May 20, 2022

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How Strong China’s Influence is in the NBA (Enes Kanter and Lebron James Drama)

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LeBron James refused to speak to Enes Kanter last week before the Los Angeles Lakers’ game against the Boston Celtics at TD Garden. The reason is clear that Kanter has interfered in the political sphere of other countries, especially protests about what is happening in China. LeBron seemed to know that what Kanter did could shake up the NBA and its business.

In 2019, James refused to speak to Daryl Morey (then manager of the Houston Rockets). This is after Morey posted support for Hong Kong independence on his personal Twitter account. Although Morey finally deleted the upload, it had already caused turmoil between the NBA and Chinese communities.

Because of Morey’s actions, the NBA had to fight desperately to gain the trust of China. Because, Morey’s comments made the NBA lose money. When China didn’t broadcast their games, the NBA lost about US$200 million or equivalent to 2.8 trillion rupiah. Meanwhile, the event also affected the business of selling sports products. LeBron and Nike also suffered losses.

Learning from the case that occurred in 2019, it seems that the NBA and its business partners must be careful with issues related to China. In recent months, the Celtics’ Enes Kanter has continued to launch political criticism of China. He recently proposed a boycott of the 2022 winter Olympics in China. He was also wore a T-shirt that reads “Free Tibet, Free Taiwan, Free Hong Kong”.

Not only that, Kanter also used shoes as a means of protest. This certainly had a huge impact on Nike’s business, for which we know one of its main ambassadors was LeBron James. Quoted from kcby.com, LeBron said that Kanter was taking advantage of him. “He (Enes Kanter), tried to use my name to create a bigger influence, for his own sake,” said LeBron.

LeBron must be careful when dealing with China. Especially when Kanter had already brought up the name Nike in his protests. Because LeBron himself earns about US $ 30 million or the equivalent of 429 billion rupiah every year from Nike. Meanwhile, revenue for the sale of Nike products related to the NBA in the Chinese region as a whole penetrated US $ 6.6 billion or worth 94.4 trillion rupiah.

So it’s clear that China has a big influence on the NBA and its derivative businesses. The NBA must also be careful in responding to the statements of its stars, especially those concerning political issues of other countries. Currently, the NBA and Nike chose to remain silent with Kanter’s actions. They don’t want the events of 2019 to repeat itself.

How Did China Have Great Influence in the NBA?

According to data compiled by Yahoo!Finance, the Chinese market already accounts for 10 percent of the NBA’s overall revenue. And, in fact, that number continued to grow before Daryl Morey’s comments about China that cracked the relationship between the NBA and China.

Initially, the NBA saw China as part of the future market, as well as a contributor to their finances. The NBA has two major partners in China, namely Alibaba (BABA) and Tencent (TCEHY). China’s two largest technology companies by market capitalization. The NBA had already stepped up the two partners’ deals before Daryl Morey screwed it up in 2019.

Alibaba is one of the companies that licenses NBA merchandise on e-commerce sites. Although Alibaba has been selling NBA merchandise licenses on Tmall since 2012. However, the NBA has not interfered in this matter. Because with Alibaba Tmall, Taobao, and Youku, the NBA can sell merchandise to 700 million Chinese consumers.

Then Alibaba executive Joe Tsai bought the Brooklyn Nets, directly adding value to the club for US$2.35 billion. It is possible that the price will increase in 2020. Because the Nets are a team that has a high selling price, with stars such as Kevin Durant, James Harden, and Kyrie Irving.

Meanwhile, Tencent has been the NBA’s official digital partner in China since 2015. The extension of the deal with Tencent includes live streaming of matches. Tencent is the exclusive provider of the NBA League Pass in China, plus additional video content on Tencent’s extensive list of websites and apps, including QQ, WeChat, and Weishi (Tencent’s version of Vine).

The NBA itself said that 490 million Chinese fans watched games via Tencent during the 2018-19 season. That number had dropped dramatically in 2019 to 2020. But when China began to open up to the NBA, Enes Kanter had the opportunity to be a troublemaker. In 2019, the NBA has announced that the deal with Tencent was worth around US$1.5 billion over five years (until 2024).

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