The NBA returned to state-run TV in China on the eve of the playoffs after a three-year ban. It was a quiet return, with no fanfare from New York or Beijing.
NBA owners remained silent throughout the ban, even as the league worked behind the scenes to repair a relationship that had cost hundreds of millions of dollars and laid bare the complexity of doing business with an authoritarian regime.
The NBA has a $5 billion business in China and many of the owners have significant personal stakes there.
One of the 40 principal owners has a joint venture with an entity that the US government has disapproved of.
The owners of businesses in China have a lot of ties to the Chinese government and the public.
The NBA-China conflict began in October of last year when the NBA general manager sent a message in support of Hong Kong protesters. The compromises embedded in the NBA-China relationship were reported last month.
Robert Kuhn, a long time adviser to Chinese political leaders and multinational corporations operating in China, said that American companies have a problem with social justice.
This is going to be an issue for the rest of our lives.
The NBA denied requests to interview commissioner Adam Silver or deputy commissioner Mark Tatum. In a statement, NBA spokesman Mike Bass said that the NBA believes that exporting media rights of NBA games to fans in more than 200 countries and territories around the world is consistent with the NBA's mission.
Strategy Risks, a New York firm that quantifies corporate exposure in China, was commissioned by Disney to look at the conflicts of interest for the rest of the league's owners.
NBA China has grown so large that it contributes significantly to the value of each team, according to the Strategy Risks analysis. Many NBA owners have substantial financial interests in China through their other businesses, even though Tsai has the biggest exposure.
Strategy Risks used a proprietary model that accounted for a range of data and risk factors, including the size of operations in China, current and projected revenues, valuation, growth opportunities and reliance on supply chains connected to the country, to calculate the owners exposure beyond the NBA.
The owners of the teams were evaluated strictly through their teams by using a conservative approach. NBA China is valued at $5 billion, and the NBA owns 90 percent of the entity, with several state-controlled banks collectively owning the rest. Each of the 30 teams in the league is worth an estimated $150 million in China.
The exposure numbers are based on market values in February. The financial information for the teams and companies was derived from publicly available documents.
NBA owners face both financial and political risk when doing business in China, according to Strategy Risks. Micky Arison has more than $375 million tied up there through the team and his business, Carnival Corp., the world's largest cruise operator. 8% of the total volume of the cruise industry was represented by Chinese passengers.
Carnival launched a joint venture with China State Shipbuilding Corp. to establish a China-based cruise line. The official launch of the cruise joint venture in China is a significant milestone in the development of a strong and sustainable cruise industry in China, said Arnold Donald, the CEO of Carnival.
The partnership is ongoing and designed to serve the Chinese market, according to a recent filing with the U.S. Securities and Exchange Commission.
CSSC has close ties to the Chinese military. According to the South China Morning Post, it builds aircraft carriers for the People's Liberation Army and is developing the country's first nuclear-powered carrier.
The shipbuilder is listed by the U.S. government as acting contrary to the national security or foreign policy interests of the United States.
Matt Schrader is an analyst for the International Republican Institute, a conservative think tank that promotes democracy around the world.
The Center for Strategic and International Studies cited the Carnival-CSSC partnership in a recent report.
If China invades Taiwan, a lot of the ships that do it will be built by theCSSC. If we see Ukraine 2.0, theCSSC will be a big player.
Arison is an advocate for human rights in the United States. In 2020, he described the Heat's commitment to social justice as "never-ending", as part of a campaign in which the team released a two-minute video featuring employees like him.
Arison didn't comment on the story. Carnival said in a statement that its joint venture or partner are not under US trade-related sanctions. Carnival Corporation has taken steps to ensure full compliance with US sanctions.
The NBA and its owners are not unique in China. Many businesses have tried to exploit the Chinese market, only to be accused of selling out American values. Disney has a theme park in Shanghai and has extensive business in China. When Disney launched its streaming service in Hong Kong, it did not include an episode of The Simpsons that was critical of the Chinese government.
According to Strategy Risks, Nets owner Tsai has the highest percentage of his net worth tied to China. Kings co-owner Paul Jacobs has more than 30% of his net worth linked to business there, according to Strategy Risks.
According to Strategy Risks, Jacobs is heavily invested in wireless technology company, which had two-thirds of total annual revenues earned in China and Hong Kong last year. Jacobs is a shareholder in the company with shares worth more than $200 million. Strategy Risks estimates that Jacobs has a stake in the Kings of China of about 140 million dollars.
Jacobs didn't comment.
Robert Pera is the founder and majority shareholder of Ubiquiti, a wireless equipment manufacturer. Ubiquiti has 10% of its revenue in Asia. The manufacturing and logistics operations of Ubiquiti are based in southern China.
As a result of foreign policy and geopolitical developments, Ubiquiti faces risk from increased economic and operational uncertainties.
Pera has a total exposure of $369 million.
Pera didn't reply to many requests for comment.
Tilman Fertitta is the president and CEO of the company that operates 10 restaurants in China that make an estimated $57 million in annual sales. Fertitta's total exposure is estimated by Strategy Risks.
Fertitta didn't comment.
Charlotte Hornets owner Michael Jordan has a well-known brand in China, which is why he sued a Chinese sportswear company that was using his name and logo. Nike was hit with a boycott from Chinese consumers last year after it was accused of using cotton picked under forced labor in Xinjiang.
Jordan and his brand pledged $100 million to the social justice movement in the United States in 2020. The NBA and other owners made donations. Jordan has an estimated China exposure of $85 million.
Jordan didn't comment on the story.
Several NBA owners have significant China exposure through their ownership of private equity or venture capital firms.
As the Chinese financial sector has opened to foreign investment in recent years, these firms are becoming more exposed to China by acquiring direct or indirect ownership stakes in Chinese companies, according to Strategy Risks.
According to Strategy Risks, Joshua Harris is the principal owner of the 76ers and co-founded Apollo Global Management, a private equity firm that managed assets worth $481 billion. There are three subsidiaries in Hong Kong.
The Asia real estate equity funds we manage have a primary focus on investing in China, India and Southeast Asia, according to an annual report filed last year with the SEC.
Strategy Risks estimated Harris China exposure at $12.4 million. Harris is tied up in China in other ways and has an estimated $76.5 million exposure through the 76ers. Harris Blitzer Sports and Entertainment owns a stake in a top-flight esports team and a 36% stake in an English premier league team. Harris exposure to China is estimated to be about $96 million.
Harris didn't say anything.
Dan Harris, an attorney with the firm Harris Bricken, said that nobody really wants their name associated with China, but what can they do? The death in China is what Americans want them to say. If they say what China wants, it will be death in America.
John Mastroberardino was a contributor to this report.
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