Nearly one year later, the backlash from a tweet by the former Houston Rockets (“Rockets”) General Manager, Daryl Morey, seems to have finally subsided. In October 2019, one tweet caught Chinese and National Basketball Association (“NBA”) executives completely off-guard. At the time, Hong Kong’s pro-democracy protests were fueling anarchy and revolts, causing the government, backed by Beijing, to use emergency power measures for the first time in approximately fifty years. In an effort to support the protests, Morey tweeted “Fight for Freedom. Stand With Hong Kong.” Those seven words resulted in a massive economic downfall for the NBA and damaged the long-standing relationship between the league and China.
The NBA’s expansion efforts into China date back to 1979 when the Washington Bullets became the first team to play a game in China. Shortly after that, the NBA capitalized on the untapped market by airing games on China’s state-run CCTV, opening an office in Hong Kong, and playing over 20 NBA Preseason games in China. The NBA furthered its devotion to the Chinese fan-base in 2008 by creating NBA China, which is now estimated to be worth $5 billion. As a result, basketball continues to remain the most popular sport in China.
On October 4, 2019, the seemingly positive relationship between China and the NBA came to a screeching halt because of the words of one man. Immediately following Morey’s tweet (which he quickly deleted) the Rockets’ coverage on CCTV and Tencent Holding’s (“Tencent”) streaming platform ceased. Shops and online stores removed their merchandise and the existence of arguably the most popular team in China disappeared in a matter of days. The consequences of Morey’s actions continued on October 8, 2019 when CCTV suspended all NBA broadcasts. Additionally, tech giant Tencent—which had reached a $1.5 billion deal with the NBA in 2019—halted coverage of all NBA games. However, it quickly resumed live broadcasts by mid-October. Tencent’s decision to resume delivering limited coverage to approximately 500 million Chinese NBA fans may have mitigated some financial losses. But CCTV’s censorship of a large portion of the NBA’s viewership continued to pose major economic downfalls, though the extent was not initially clear.
The standoff between China’s CCTV and the NBA continued until Game 5 of the NBA Finals on October 9, 2020, between the Miami Heat and the Los Angeles Lakers. For the first time in a year, the state-run television channel finally resumed its NBA coverage and the tension between the NBA and China seems to have eased. The final damage caused by the rift has yet to be determined. However, NBA Commissioner Adam Silver estimated that the loss would be in the hundreds of millions, even as much as $400 million—not a small figure compared to the league’s annual global revenue estimated at around $10 billion.
With the emergence of COVID-19, the league faced even greater financial uncertainty. Before the NBA implemented the ‘bubble’ in Orlando, NBA Commissioner Silver advised players that roughly 40% of the NBA’s revenues come from arena sponsorships and ticket sales. The NBA’s restart on July 30 increased approximately 80% more prime-time viewership than before the lockdowns interrupted the season. Even though these numbers in the ‘bubble’ experience satisfied the league’s television contracts and provided revenue-sharing payouts to each team, the pandemic still crippled many teams financially. According to a confidential ESPN report, 14 of 30 NBA teams lost money this past season before the television payouts, and nine of those teams suffered losses even with the profit sharing. Amidst the unpredictability caused by COVID-19, the revenue loss that resulted from Morey’s tweet becomes even more prevalent. However, CCTV’s recent decision to resume coverage of the league certainly provides the NBA with an assurance that they may be able to salvage their relationship with China after all.