American event to the grassroots level in China can have its challenges as well as its opportunities. Does it have a chance to succeed?

“The partnership between ‘The Basketball Tournament’ and China is an exciting one with respect to extending the proliferation and growth of basketball in the country beyond the terrific work done by NBA China to the grass roots level,” said Ray Katz, a veteran sports marketer and professor at Columbia University. “This exciting and authentic event has some top U.S sports icons in marketing and production already involved, and Yao Ming’s participation will accelerate its expansion and provide compelling global organic content opportunities for current and future sponsors. Global expansion always is driven by the right partners in each country and in Yao Ming, this event has the best basketball ambassador China has to offer.”

How much will Yao be involved in the running and marketing of the event? All of that is yet to be determined. “TBT is a powerful international platform that leverages the popularity of social media to create unbelievable interaction between fans and their teams. The open tournament format elevates grassroots basketball to a higher level,” he added in a release on Monday.

The goal for TBT would be to use the power of the Yao brand internationally, along with the marketing expertise in country of Starz Sports and “Team Yao, ” to take an American event and tailor it to a Chinese marketplace. If it succeeds will be a multi-million dollar question, but for now, it is a new and intriguing example of how sport, especially basketball, is becoming a sports business unifier for two massive markets which are growing closer every day.

Astonomical CSL broadcast deal stuns China’s sports industry

CCTV, IMG and Infront – all huge names in the sports industry – were among the suitors to buy the rights to produce and broadcast the Chinese Super League. But these three, and others, were obliterated by the bid submitted by the comparatively little known Tiao Power, worth a staggering 8 billion yuan over five years.

Reports say that Tiao’s 8 billion yuan bid – worth 20 times more than the existing deal – dwarfed the 4.3 billion submitted by Shanghai’s Great Sports channel, 4 billion from CCTVSE (the sports marketing wing of the broadcaster) and 1.75 billion from Guangdong’s GDTV. IMG, Infront and two other parties didn’t make it through to the final after failing to satisfy all of the CSL’s requirements in the submission process.

Under the terms of the deal, Tiao will pay 1 billion yuan in each of 2016 and 2017, followed by 2 billion yuan each year from 2018-2020. It’s a huge amount of money by Chinese standards for a product that, while improving, is still way behind the top European leagues, and Tiao is clearly gambling that losses in the first few years of the deal could be compensated by profits 4-5 years down the line.

The company, run by media mogul Li Ruigang (above) – also known as China’s Rupert Murdoch – won the broadcast rights to Chinese national team matches earlier this year for 70 million yuan, ending the CFA’s long association with CCTV. Of course, CCTV could still end up broadcasting both Chinese national team and CSL games, but that is far from certain, and they would have to pay handsomely for the privilege.

Ti’ao Power’s GM, Ms Zhao Jun, earlier this year dismissed talk of a pay-per-view model, citing previous failures in China, although English Premier League games are now available on a wide variety of online platforms, some of which cost 5.99 RMB (standard definition) or 9.99 RMB (HD) per game.

Aston Villa’s Chinese owner: Saint or Sinner?

Tony Xia has been hailed in some quarters as Aston Villa’s knight in shining armor, but how much is really known about the Chinese businessman?

Reading the Meet our new Owner introductory page on Aston Villa’s official website, new chairman Tony Xia ticks all the right boxes: young, presentable, well-educated, former player, long-time Villa fan and – as an employer of 35,000 people in 75 countries – presumably also fantastically rich.

But the truth, it seems, is not quite that simple.The first red flag is the fact that in a seven-paragraph article, Tony himself doesn’t actually appear until the fifth paragraph, begging the question who is the real owner – him or the Recon Group? Is he the king of the empire, or is there someone lurking behind the throne?

So what of this empire? Recon owns controlling interests in five publicly-listed companies, of which the largest two are from the Chinese mainland (and the other three listed in Hong Kong). The jewel in the crown is the Shanghai-listed Lotus Health Group, China’s largest manufacturer of the food additive MSG, widely used throughout the country, but increasingly being shunned by discerning Chinese diners.

Next up comes Shenzhen-listed Tianxia Zhihui, which started out as a company that made shampoos and soaps – rebranded as Softto in 2004 – but was then renamed and restructured last year into an entity involved in the smart city business.