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China on a full-court press for basketball
New NBA Centre serves as testament to sport's popularity - and also an anchor for development

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Saturday, June 9, 2018 – Page S11

WUQING, CHINA -- Wuqing is an odd place for a victory lap, particularly if you are the Canadian who has led the NBA in China for seven years. It lies between Beijing and Bohai Bay, placing it firmly in Chinese flyover country.

And yet Wuqing is the site of one of professional basketball's newest ventures, the 130,000square-foot NBA Centre, complete with a hardwood-floor court, children's centre, workout gym, indoor track and, behind a gleaming glass facade, the world's tallest Logoman, the league's iconic emblem.

The NBA-themed fitness centre is a "first of its kind destination," boasted David Shoemaker, the outgoing NBA China president, who came here on a morning in early May for a grand opening ceremony.

The NBA is China's most popular professional sports league and during Shoemaker's time as president the Ottawa-born executive has overseen a more than threefold expansion in its revenue, occupying a rare role as a Canadian at the heart of one of the most successful foreign ventures in China. Last season, the NBA calculates, 765 million individual Chinese viewers tuned in at least once. The league commands such devotion that the Chinese government has introduced an NBA curriculum in thousands of schools. The league's athletes and executives have shaken hands with Chinese President Xi Jinping and have even been invited to meet top leadership inside Zhongnanhai, the cloistered compound that serves as the headquarters of the Communist Party of China and is shuttered even to many foreign heads of state.

In other words, the NBA has no need to build a gleaming new basketball centre in the Chinese equivalent of Red Deer.

But the growth of professional basketball in China, a corporate ascent without parallel in modern sport, has in many ways offered a tutorial on how to navigate the world's most populous market - one of intense interest to other leagues, including the NHL - and the Wuqing project is a good example of why.

The NBA Centre may be a long way from the people and pocketbooks of Beijing, but it's at the heart of Chinese political ambitions to knit a vast area around Beijing into a huge megalopolis.

"There was a whole ton of emphasis in the government around this part of Beijing - about moving the city out in this direction," Shoemaker said. The force of official will in China means that, with time, new apartment buildings are likely to fill up - and the NBA will already occupy a prime position in a place where it "virtually has no competition."

This has in many ways been the playbook for the NBA in China, where it has built a nine-figure business (and talks openly about expanding it to 10 figures) by aligning itself with the currents of Chinese history, culture and politics.

Shoemaker, a corporate lawyer educated at the University of Toronto and University of Western Ontario, has stood at the helm since June 1, 2011. In that time, the NBA signed a US$500-million deal for broadcasting rights with internet giant Tencent, which has now become its third-most important broadcast partner; built up a social media following of 140 million; and grew its China business into one of its most lucrative, with a profit margin of roughly 54 per cent. "Our margins here may be bigger than elsewhere," said Shoemaker, who began his China role with the league when the organization counted about 130 staff and glowing prospects.

Western missionaries brought basketball to China in the late 1890s, but the extraordinary career of Shanghai-born Houston Rockets centre Yao Ming gave the NBA a singular boost, making China its most important overseas market. Less than two months after Shoemaker started, Yao retired. It came as a shock to the executive, who has himself just stepped aside from the league.

"I went to his retirement celebration, and there was certainly a gulp moment for me," Shoemaker said. "I said to myself: 'The greatest ambassador of the game, the greatest icon of the game in China to ever play, is about to leave the court. And I don't even get the benefit of one season of that.'" By that time, the NBA was also in the midst of a lengthy lockout.

Friends and family asked whether he was reconsidering his move to China.

"We didn't know what to expect," said David Stern, the former NBA commissioner, in an interview. "We were hoping for the best." After all, the league had thrived after the retirement of Michael Jordan. And at the time of Yao's retirement, Chinese sales of Allen Iverson and Kobe Bryant jerseys were strong.

"Yao Ming was a catalyst, but the fans were more sophisticated than we could have possibly hoped in terms of their understanding of our entire game," Stern said. So "we didn't expect there to be a huge dropoff."

They were right.

"Our business didn't register even a slight downturn," Shoemaker said.

Growing the game, however, required tough decisions. One of the most important involved choosing a partner for digital distribution. When Shoemaker arrived, the NBA had deals with a series of partners for online streaming, many of them willing to pay significant sums for continued access to the game.

The league chose to throw in with Tencent, spurning other bidders and the cash they were offering.

"The NBA had a much bigger offer from another competitor," said Li Shuangfu, a former Chinese basketball writer who founded the site Lanxiong Sports. "But the NBA said no. Because they had more trust in Tencent's ability to get more fans."

It was a strategic decision in keeping with others made by the league in China, where it has invested without hope of immediate financial returns in all kinds of ways, such as providing assistance for coaching and player development to the Chinese Basketball Association and pouring millions of dollars into the basketball curriculum being used in schools.

Tencent was "prepared to make a commitment to grow basketball and to grow the NBA in China in a way that we weren't sure anybody else was," Shoemaker said.

That commitment extended to building a completely new pathway to bring the NBA to China. To ensure an uninterrupted video signal, Tencent paid for a dedicated fibre-optic cable from the NBA Replay Center in Secaucus, N.J., to Los Angeles, then for the laying of a new cable across the Pacific.

Tencent's "actual investment runs far more than" the initial US$500-million, "but it was all worth it, given the momentum" of the game in China, said Seng Yee Lau, chair of group marketing and global branding at Tencent.

He credited Shoemaker and the NBA for acting not just "for short-term reasons, but by taking a long-term view in ensuring that the love of basketball is given the best chance to flourish."

The payoff, he said, is not just soaring viewership. "What is more amazing is that there is now a desire for the core users to be willing subscription fans."

But it's been a long path to that goal. Stern first brought the NBA to state broadcaster CCTV in 1987, famously waiting in an office lobby to wait out an executive who tried to duck a meeting. Ultimately, the executive agreed to a deal in which the league would sell sponsorship and split revenue with CCTV in exchange for CCTV airing some games.

"We weren't able to sell any sponsorship to speak of, but we sent the cheque in any event as a sign of our goodwill," Stern said.

But CCTV was hardly bristling with entertaining content back then, and the NBA's early entry into China put the game in front of people who would go on to important roles.

In the years since, the league has been assiduous in cultivating political relationships, using the celebrity of its players to further its business goals. In 2012, Xi - then still just vice-president - attended a Lakers game in Los Angeles.

The NBA sent Magic Johnson to his suite to meet him, instructing the basketball icon on "the importance of getting Xi Jinping to say, 'I like basketball.'" The man who would go on to become Chinese president complied, saying, "When I have time, I watch some NBA games."

The league has similarly courted Liu Yandong, a former vicepremier and advocate for educational reform. It invited her to watch an elite Chinese high school basketball team play in Houston and built a relationship around its annual China Games in Beijing, which have become coveted tickets. "We use those events to sit with government officials and talk about what we can do together," Shoemaker said.

The result: The NBA was invited to a meeting at Zhongnanhai, ultimately forming a partnership with education authorities who will introduce an NBA basketball course in physical education classes at 5,000 schools, with five million children, next year.

"We're in a pretty privileged position," Shoemaker said.

Li of Lanxiong Sports credits Shoemaker and the league with taking the time to accomplish such projects. "When other leagues come to China, the first thing they want is to make money.

They don't have the vision or the patience to build up a fan base," he said.

Still, that remains a work in progress. The next big step for the league in China is to surpass US$1billion in annual revenue, Shoemaker said, up from an estimated US$250-million two years ago. But "to take the next leap in terms of growing the game, and growing the business in China, we need a pipeline of Yao Mings," he said. At the moment, that's not on the horizon, although the NBA is investing in basketball academies and schools across China.

Shoemaker's own travels have taken him to distant places in Sichuan province and on frequent culinary adventures. "I can eat sea cucumber, chicken feet, duck tongue - in Xiamen, I had the sandworms," a concoction set in a gelatinous substance. "It's fully repulsive, but I ate that."

But his biggest struggle, he said, has been with a culture where sports are still often seen as a distraction for young people.

"We've been competing with piano and violin and homework for some time. And I think we've been losing that battle for some time."

And, like it has with its NBA Centre in Wuqing, the NBA has positioned itself at the heart of a government policy, as Beijing turns to athletics as a healthy activity that forms "part of a prosperous China," Shoemaker said.

"To be involved in sport, it's not just for flunkies in school." What it means for the NBA, he said, is that in the battle to build a generation of players, rather than mere viewers, "we're starting to turn the corner." With reporting by Shaun Yang

Associated Graphic

Houston Rockets' Yao Ming, left, blocks New Jersey Nets' Devin Harris during the NBA China Games 2010 in Beijing. The NBA generated an estimated US$250-million in annual revenue in China two years ago and is now striving to surpass US$1-billion.


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