- CBA has tried to move away from government control
- League has taken charge of its own commercial inventory
- 20 clubs now own a 5-per-cent stake in the league
Even with an A-Z of tourism marketing terms and a flexible descriptive philosophy, the Beijing district of Jinyuanzhuang hasn’t a great deal to recommend it. A nondescript western region just outside the fourth ring-road of this great city, the place is grey and industrial, boasting neither the scale nor the gleam of the modern, skyscraper-hewn CBD, but not entirely nothingy either.
The western terminus of Subway line 1, Pingguoyuan, is not too far to the east – but still, nowhere near close enough to walk. Here the highways are three-laned, rather than six, the buildings are 20-storeyed, rather than 70, and the hills of Jiufeng National Park are comfortingly visible to the north. The taxis are a little less frequent, but a little more likely to stop for the foreigner with no access to ‘Didi’ – the ‘Chinese Uber’ that is the modern-day ticket-to-ride in China. But this district is at the core of a quiet revolution fomenting inside the Chinese sports industry.
Not too far to the south is the Laoshan Velodrome and biking centre, a state-of-the-art cycling facility built for the 2008 Olympics; to the east, a little further into the city, is the formidable Wukesong Culture & Sports Center, the indoor arena built, again, for the 2008 Games and now known as the Cadillac Arena. And here, besides the slightly smaller Shougang Basketball Arena, is the office block that houses the administrative staff for the second-highest paying domestic basketball league in the world – the CBA.
Founded in 1995, almost ten years ahead of the Chinese Super League, the Chinese Basketball Association league has grown more steadily, less flashily, than its soccer counterpart. Spurred by the popularity of basketball in China – itself driven by the pioneering work of the NBA in the 1980s – the CBA league came into force just as the Chinese government was recognising its responsibility in the development of sport as a source of national health and pride, and just as a 14-year-old 7-footer called Yao Ming was looking for the next step in his young basketball career. Yao went on to star for the Shanghai Sharks for five years before joining the NBA, and the Houston Rockets, in 2003, embarking on the big time and pouring fuel on the fire of national basketball fandom back home.
Now, almost seven years after Yao’s retirement, his presence still looms large over Chinese sport. His is the image you still see on billboards hung high over city streets, his is the face that flashes at you on the thousands of advertising TV screens that line the walls of the subway, and his is the hand that is now guiding the sport of basketball forward in China.
A former NBA All-Star, an inductee of the Basketball Hall of Fame, owner of his boyhood club, the Shanghai Sharks, 37-year-old Yao was inducted as CBA president in February 2017. And make no bones about it, this will be the most challenging role of his life. Because Yao is not simply a custodian, a figurehead in front of the opaque power structures that lie behind most Chinese sport, a spoonful of sugar to help the government medicine go down. He has set himself up as a transformative leader and has embarked on a series of ambitious reforms that could reframe the way sport is organised in China.
Schooled in the NBA system, Yao understands how the player draft and trade systems, the salary structure, in-venue entertainment, rigorous refereeing standards, competitive balance and marketing all come together to produce a high-grade product. He understands how a profit motive gets people pulling in the same direction. On the other side of the coin, he’s also becoming increasingly aware of how government works in China. Taking on the CBA role meant exchanging his private citizen’s rights for a ‘diplomatic passport’ – not such a glamorous thing in China – and working inside the central government’s sports and educations structures. Balancing the strain of responsibility, the delicacy of Chinese politicking, and his desire to move the CBA more towards an ‘NBA model’ is a 24/7 challenge for Yao.
But he’s not doing it alone. In his corner is Ma Guoli, a long-time friend, collaborator, and business partner, and a man who has done more than most to shape the direction of the Chinese sports industry. If the latest CBA figures are to be believed, there are 300 million people in China actively involved in playing basketball. If Yao was and remains a visible inspiration, Ma’s decisions have arguably been just as much of a driving force. The NBA is by some distance the most commercially successful international sports league in China, and the story of how that came to pass is almost folkloric across the sports industry now: spotting the potential of the Chinese market earlier than anyone else, then-NBA commissioner David Stern worked hard to forge links in the country in the 1980s, imploring national broadcaster CCTV to show the league on its network and sending tapes of NBA games via airmail. Those tapes landed on Ma Guoli’s desk, and he duly obliged.
Starting at CCTV in 1982, Ma was head of sport at the government-controlled broadcaster from 1989 to 2005, at which point he was seconded to act as the Chinese government representative and COO on Beijing Olympic Broadcasting – the joint venture company set up to produce coverage of the 2008 Olympic Games. When the Games were over, Ma agreed to lead the Chinese outpost of the Infront Sports & Media agency, whose largest Chinese client was none other than the CBA, for which the agency had taken on all commercial rights.
In 2012, the final year of the initial seven-year deal between Infront and the CBA, Infront registered a cumulative television audience for the league season of 700 million, a 130-per-cent increase on 2005’s figures. Under Ma’s leadership, the number of sponsors tripled, with global, blue-chip brands like Nike, UPS and Tissot coming on board. In early September 2012, Infront signed a five-year extension with the CBA, worth a reported $270m in guaranteed payments. In a stroke, much of that guarantee and more was taken care of through a blockbuster deal – masterminded by Ma – with Chinese sportswear brand Li-Ning, which agreed to pay a reported $60m per season for a five-year spot as the league’s main partner.
A canny commercial operator who also knows how to navigate choppy governmental waters, when Yao gave Ma the call to join him on a new journey – even at the age of 65 and wanting to wind down ever so slightly – Ma found it impossible to turn down.
“My title is chairman consultant, and my role here is to help the company run smoothly,” Ma explains. He is, of course, the perfect man for the job. The single most dramatic change so far in the Yao regime has been a structural split that has seen the CBA league become, to all intents and purposes, a private entity. Ma’s office on the 19th floor of the CBA League building here in Jinyuanzhuang is next to Yao’s, but the chairman himself is more often to be found in the offices of the federation itself, back in the east of Beijing where government buildings abound.
The league building here in the west is at one with its surroundings, and fits the spare communist architectural aesthetic that characterises so many of the 20th-Century buildings in Beijing. But take the elevator to the 19th floor and shabby beige gives way to brilliant white, an office more suggestive of a progress-focused US corporation than a Chinese government administration set-up. And that, in a way, is the point. Chinese soccer, the CBA’s nearest equivalent, went through its own reform process some years ago, but the split that is supposed to exist between professional league on the one side, and the federation and government on the other is nominal at best. The CSL still shares an office building with the CFA, albeit on different floors.
“We have 21 years of history as a league, but we’re a new company,” explains Ma. “Before, the whole league belonged to the government, but since July it belongs to the clubs. This company, we have 20 shareholders with five per cent each from each club. But we need to keep the league going very well, so we need the traditional way and also the old teams. So this company got together in two major parts; the competition administrators came from the government, and the sales and commercial team came from Infront China and that’s based here with around 56 people. We ran the marketing rights for the league before. That’s why Yao Ming asked me to put these two major parts together and to run this for the future.”
The most obvious change has been to the playoff system, expanded this year to include ten teams. A draft system, more teams, and a more distinct conference system are yet to be implemented. Yao’s innovations at national-team level – where there are now two China teams competing at the same level as an experiment in development ahead of the 2019 Fiba World Cup, which will be hosted in the country – have been more visible.
Off-court changes are already starting to bear fruit, and not just in the long-term view club owners are now able to take with their shared ownership of the league. While Infront, as well as other third-party agencies, are still retained to market CBA League media rights in various international territories, the league has taken control of much of its own commercial inventory. The handover period appears to have gone smoothly. Li-Ning recently renewed its headline deal and most of the league’s partners, according to Ma, have continued. “It’s almost 50/50 between media rights and sponsorship revenue, so that’s quite healthy,” says Ma. “Li-Ning is still the major partner; and we’ve got a new strategic partner from China Life Insurance. We’ve got a number of new partners, and most of the partners from before have remained with the CBA. It’s a good situation.”
Despite the popularity of basketball in China, there is still a level of scarcity to the CBA product. The league season only runs from October to April, and the number of game days pales in comparison to the NBA, whose $700m, five-year deal with digital broadcaster Tencent opened some eyes to the commercial potential of basketball in China in 2015.
New for this year is an expanded inventory to sell to TV partners and, on the back of that, a clear strategy to pursue a balanced path between exposure and revenue.
“In the past we had three gamedays, Wednesday, Friday and Sunday. But now we still have two or three rounds every week, but we spread the matches from Tuesday to Sunday. We keep our rights 50/50 [between CCTV, which signed a new ten-year deal ahead of the 2017/18 season, and digital partners including Tencent, zhibo.tv and Bilibili] but we need to think about the two types of broadcasters’ respective needs. For example, CCTV, we give them Tuesday to Sunday the choice. If they want to telecast every day, it’s ok, but if not, they can choose.
“But we give the new media platform a space on Thursday where there’s no CCTV coverage of CBA, only new media. Also, we produce more content that’s used only by new media. And for the future, we’d like to produce more exclusive content only for new media and pay-media platforms, so we’re setting up in-house production capability to do that.”
Having spent a year and a half at the ill-fated sports streaming firm LeSports before joining the Yao project, Ma knows only too well the dangers of over-speculating in a sports media market that has everyone excited but few actually aware of how to monetise effectively. Looking at the money in Chinese football – both in terms of transfer fees, and the billion-dollar fee committed to by the China Sports Media agency for CSL rights in 2016 – Ma has a sense of trepidation.
“I was with Infront China [when CSM took the CSL rights]. We prepared a bid, but we didn’t qualify. For me, I never thought about such a high price. There is so much venture capital money in China. What happened in the past three or four years is driven by the capital.
“But for sports, it’s a traditional business. You cannot expect a league to be this year 100 million, but next season one billion. It’s too much of a jump. For CBA, we keep calm and stay stable and move forward gradually.
“For basketball here, it’s very different from soccer. A very important element is that basketball owners, first of all, they’re not usually the big bosses. They are rich, but not so rich. Secondly, they really love basketball. A number of the club owners play basketball themselves every week. They know it’s a long-term business.
“And thirdly, really we don’t have the same ambition to build the CBA as the number one league in the world – no way! We would like to entertain local society and to have a stable financial situation for the league. NBA is the number one basketball league in the world; but the CBA can be the number two.
“But we need more promotion for that, more organization, maybe more teams, longer schedules and more technical support, better pictures, better new media exposure. Because this company started only last July, the season started last October, so we’re on the way to that, but it’s the start of it.”
And with that, Ma is off, through the office, into the elevator and down to the plain atrium at the foot of the building, ready to navigate the tricky traffic of Beijing once more, on his way to dinner with his old friend Yao on the other side of town.
The second edition of the Leaders Sport Business Summit, Beijing, takes place on 25th and 26th July. For more information, visit www.leadersinsport.com