Brave Dragons

by Jim Yardley

  The highlight show from the NBA was a start. Every week, someone in the NBA’s New York office placed a tape inside an envelope and mailed it to Beijing. There, editors at CCTV extracted about fifteen minutes of highlights and dubbed Chinese commentary. Chinese fans already knew about Larry Bird and Magic Johnson from newspapers, but CCTV could show them the most exciting moments of their games. The problem was getting the tape. Shipping took two weeks. Editing took two more. Highlights were aired in China a month after the games had been played.

  “There was no UPS,” Ma recalled. “We just had normal mail.”

  When David Stern returned from China, he had to figure out how much this new market was worth. The NBA had no idea how to price advertising. In 1990, CCTV’s total advertising revenue amounted to less than $1 million. Advertising was in such an infantile stage of development that NBA executives found themselves asking advertisers for advice on pricing in China. “We would go to the Coca-Cola guy and say, ‘We’d like to sell this to you. Can you tell us how much it is worth?’ ” Stern recalled. “We didn’t know how to value a thirty-second spot.”

  What did become obvious was the popularity of the NBA. Those highlights packaged in New York included footage of Michael Jordan during his championship era with the Bulls. Before Yao Ming, Jordan was the first star to captivate Chinese fans and his arrival on Chinese television was perfectly timed. By 1992, an aging Deng Xiaoping was worried his economic reforms were stalling. Deng had unmatched influence, if no official government title, and he embarked on what became known as his Southern Tour. At stops at special economic zones along the southern coast, Deng called for deeper economic reforms and exhorted the nation to develop faster. Soon, new policies fueled a nationwide construction spree, especially along the coast where foreign investment soared, as almost every multinational in the world opened factories to benefit from cheap labor, good infrastructure, and friendly policies. Within a decade, China emerged as the workplace of the world.

  Deng’s tour shook television, too. New stations had proliferated across China and were supposed to be producing their own programming. But the programs were bland and amateurish, and many stations continued to subsist largely on government subsidies. After Deng’s tour, stations were ordered to improve the quality of their programs, expand their use of advertising, and reduce their dependence on the government dole. This meant that stations needed to contemplate what their viewers might actually want to see. They also needed credibility with advertisers and found it in the form of foreign brands. Nike was now outsourcing some of its shoe manufacturing to the new factories on the Chinese coast—and drawing criticism for the labor conditions of Chinese workers—but it had started cultivating China as a market, too.

  Terry Rhoads, then a young Nike employee, traveled the country and watched kids in polyester pants playing basketball on dirt courts. No one had any skills, but everyone loved to play. “I remember at Nike we felt, Wow, we have so much work to do,” Rhoads recalled. “We were fortunate that the NBA was giving away its programming. Jordan was like osmosis. He was seeping into the consciousness of Chinese youth, this godlike man who could fly.”

  Nike had already made Michael Jordan the centerpiece of the company’s advertising strategy, and the spots for Air Jordan shoes had changed sports marketing and helped transform Jordan into a global figure. In 1994, few Chinese consumers could afford the Air Jordan shoes, but Chinese television stations wanted the ads anyway. “Those Jordan ads were so popular that TV stations were contacting us and asking if they could run them for free,” Rhoads recalled. “The stations wanted to demonstrate to other advertisers that they were top-shelf.” Soon, so many Air Jordan ads were running on stations across China that Rhoads got a call from Nike’s regional headquarters. The bosses were pleased that the company was getting so much exposure in the new China market but also concerned about the cost. How was Rhoads paying for all these ads? He happily told them he wasn’t.

  Television was turning sports into a cultural force in China, and an economic opportunity. ESPN and Star Sports were moving into Asia with new channels that carried such an endless lineup of soccer that Thailand soon became home to some of the world’s most fanatical fans of the English Premier League. This same public enthusiasm for sports was building in China when Ma Guoli became head of sports programming at CCTV. Soon the network expanded coverage of the Olympics and began airing taped soccer matches from the Italian league. The Chinese sports fan was essentially up for grabs. The NBA was now mailing tapes with more highlights and longer segments from games, even as the same delays persisted. “Michael Jordan was the emperor of the NBA, and we didn’t feel good if newspapers could tell the story of the final before us,” Ma said. “We could only show the tape one month later. It was embarrassing.” At one point, Ma arranged for China’s leading state-owned airline, Air China, to deliver tapes of the NBA Finals, reducing the lag time to a week after editing. Finally, CCTV carried the 1994 NBA Finals between Houston and New York, the first live coverage of a championship series.

  Ma knew the moment was right to create an all-sports channel and even blurted out the idea on a live program to the annoyance of CCTV’s president. When Ma made a formal proposal for a channel, CCTV’s oversight committee turned him down, saying the idea was premature. But a few months later a new frequency became available for a handful of channels. Ma’s proposal was still lying around the offices at CCTV, and his bosses quickly ordered him to resubmit it. Soon China’s answer to ESPN would be born. Known as CCTV5, the channel debuted on October 1, 1994, the forty-fifth anniversary of the founding of the People’s Republic of China.

  Now that Ma Guoli had a channel, his problem was finding enough sports to put on it. He didn’t have the budget to compete with ESPN or other channels to buy broadcast rights to major international competitions or leagues. The NBA had whetted an appetite in China but Ma couldn’t afford to buy full rights to the NBA. His one advantage was Chinese sports. He had a monopoly on broadcasting any sport in China. And China was about to create its own commercial sports league.

  David Stern had recognized that sports could be packaged, delivered across borders, and sold like any other product. Television made this possible, and television’s biggest sporting stage was the Olympics. When the decision was made to allow professionals to play at the 1992 Olympics in Barcelona, the NBA had its chance to wow the world. The “Dream Team” led by Magic Johnson, Michael Jordan, and Larry Bird was the greatest assemblage of basketball talent in history and eviscerated the Olympic field to win the gold medal in what became a marketing coup for the NBA. NBA stars were now global celebrities. The NBA was indisputably the greatest and most glamorous basketball league in the world.

  For China, Barcelona was a disaster. The Chinese men’s team finished last, losing each of its five games by lopsided margins, a dismal performance that should not have been surprising, given that funding had been slashed for domestic basketball after the 1988 Games in Seoul. Chinese sports officials, focused solely on winning more total medals, had decided that the chances of medaling in basketball were low and redirected money into sports such as diving, target shooting, and women’s weightlifting. It was a strange time to decide that basketball represented a bad investment. Sports were becoming a global industry and American sports leagues were becoming cash machines with revenue streams from television rights, merchandising, ticket sales, concessions, and corporate sponsorships. But the careers of China’s sports bureaucrats rose or fell solely on whether the Chinese team won Olympic medals, not on profits. When they began redirecting money to smaller sports, many basketball officials asked in vain to introduce commercialism as a means of replacing the lost money.

  “We said, Okay, you take care of little brother and little sisters,” one of them recalled. “We said they should let big brother earn his own food. But they wouldn’t let basketball go to the market.”

  The humiliation at Barcelona changed that. In 1992, two ranking Chinese sports offici
als, Wang Junsheng and Xu Feng, joined with a Brit named Richard Avery of the sports agency IMG to introduce a commercial soccer league in 1994, followed the next year by a new commercial basketball league, the CBA. Midwifing the CBA into existence required a typically Chinese coupling of experimentation and resistance to experimentation. The national sports ministry controlled the league and government basketball officials retained authority over games, schedules, and the rules. This was the resistance. But the league’s budget came through a contract with its commercial partner, IMG. This was the experiment. IMG paid the league an annual fee for marketing rights. In turn, IMG generated revenue from television rights and corporate sponsorships, and among the potential corporate sponsors, none were more interested than cigarette companies. No country on earth manufactured or consumed more cigarettes than China, and foreign tobacco companies jumped at the chance to identify themselves with the new leagues. Philip Morris financed the soccer league as a promotion for Marlboro, while British American Tobacco, or BAT, sponsored the basketball league to advertise its Hilton brand. No one seemed to mind or notice the linkages between tobacco and lung cancer; it was already common for Chinese coaches and players to smoke a cigarette or two at halftime.

  Nothing like this had ever been tried in China. Under Mao, sports were intended to promote physical strength and instill revolutionary fervor. The idea that a sporting event should be organized to attract fans and generate revenue was a dramatic conceptual departure. None of the infrastructure for a commercial league existed. No one knew how to produce a game for television. No one knew how to sell a game as if it were a tangible product, say a quart of milk. “No one knew what advertising boards were or what press conferences were,” recalled Kenneth Lim, who worked for IMG. “No one knew anything about marketing.”

  For IMG, even the most threadbare marketing concepts seemed fresh and exciting in China. When attendance began to dwindle at soccer matches, IMG introduced the giveaway. The first 10,000 fans buying tickets for a soccer match were rewarded with a free red Marlboro cap. Owning a Marlboro cap meant owning something foreign, which meant something of value and social cachet. “We would draw a stampede of 45,000 people,” Lim said. “They wanted the hats. And it got them excited about the games. Even today, you can still see people wearing those hats around China.”

  The balance of power was starting to shift: Fans were customers, and customers now mattered. Commercializing sports meant empowering fans, since the money they paid for a ticket entitled them to be entertained. The games needed to be entertaining because there was now competition for the public’s attention and money. Movies, television, restaurants, and other diversions were becoming common in even the smallest Chinese cities. Public gatherings in China had traditionally been organized to bear witness to the power of the state. The crowd was supposed to be obedient and provide affirmation for whatever the Communist Party wanted affirmed. Now fans were pushing and shoving for hats and other freebies at games organized around the idea that sports should be fun. Police saw the freebies as a security risk and insisted on veto power, out of fear that angry fans would throw things on the court or even riot. Hilton once tried to give out oversized foam Number 1 hands stamped with the Hilton logo; the cops said no way.

  “We would make sure the sponsors had something acceptable,” said Bill Moriarty, who worked for IMG on the basketball league. “The rule was, if they can throw it, don’t let it in.”

  For anyone accustomed to the old model, the CBA felt like a radical departure, yet it was not radical enough. Initially, IMG found enough sponsors to pay the CBA fee and make a modest profit every year. But finding new streams of money was especially difficult in China. National television rights went to CCTV5 and, initially, the league had to pay the network, rather than vice versa, to broadcast games. Since no other national television network existed—nor was allowed to exist—the CBA could not seek other bidders. Provincial governments or other state entities continued to control most teams, and none of the teams, whether private or state-owned, were allowed to market independently in their home cities. Moreover, sports bureaucrats still cared more about preparing the national team for the Olympics than the smooth operation of the CBA. Officials might unexpectedly cancel or postpone part of a CBA season to allow the national team more time to practice. In a putatively commercial league, the needs of the state still prevailed.

  The crisis came around 2001. Big Tobacco was under siege in the United States for illegally marketing to teenagers and lying about the health hazards posed by nicotine. Tobacco companies, banned from sports marketing in the United States, also withdrew from the Chinese leagues, and IMG departed after a contract dispute with Chinese officials. The CBA was rudderless and short of cash, and the national team had not made much progress since Barcelona (the Chinese would lose to South Korea in the 2002 Asian Games, an unthinkable humiliation). Meanwhile, the popularity of NBA basketball was only growing in China, especially after Yao Ming joined the Houston Rockets. CCTV5 soon began carrying live regular season games, drawing audiences that dwarfed the number of people watching the CBA.

  Chinese basketball was in a crisis at precisely the wrong time. In September 2001, Beijing won its bid to host the 2008 Olympics and the Chinese government declared the staging of the Games to be a paramount political priority. Beijing would spend $43 billion on new roads, subway lines, bridges, parks, and sports stadiums. Ancient hutong neighborhoods would be razed and replaced with forests of sleek glass skyscrapers as Chinese leaders were determined to show the world a new, modern, and rising nation. A similar urgency swept through the sports bureaucracy; if winning medals had always been a political priority, the pressure to win was now far greater, including in basketball.

  By 2002, the NBA smelled momentous opportunity. From the outset, when David Stern cut his deal with CCTV, television had allowed the NBA to dominate the basketball market in China. For a new generation of brand-conscious Chinese teenagers, the NBA was as much a lifestyle brand as a sport, representing a hip, urban attitude. Allen Iverson, the rebellious, tattooed scoring guard for the Philadelphia 76ers, became one of the most popular NBA players in China; Chinese kids bought copies of his jersey or his brand of shoe. The NBA logo, an afterthought in the United States, became an imprimatur of cool in China. “You could just tell,” recalled Mark Fischer, the managing director of NBA China from 2004 to 2008. “The more we put into China, the more we would get out. You could just feel that this place was ready for a brand like the NBA.”

  The key was placing a Chinese player. Having a successful Chinese player in the league was essential if the NBA wanted to cement its relationship with Chinese fans. It was one thing to root for foreigners on television; it was something else to root for one of your own, competing for national pride on the international stage. The first Chinese player had been Wang Zhizhi, who was unexpectedly drafted in 1999 in the second round by the Dallas Mavericks. Two years of negotiations ensued between the Mavericks, the NBA, and the Chinese military before Wang joined the Mavericks at the end of the 2001 season. In his first game, Wang collected a pass at the top of the key and swished a 3-point shot. But injuries and a lack of speed made him a marginal NBA player. His lack of success, coupled with his quiet, aloof temperament, also presented problems for the league’s marketing machinery.

  “Chinese love winners,” Fischer said. “They love guys recognized as stars. But Wang Zhizhi was quiet. We had a hard time marketing around him. Yao Ming was another story. He had a kind of charisma, and when he became the first pick in the 2002 draft, and especially when he became an All-Star his first season, that’s when we had something to rally around.”

  The NBA had first noticed Yao at the 2000 Sydney Olympics when he was a teenage center for the Chinese team who rejected a shot by the American forward, Vince Carter. Once Yao was drafted into the league, China became first priority in Stern’s global plans. In 2004, the NBA inaugurated the China Games, a pair of preseason matchups in Shanghai and Beijing b
etween Yao’s Rockets and the Sacramento Kings. Chinese newspapers expanded their coverage of the NBA and sent reporters to the United States to follow Yao. New basketball magazines appeared to meet the growing public appetite for the game, while Internet fan clubs sprouted for players like Kobe Bryant. Other NBA stars began touring China on behalf of shoe companies or simply to promote themselves in the China market. When the retired Michael Jordan came to China, the crowds were so huge that police in Beijing canceled an event at a popular outdoor court near the Forbidden City.

  The NBA also seemed to have found an ally in the bespectacled former college professor now running the Chinese league, Li Yuanwei. Li’s arrival in 2003 was regarded as a victory for reform; he replaced Xin Lancheng, a classic Communist Party bureaucrat who distrusted foreigners and favored continued government control of the league. Li and Xin had been rivals inside the league office before Xin had gotten the top position. While Xin ran the league, Li spent three years in bureaucratic purgatory at a teaching position at Beijing Sports University, where he specialized in “basketball management,” studying how leagues in Europe and South America were making profits and producing internationally competitive teams, even as China seemed stuck.

  “We were losing money and morale was low,” Li later told me. “Everybody was frustrated. We had almost no idea what was going on outside China.”

  Having now replaced Xin, Li began to look outward. He hired a former NBA coach, Del Harris, to lead the Chinese men’s team in the 2004 Athens Olympics, and flew to America to visit David Stern and study the NBA. He deeply admired the NBA business model but chafed at what he considered the arrogance and sometimes condescending tone of Stern and many NBA executives. He was annoyed that the NBA announced its China Games without consulting him. When he attended the 2004 NBA All-Star Game, Stern asked Li to appear with him at a press conference announcing the China Games. Li refused, since doing so would be tantamount to CBA approval; he wanted to signal that the Chinese league must be respected. Stern was irritated but later made amends before the preseason game in Beijing, pledging to cooperate closely with the CBA, Li recalled. The relationship seemed in good standing.