China NBA: How one tweet derailed the NBA's China game plan

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Yao Ming playing basketball.Image source, AFP
Image caption,
Yao Ming made the Houston Rockets "China's team"

Last Sunday night, Daryl Morey, the General Manager of the Houston Rockets, sat in his hotel room in Tokyo, where the Rockets were playing two pre-season games against the current NBA champions, the Toronto Raptors.

Mr Morey - in a move that would reverberate around the sporting world and beyond - then fired off a tweet expressing support for the protestors in Hong Kong who have been taking to the streets for the past four months.

While he hasn't explicitly admitted as much, it's safe to say he now regrets hitting that send button.

Close to a week later, the fallout from that single, quickly-deleted tweet - which included the words "Fight for freedom, stand with Hong Kong" - is still dominating the news cycle.

We've seen posts from Rockets owner Tilman Fertitta, an explanation of sorts from Mr Morey, and not one, but two statements on the matter by the National Basketball Association (NBA), none of which appears to have appeased Chinese fans and sponsors, who were furious that an outsider was stirring up an issue many there regard as non-negotiable.

Image source, Reuters
Image caption,
Daryl Morey is regarded as an innovative figure in the NBA

Freedom of speech, they argued, doesn't apply in certain areas and it wasn't Mr Morey's place to comment in the first place.

To top it all off, the league's handling of the situation simultaneously managed to spark a backlash back at home, with US fans and politicians alike calling out the league for pandering too much to China.

Hong Kong protests - key facts

US basketball is a big deal in China

The timing could not have been worse: the LA Lakers and the Brooklyn Nets are in China right now to play two pre-season games, but national broadcaster CCTV refused to broadcast them. Once the state-run channel had made that decision, online streaming partner Tencent had little choice but to follow suit.

Admittedly, pre-season games don't quite get pulses racing in the way that regular season games do, but this has become something of a tradition in China, where basketball rivals football as the country's most loved sport.

NBA teams have played in front of Chinese fans in 13 of the past 14 years, with LeBron James - unquestionably the biggest name still active in the league - set to lead his Lakers in Shanghai and Shenzhen this week against the Nets, whose new owner Joe Tsai co-founded Chinese tech giant Alibaba.

Basketball in China is almost as old as the game itself and Chairman Mao was known to be a big fan.

Image source, AFP
Image caption,
LeBron is a massive star in China

But the sport took a great leap forward once Yao Ming joined the Rockets in 2002. Yao played the bulk of seven seasons in Houston from 2002-09, before finally retiring after two more injury-plagued years.

During that time, his popularity with fans saw him named to the All-Star team eight times - even during periods when he barely played - firmly establishing the Rockets as "China's team".

It's also big business

However, the backlash to Mr Morey's ill-fated social media post has been so strong that Houston has quickly lost that mantle.

Meanwhile, Rockets merchandise has been cleared from various e-commerce platforms in China, while almost every Chinese sponsor of the league, plus others associated directly with the team, have suspended those partnerships.

Accurate statistics in a country of 1.4 billion people are notoriously hard to come by, and the Chinese Basketball Association (CBA)'s claim that 300 million Chinese play the sport is wildly optimistic.

Image source, Reuters
Image caption,
The NBA's largest store outside North America is in Beijing

But the country still has millions of basketball fans, making China a clear number two market for the NBA, behind only the US.

And for a society that doesn't have a long history of paying for online content, Tencent's five-year streaming deal that puts an estimated $1.5bn (£1.2bn) in NBA coffers is far ahead of anything else in the sporting landscape here.

In other words, China matters.

The crisis playbook vs free speech

We've seen similar incidents with foreign entities play out in China previously. Dolce & Gabbana, Marriott, Delta Airlines and others have all fallen foul of consumer sentiment in recent years for an ad, post or oversight that was perceived in China as a slight on the country.

The crisis playbook then follows a familiar pattern: the foreign brand in question issues an apology, keeps a low profile and tries to work its way back into the good graces of those consumers.

But this time it's different.

NBA Commissioner Adam Silver has made it clear he will not apologise for Mr Morey's tweet, citing the American league's values of "equality, respect and freedom of expression".

He has some leverage here. If consumers are annoyed with a fashion brand, hotel or airline, they can easily switch to another option; but the NBA stands apart in China.

The CBA is a supplementary, complementary league, but in no way is it ready to replace the NBA as the league of choice for Chinese fans.

Image source, Getty Images
Image caption,
Adam Silver insists on the league's values of "equality, respect and freedom of expression"

Claims that basketball fans might instead follow another sport are also off the mark.

The impact of this controversy is two-fold. The NBA's regular season starts on 22 October, and the hope is that the dust will have settled by then, and the league broadcast partners can return to regular programming - albeit with Houston Rockets games kept offline for at least a few more months.

It's still possible, though, that China doubles down on its call for an official apology, meaning that the situation could escalate still further and the broadcast ban extend into the regular season - though if that does happen, enterprising fans will likely find a way to access pirated live-streams from overseas.

Between a rock and hard place

But, more importantly, the risk of a backlash back home for companies operating in China is becoming greater.

With consumers in the West now hearing about the demands placed on those firms in China, the companies - already acutely aware of the political minefields that lie in wait - will have to weigh their moves in the East with the reception those moves get back in the West.

And as the NBA has found this week, it's becoming nigh on impossible to strike a balance between those two very different sides, even with carefully-worded statements.

Some may choose to pick sides and prioritise one market over another for a variety of different reasons, while the majority will do their very best to continue the high-wire act and stay out of trouble in the first place.

But with online mobs all over the world amplifying every perceived misstep, expect to see more companies stuck between a rock and hard place in the future.

Mark Dreyer has been covering the sports industry in China since 2007 and runs the China Sports Insider website. He can be found on Twitter here.