The Wall Street Journal-20080111-NBA Uses Local Allure to Push Planned League in China
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NBA Uses Local Allure to Push Planned League in China
Beijing -- In the most ambitious play yet by a U.S. sports entity in China, the National Basketball Association has used the popularity here of the sport and its marquee players as a springboard for a new league -- despite a sometimes rocky relationship with the country's basketball bureaucracy.
The NBA has been establishing a presence in China for years, and has already done advance work on the league, including agreeing to take a stake in an arena recently completed in Beijing for the 2008 Olympics.
The biggest hurdle has been China's state-run national league, the Chinese Basketball Association, which controls where its players can play and also runs China's national basketball team. The NBA says it will work with the CBA, but won't provide details. People familiar with the league's plans say the NBA is counting on using the CBA's existing players and coaches in the new venture.
China's government doesn't want to overhaul its state-controlled sports system before the Olympics, longtime basketball observers and insiders say. But after the Games, these people believe, basketball and other sports could open to foreign investment and partnerships, much as the banking and retail sectors already have.
The NBA announced its venture in May, initially pressing forward without the Chinese league's blessing. The CBA has since pledged its cooperation.
"Have there been bumps in the road? I'm sure," says Heidi Ueberroth, the NBA's longtime point person on China. But, she adds, "It's been a cooperative partnership."
Though the number and ownership structure of NBA China teams has yet to be determined, the NBA's plans for the new league include TV deals with local and national broadcasters, merchandise and marketing partnerships, and community programs aimed at promoting basketball across the 1.3 billion-person nation.
The owners of the NBA's 30 North American franchises have already approved the NBA China enterprise, which the NBA expects to be worth as much as $3 billion. Walt Disney Co. has committed to owning a 5% stake, and four Chinese companies, whose names the NBA is expected to announce on Monday, will collectively own another 6%.
Goldman Sachs Group Inc. is advising the league on NBA China's financial side, and the league has enlisted AEG, a subsidiary of the Anschutz Co., to run and book the Beijing arena.
Since its first exhibition game here nearly three decades ago, the NBA has become one of China's top sports brands. On Chinese television, live NBA games outnumber CBA games.
The young Chinese league, started in 1995, is dogged by a reputation for poor play, officiating and TV production. In some markets, its broadcasts are cut short for gymnastics or table tennis. U.S. basketball observers compare the CBA's play with non-elite U.S. college programs. Each team can have two foreign players, but they are limited to a combined five quarters of play per game. Referees are paid by the home team.
On basketball courts, Chinese children favor jerseys from NBA stars like Tracy McGrady and Allen Iverson, rather than local players like Wang Zhizhi or Mo Ke. One Chinese player who is prominent on billboards is the NBA player Yao Ming of the Houston Rockets, who started with the CBA.
Chip Hill, an American bank executive in Beijing, saw the CBA's Beijing Ducks play last season in their home arena, where the lone concession stand was a card table dispensing tea, water and microwave popcorn. He says his kids seemed to be the only young fans there. "Everyone else was over 40," he says.
The CBA says its ratings continue to rise nationally. But according to Chinese media reports, the CBA's TV viewership peaked in 2005 and has declined since. NBA games, meanwhile, attracted a total of 1.2 billion television viewers in China last season, up 19% from the previous year, the league says.
When it brought the Washington Bullets for exhibition matches against two Chinese teams in 1979, the NBA found a receptive audience. Basketball has been played here since the 1890s.
By 1987, three years after he took the job of NBA commissioner, David Stern had persuaded China's state television network, CCTV, to air the NBA All-Star game. More games followed, with the NBA agreeing to share broadcast revenues with CCTV. The early arrangements generated little cash but were aimed at building a rapport with officials. "We knew it was important to get a foothold," Mr. Stern says.
The CBA has allied with the NBA in the past, but on some larger projects, relations have been chilly. In late 2002, the NBA started organizing a series of exhibition games in China between NBA teams, to be called the China Games. The CBA would have been a logical partner, but the NBA instead worked closely with the government-run sports administrations of Beijing and Shanghai to launch the first exhibition games, in 2004, which featured Mr. Yao's Rockets.
More recently, the NBA and CBA discussed a marketing partnership, say people familiar with the talks. But the CBA awarded its seven-year league promotion deal to Infront Sports & Media AG, a Swiss marketing group.
"The CBA, they treated the NBA as a competitor, not as a co-worker," says Zhang Weiping, a former Chinese national team coach who is now the play-by-play announcer for CCTV's broadcast of the NBA finals.
After the success of the China Games, the U.S. organization began paving the way for an NBA-backed Chinese league. In late 2006, the NBA received an invitation from CAAC Real Estate Development Co., Ltd., a loose affiliate of the giant Air China Ltd., to invest in the Beijing Olympic Basketball Arena, and took a minority stake this past February.
Bringing in American architect David Manica, who worked on the Rockets' home court, Houston's Toyota Center, the league has had input on everything from scoreboard and concession-stand design to seat padding. Building renderings show the NBA logo projected onto the bamboo-like aluminum ribbons that will adorn the arena's exterior. The arena, which will feature restaurants, luxury suites and a huge shopping mall next door, will seat 18,700 fans, more than twice the capacity of the typical CBA arena.
Mr. Stern went public with NBA China this past May, saying he hopes the league would start sometime after the 2008 Olympics. The announcement threw the CBA into a panic, say those familiar with the organization. The NBA had shown it could plan the China Games without its local counterpart, and now was making it clear that it was prepared to bypass the Chinese side again.
In October, the NBA picked Tim Chen, the former head of Microsoft in China, to lead its new enterprise. The Taiwanese-born Mr. Chen -- considered one of the top international business leaders here, with strong government contacts -- met with CBA executive vice president and secretary general Li Yuanwei soon after in Shanghai, where the Cleveland Cavaliers were playing the Orlando Magic in the 2007 China Games. In a speech to Chinese basketball officials and NBA executives, the CBA's Mr. Li sat beside Mr. Stern and pledged his cooperation with the NBA.
He conceded some nervousness about the NBA's involvement in Chinese professional basketball, but welcomed his new partners by saying there's room for both at the basketball table. "McDonald's has been in China for quite a long time," he said. "But there are still a lot people who love Shanghai cuisine."
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Ellen Zhu, Kersten Zhang and Sue Feng contributed to this article.
