The NBA and China

[Pakuni]

Do you agree this means big changes next year?

Where are you getting the 15 percent cut in salary cap figure?
NBA revenues topped $8 billion in 2017-18 (most recent year I could find). From what I can find, the league gets about $500 million of that from China. So, assuming no other growth in NBA revenues over the past two years (unlikely, no?), that's what, maybe a 5 percent revenue decline, factoring in last year's growth? And, again, some of that is almost certainly to be offset by increases from other revenue streams.

So, yeah, the NBA's bottom line obviously will suffer if revenue from China suddenly dips to zero. But it's not likely to be  nearly as calamitous as you're suggesting. Five percent is nothing to sneeze at, but it's not 15 percent either.

Beyond all that, this almost certainly will pass over time. NBA basketball is exceptionally popular in China and the powers that be aren't going to want to keep people from their bread and circuses forever.

[Pakuni]

They don't profit much at all now.  They pretty much run these teams at breakeven now.

The average NBA team ended 2018 with $61 million operating income, per Forbes annual team valuations.
Six teams had an operating income of more than $100 million. Another sat at $99 million.
Only one team, the Cavs, lost money. The next worst made $10 million.

https://www.forbes.com/nba-valuations/list/#header:operatingIncome_sortreverse:true

[tower912]

And, honestly, there probably IS a political element to it.    This can be seen as China posturing in this area due to ongoing trade disagreements.    But again, IMO, a new chapter of an old story.

[Not A Serious Person]

Salary cap hit  for next year, down 15%

https://sports.yahoo.com/sources-nba-teams-planning-for-scenario-in-which-salary-cap-would-drop-due-to-situation-with-china-003037770.html

Silver confirms

www.cnbc.com/amp/2019/10/18/nba-china-rift-causing-league-substantial-losses-commissioner-says.html

[Pakuni]

Salary cap hit  for next year, down 15%

https://sports.yahoo.com/sources-nba-teams-planning-for-scenario-in-which-salary-cap-would-drop-due-to-situation-with-china-003037770.html

Silver confirms

www.cnbc.com/amp/2019/10/18/nba-china-rift-causing-league-substantial-losses-commissioner-says.html

Thanks, but Silver didn't confirm.

[Not A Serious Person]

Thanks, but Silver didn't confirm.

Ok, I should have been more specific.

Silver confirmed losing China is a big financial hit to the league. I did not mean the cap reduction, as that is speculation and not a fact (yet)

[MU82]

Where are you getting the 15 percent cut in salary cap figure?

Out of his anal cavity ... which he finally admitted when you called him on his BS.

[cheebs09]

Out of his anal cavity ... which he finally admitted when you called him on his BS.

I believe this is where the 15% came from. I posted this a little while ago.

[mu03eng]

15% is a worst case scenario and I think it's also being misconstrued. I think the 15% number is off the projected cap for next year, not 15% off the cap number this year.

Simple example this year it's about $110M next year was projected around $120M. The 15% of next year means the new projection would be $102M for next year NOT $97M if you took it off this years

[Not A Serious Person]

15% is a worst case scenario and I think it's also being misconstrued. I think the 15% number is off the projected cap for next year, not 15% off the cap number this year.

Simple example this year it's about $110M next year was projected around $120M. The 15% of next year means the new projection would be $102M for next year NOT $97M if you took it off this years

A lot of is dependent on:

* Do the Chinese ever come back (both broadcast rights and/or endorsements)?  The Chinese are about 15% of total league's revenues, hence team scenarios of a 15% drop in the cap.

* What about domestic revenue sources?  Do games become a "free HK" or "free Tibet" protest (see the pictures of Friday's Nets game several posts below).  Does that make it less desirable to attend (drop in the gate)?  Or does this fizzle out in a few weeks?

* Dometic TV ratings.  Are they affected at all by any of this?

* Lastly, what about personal appearances and endorsements?  Supposedly LeBron was set to make almost $1m in appearances fees in China a few weeks ago.  That was all canceled.  If every paid appearance comes with Free HK protesters (not only LeBron, but all NBA players), do they lose that source of income?  Are NBA players less desireable (now) as pitchmen on commercials?

The answers to these and more will determine the hit, if any, to the Salary cap.

[Pakuni]

* Do the Chinese ever come back (both broadcast rights and/or endorsements)?  The Chinese are about 15% of total league's revenues, hence team scenarios of a 15% drop in the cap.

This doesn't seem accurate.
Estimates put league revenues from China at $400 to $500 million. Total NBA revenue in the 2017-18 season was $8 billion. $500 million of $8 billion is quite a bit less than 15 percent.

A lot of what you say about the China situation hurting NBA revenues is accurate. I don't know why you think you need to constantly exaggerate the situation to make your point.

[Not A Serious Person]

This doesn't seem accurate.
Estimates put league revenues from China at $400 to $500 million. Total NBA revenue in the 2017-18 season was $8 billion. $500 million of $8 billion is quite a bit less than 15 percent.

A lot of what you say about the China situation hurting NBA revenues is accurate. I don't know why you think you need to constantly exaggerate the situation to make your point.

The 15% is from the yahoo link above, you know this. stop making this a personal attack.

I will try to stop the personal and political... will you.

[Pakuni]

The 15% is from the yahoo link above, you know this. stop making this a personal attack.

I will try to stop the personal and political... will you.

I'm sorry if you feel this is personal. I'll try to make it seem less so.
The Yahoo article you linked doesn't say the league gets 15 percent of its revenue from China. It says some teams are considering a scenario in which the cap drops 10 to 15 percent.
Also, we know that the league doesn't get 15 percent of its revenue from China because the amount it gets from China - estimated at $400 to $500 million - is far less than 15 percent of league revenues ($8 billion).
I'll mention it no more.

[Cheeks]

This doesn't seem accurate.
Estimates put league revenues from China at $400 to $500 million. Total NBA revenue in the 2017-18 season was $8 billion. $500 million of $8 billion is quite a bit less than 15 percent.

A lot of what you say about the China situation hurting NBA revenues is accurate. I don't know why you think you need to constantly exaggerate the situation to make your point.

Don’t forget the other dollars the players make on the side from China.  Insanely lucrative for them to go there, make appearances, run a camp or two.  Insane money....not officially part of NBA revenues.

[Not A Serious Person]

Don’t forget the other dollars the players make on the side from China.  Insanely lucrative for them to go there, make appearances, run a camp or two.  Insane money....not officially part of NBA revenues.

Correct ... the long ESPN article about this last week mentioned that Lebron stood to make about $1m in appearances and other such events in China two weeks ago. That was all canceled. It also said Kyrie Irving also stood to have a nice payday too, and that was cancelled as well.

It mentioned in relation to the players meeting in China with Silver. The articled suggested the reason players like LeBron and Kryie were so mad was they had an immediate loss of income from those canceled appearances.

(The article also notes that when LeBron demanded that Morey get punished by the league, implying he was upset by the loss of income, Silver’s response was something along the lines of “we don’t punish the players when they criticize Trump.”)

[Eldon]

Correct ... the long ESPN article about this last week mentioned that Lebron stood to make about $1m in appearances and other such events in China two weeks ago. That was all canceled. It also said Kyrie Irving also stood to have a nice payday too, and that was cancelled as well.

It mentioned in relation to the players meeting in China with Silver. The articled suggested the reason players like LeBron and Kryie were so mad was they had an immediate loss of income from those canceled appearances.

(The article also notes that when LeBron demanded that Morey get punished by the league, implying he was upset by the loss of income, Silver’s response was something along the lines of “we don’t punish the players when they criticize Trump.”)

Did LeBron demand that Morey be punished?

Silver said that China wanted Morey fired, but I don't remember hearing that LeBron wanted any action taken.

(Also, who knows if Silver is telling the truth re China requesting Morey's firing)

[mu03eng]

(Also, who knows if Silver is telling the truth re China requesting Morey's firing)

That would be an oddly bizarre and counter productive thing to make up.....bet hey anything's possible I guess

[Not A Serious Person]

Did LeBron demand that Morey be punished?

Silver said that China wanted Morey fired, but I don't remember hearing that LeBron wanted any action taken.

(Also, who knows if Silver is telling the truth re China requesting Morey's firing)

Reporting on the October 9th meeting in China ...

https://es.pn/2IVFa1Y

Silver opened the floor. James raised his hand.

His question was related to Morey — and the commissioner’s handling of the Rockets’ GM. James, to paraphrase, told Silver that he knew that if a player caused the same type of uproar with something he said or tweeted, the player wouldn’t be able to skate on it. There would be some type of repercussion. So, James wanted to know, what was Silver going to do about it in Morey’s case?

Silver pushed back, reminding the players that the league never doled out discipline when they publicly criticized President Donald Trump. Morey was exercising the same liberty when he challenged China. Regardless of the financial fallout of one versus the other, that’s not what should matter. Silver might have disliked the ramifications of Morey’s tweet, but he would defend the right to say it.

[Lennys Tap]

Reporting on the October 9th meeting in China ...

https://es.pn/2IVFa1Y

Silver opened the floor. James raised his hand.

His question was related to Morey — and the commissioner’s handling of the Rockets’ GM. James, to paraphrase, told Silver that he knew that if a player caused the same type of uproar with something he said or tweeted, the player wouldn’t be able to skate on it. There would be some type of repercussion. So, James wanted to know, what was Silver going to do about it in Morey’s case?

Silver pushed back, reminding the players that the league never doled out discipline when they publicly criticized President Donald Trump. Morey was exercising the same liberty when he challenged China. Regardless of the financial fallout of one versus the other, that’s not what should matter. Silver might have disliked the ramifications of Morey’s tweet, but he would defend the right to say it.

If true, good on Silver, bad on Lebron.

[Not A Serious Person]

And, honestly, there probably IS a political element to it.    This can be seen as China posturing in this area due to ongoing trade disagreements.    But again, IMO, a new chapter of an old story.

Big political element to it.  The Chinese are seething that Trump dictates the agenda by imposing tariffs and threatening more.  The Chinese really have nothing they can threaten back with (other than not by farm products, but these are not on the same level).

So when the Chinese became aware of Morey's tweet, I think (as do many others) that the Chinese jumped on it, not because of what it said, but as an excuse to "club" an American product as a form or retaliation.

[rocket surgeon]

 china is in one of it's more vulnerable positions economically today than in a long time.  there are many of you out there who know more first hand, but from what i've read and heard, vietnam, south korea, indonesia, thailand, etc are coming on strong, providing alternatives to a lot of stuff sold in the "walmarts" of the world.  china still has some clout of course, but maybe best be careful as the aforementioned are ready to fill the vacuum

[forgetful]

Big political element to it.  The Chinese are seething that Trump dictates the agenda by imposing tariffs and threatening more.  The Chinese really have nothing they can threaten back with (other than not by farm products, but these are not on the same level).

So when the Chinese became aware of Morey's tweet, I think (as do many others) that the Chinese jumped on it, not because of what it said, but as an excuse to "club" an American product as a form or retaliation.

Yeah, I'm going to have to go with a No on that one.

There reaction was expected and simple. They do not allow anyone to interfere with Hong Kong. They have a long history of suppressing any external negative comments regarding how they treat their people.

[Not A Serious Person]

NBA commissioner Adam Silver will face ‘retribution’ for defaming China, state media says
Published: 7:00pm, 19 Oct, 2019
https://www.scmp.com/news/china/diplomacy/article/3033707/nba-commissioner-adam-silver-will-face-retribution-defaming

In a commentary on Saturday, state broadcaster CCTV said Silver had “crossed the bottom line” by continuing to defend Daryl Morey, general manager of the Houston Rockets, who posted an image on Twitter on October 4 saying “Fight for Freedom. Stand with Hong Kong”.

Making his first comments about the dispute since returning from a contentious visit to China for two preseason games, Silver said on Thursday that the Chinese government had asked the NBA to fire Morey.

“We said there’s no chance that’s happening,” he said in an interview at the Time 100 Health Summit in New York. “There’s no chance we’ll even discipline him.”

But Chinese foreign ministry spokesman Geng Shuang said on Friday that Beijing had never made such a demand.

NBA Commissioner Adam Silver “sought to paint China as unforgiving”, according to state broadcaster CCTV. Photo: EPA-EFENBA Commissioner Adam Silver “sought to paint China as unforgiving”, according to state broadcaster CCTV. Photo: EPA-EFE

Chinese state media has warned that NBA commissioner Adam Silver will face “retribution” for defaming China in the latest twist to a dispute that began with a basketball team executive tweeting his support for the pro-democracy protests in Hong Kong.

In a commentary on Saturday, state broadcaster CCTV said Silver had “crossed the bottom line” by continuing to defend Daryl Morey, general manager of the Houston Rockets, who posted an image on Twitter on October 4 saying “Fight for Freedom. Stand with Hong Kong”.

Making his first comments about the dispute since returning from a contentious visit to China for two preseason games, Silver said on Thursday that the Chinese government had asked the NBA to fire Morey.

“We said there’s no chance that’s happening,” he said in an interview at the Time 100 Health Summit in New York. “There’s no chance we’ll even discipline him.”
But Chinese foreign ministry spokesman Geng Shuang said on Friday that Beijing had never made such a demand.

CCTV said Silver had crossed a line.

“Silver has spared no effort to portray himself as a fighter for free speech and used freedom of speech as an excuse to cover for Morey, who voiced his support for the violent actors in Hong Kong,” it said. “This has crossed the bottom line of the Chinese people.”

Silver’s handling of the controversy had proved his “double standards”, the broadcaster said, adding that he had “defamed” China on the international stage.

“To please some American politicians, Silver has fabricated lies out of nothing and has sought to paint China as unforgiving,” it said.

The way in which the NBA boss had defended Morey showed he had “problems in his character”, the report said, adding that he “will receive retribution sooner or later”.

[Not A Serious Person]

Yeah, I'm going to have to go with a No on that one.

There reaction was expected and simple. They do not allow anyone to interfere with Hong Kong. They have a long history of suppressing any external negative comments regarding how they treat their people.

Except that the WSJ warned in June something like this might happen to American properties.

https://www.wsj.com/articles/how-china-can-retaliate-beyond-tariffs-1529428031

China can’t match the scale of the White House’s latest tariff threats. But it could find other ways to upset U.S. business interests, including ones that hit as quickly as tariffs. ... It is easy to imagine attacks on U.S. brands by China’s tightly controlled media. As Mark Williams, chief Asia economist at Capital Economics, points out, China has used this tactic before on Japan and Korea. In 2012, amid a long-running feud between Japan and China over a group of disputed islands in the East China Sea, Japan’s auto exports to China fell 80% over three months. Korean car makers were similarly hit when the country decided to install an antimissile defense system.

[MU82]

I will try to stop the ... political

Apparently not.

The Chinese are seething that Trump dictates the agenda by imposing tariffs and threatening more.  The Chinese really have nothing they can threaten back with (other than not by farm products, but these are not on the same level).

One country's leader faces re-election in just over a year and tremendous pressure to produce a "win"; the other country's leader is a dictator who can just wait out his opponent and play the long game.