NBA Projected to Lose Hundreds of Millions Over China Controversy

Created by Brandon Morse Copyright: RedState.com

Created by Brandon Morse
Copyright: RedState.com

Actions have consequences and it looks like the NBA is learning that the hard way.

In October of last year, the NBA became the subject of controversy after Houston Rockets general manager  Daryl Morey tweeted out support for Hong Kong protestors. The NBA signaled they were not pleased with any public criticism that could reflect poorly on their Chinese overlords investors and Morey deleted the tweet. Later, a CNN reporter was shut down by the Houston Rockets’ media officer when she tried to ask a question about Hong Kong during a post-game press session. Golden States Warrior coach Steve Kerr didn’t help quell the controversy when he dismissively compared commenting on China’s communist aggressions to the Chinese commenting on American gun issues.

“But people in China didn’t ask me about, you know, people owning AR-15s and mowing each other down in a mall.”

And then there were the incidences where fans were removed from NBA games or had their property confiscated when they displayed pro-Hong Kong signs from the stands.

The backlash was severe, both from NBA fans and Chinese officials. Several Chinese investors suspended their partnerships with the NBA in protest. Social media users from across the ideological spectrum blasted the NBA for their defense of China and their silence on human rights violations in Hong Kong.

Now, The Wall Street Journal is reporting that the whole kerfuffle may have ended up costing the NBA hundreds of millions of dollars in Chinese investments and fan backlash.

The loss “will be in the hundreds of millions,” NBA commissioner Adam Silver said on Saturday, the first time he’d used such a number to estimate the cost to the league’s China business. The hit amounted to “probably less than $400 million,” Silver said in response to speculation that the losses could reach $1 billion, though he cautioned that the final number might be lower than the figure he cited.

“It’s substantial,” Silver said. “I don’t want to run from that. We were taken off the air in China for a period of time, and it caused our many business partners in China to feel it was therefore inappropriate to have ongoing relationships with us. But I don’t have any sense that there’s any permanent damage to our business there.”

As hard as Silver tries to paint the loss as exclusively China’s fault, the fact is that the league has been feeling it on the home end as well. The NBA had already reduced their financial projections for the next fiscal year, which necessarily affected salary caps.

Last month, the NBA informed teams to expect a $1 million drop in the projected salary cap for next season, according to a person familiar with the matter. The salary cap determines how much the league’s 30 teams are permitted to spend on players, and it’s based on approximately half of the NBA’s annual revenues. The guidance came after the league downgraded its projections last September, before the unexpected showdown with China, from $118 million to $116 million. The latest decrease was down to $115 million—which appeared to signal the league was planning for losses in the $60 million range.

Perhaps what the NBA has been experiencing is indicative of America’s attitude towards professional sports entertainment as a whole. From the NBA to the NFL to men invading women’s sports under the guise of transgenderism to ESPN personalities, Americans are sick of politics invading their favorite sports. They watch sports to briefly escape the daily pressures of life and also to experience that unique sense of comradery that comes from cheering on your favorite teams and gathering to watch your favorite sports. Americans are obsessed with sport because it unites. They do not want the division of politics invading the one place they go to get away from it all.

That sentiment is manifesting itself in lost revenue and tv ratings. While the losses may not be at critical levels, they do signal a certain mood amongst consumers…a mood that the NBA and other professional leagues might do well to heed. Deadspin – a sports news blog – caught on earlier and asked their reporters to stick to sports and avoid the temptation of politicizing America’s passtimes. Of course, the backlash from the ‘woke’ crowd was swift and an editor was fired, but the notion that readers want more sports and less politics was a solid one.

When it comes to entertainment – be it sports or Hollywood – it would behoove the producers of that entertainment to remember that the customer is always right and the only way to be sure that you’re not making certain customers “wrong” is to steer clear of judging the politics of half your base.

The NBA could do well to learn this lesson, but the real question for them right now is – who is their “customer”? Is it China, or is it American fans? Sadly, the answer isn’t that clear at the moment but if there weren’t American fans, would there even be an NBA?