The NBA has invested heavily in expanding into China through NBA China. NBA China operates the Chinese Basketball Association and has over 100 employees. It has built arenas, increased TV coverage, and grown the fanbase in China to over 450 million interested in basketball. Investing in an NBA China team or arena offers opportunities from the growing market and interest, though there are weaknesses in unfamiliarity and lack of history to overcome.
2. What is NBA CHINA?
• NBA China, formed in 2008, is a new entity that will
conduct all of the Chinese Basketball Association’s
business throughout Greater China.
• Started as an Idea to have an exhibition game
between the CBA’s Champion and NBA Champion 20
years ago.
• Now a 100 Employee Enterprise
• Transitioned CBA from FIBA rules to NBA Rules
• Now an official NBA affiliated league
3. MARKETING POWER
Estimated NBA Fans
83% of people
People in China between 15-24
Estimated Chinese
NBA in China Basketball Players
US Population 310 Million
4. MARKETING PROCESS
ESPN and China Merchant Bank
Combined $250 Million in total Investments
AEG and Chinese Sports Ministry
Combined to design and build 12 NBA style Arenas
Throuhout China, starting with Shanghai.
China is the Largest Merchandise Market Outside the US
They have built 8 Offically Licenced NBA Stores which have
doubled revenues since being opened.
NBA is on 51 Different Networks throught China
Up 31% since 2008
NBA.COM
Traffic on NBA.COM has risen 60% since 2008
5. Promotional POWER
Baron Davis & NBA Jam Take-Two's NBA
NBA Partners
Jose Calderon Van NBA Online Reality TV
Shaq In China with Tsingtao
on Li Ning Touring Game In Show in
Beer
Tour China China China
Met fans and NBA implemented Multi-year Take Two NBA reality show
Completed a played ping pong an interactive tour sponsorship with Interactice and in China called
tour throughout in busy shopping for fans to get China’s Largest Tencent enter “Mengniu
several major area closer to the Beer Brewer online gaming Basketball
cities in China game Disciple”.
The Shaolin Launched Top Rated 45 min show
Davis reveals his Allows fans to show off Will fund Sport & showing Chinese
Temple in Henan - NBA 2K sports
plan to make a their skills on 7’, 8’, 9’ Dance Competitions Amateur
birth place of franchise in China
documentary and 10’ rims for NBA CHINA Basketballers
Kung-Fu
Shows Sino-US Chinese online gaming
Animated 1 MVP Choses;
basketball culture & market grew by 61%
attempt to learn Gets tryout with
basketball bridge last year ; now $2.75
the art of Kung billion in revenue. NBDL Team
Fu between China & US
6. Basketball Diplomacy PROCESS
STIMULUS PACKAGE
China recently received
Universal $585 billion with
Support including funding for
Sports-Related
Infastructure
Barack Obama
On record stating he will Tim Chen
work with Tim Chen to NBA China CEO who led
use NBA China to 2 fortune 100 business
cultivate a stronger in China
relationship with China
7. NBA CHINA: KEY REASONS TO INVEST
• Population and Interest
• Disney, Mercedes Benz, AEG.. You
• Tim Chen
• Growth
• Basketball Junkies
• An Investment that will pay for itself for years to
come
8. SWOT ANALYSIS: STRENGTHS
• Young Innovative League
• NBA China has backing
• "Basketball Diplomacy"
• NBA China has stores in place
• The NBA Brand Recognition
• NBA on TV
• Tim Chen
• CHINA has taken a lead role in the development in NBA CHINA
• 17 Teams already in place.
• Chinese Stimulus Package
• League Revenue Sharing
• Central Location in ASIA
9. SWOT ANALYSIS: WEAKNESSES
• Unfamiliarity
• Imbalanced Roster
• Revenue Sharing
• Lack of experience and reputation
• Superior talent
• International basketball previously operated under FIBA rules
• Lack of history of the sport within the country
• Lack of current “star” power
10. SWOT ANALYSIS: OPPORTUNITIES
• Population
• 450 Million People Interested In basketball
• 300 million play basketball
• Merchandise Sales
• New International Market
• Ticket Sales
• TV Ratings
• Growth of Chinese talent, coaches, and
management positions.
• Uniting of Chinese and American Culture
11. SWOT ANALYSIS: THEATS
• European Basketball
• Westernization of China
• CBA Already in Existence
• Minor League Basketball Feel
• Different currency rate
• American players willingness to play overseas
12. Salary Cap
820,000 U.S. dollars
per team
Allows a capitalist Monthly salary of
system for its local foreign players was not
players to compete and allowed to go above
the most successful $60,000 (limit 2 players
being rewarded heavily per team)
Chinese club players
League is protecting the
will not exceed
domestic industry from
foreign domination 300,000 yuan ($44,000)
Foreign player influence
The total salary for
is down and an
players and coaches
incentive to make the
must be below 55
national team pushes
percent of a club's
competitive level of play
revenue
from Chinese players
The motivation to play
good is making the
Chinese National Team
where players can make
up to $146,000 for
making the team
13. Season Length and Competition
Season Ends
March 14th
Playoffs Playoffs
32 Game Season Begins Begin March
Dec 20
End April
Season 24th
25
Season is
Approx 4
months
No competition with other leagues since it is the only pro basketball league in China. Due to
the fact that you can only have 2 Non-Chinese Players, the aim is to stick to the Domestic
fan base!!
14. INVESTMENT ONE: THE 18th TEAM
Values in the USA
Highest NBA Lowest NBA
Team Valuation Team Valuation
The most valuable The least valuable
franchise was the franchise was the
defending champion, Los Milwaukee Bucks with a
Angeles Lakers at $607 value of $254 million.
million.
15. INVESTMENT ONE: THE 18th TEAM
Average Cost
The median value of NBA
franchises for the year 2009
$341 Million and 2010 was $341 million.
“The average asking price
for NBA franchises is about
300 Million US dollars.
However, NBA franchises
rarely come on the market,
so when they do
competition can be fierce
$600 Million and Bidding wars can quickly
drive prices up to $600M or
higher”
16. INVESTMENT ONE: THE 18th TEAM
Conversion into Yuan
• Currently the US dollar can get you 6.65 Yuan in
]
China.
• If you take the median price for the value in the US
and try to get a team in China it will come out to 2.3
billion Yuan.
• If bidding wars ride prices up you could be looking at
3.9 billion Yuan to start a franchise.
17. Revenue POTENTIAL
Increased Revenue
Source: Sports Business Journal
“…That could put the NBA
China revenue at roughly
between $150 million and $170
million.”
230+
210
190
150 170 180
2010 2011 2012 2013 2014 2015
18. INVESTMENT TWO: THE ARENA
AEG, the sports and entertainment
presentation company, already has 12 arena
deal in place with NBA China.
Tim Chin, CEO, projects total cost for first
arena by AEG to be $277 million (Shanghai).
Others likely similar.
Compare to Orland Magic’s Amway Center
($480 million in 2010) and Dallas Mavericks’
American Airlines Center ($420 million in
2002).
19. ARENAS and Tickets
Average capacities
13 Basketball for the stadiums are
ready arenas 15,000
$15-$200USD for Newer arenas
premium seating being able to hold
in new arenas around 20,000
Taipei has 1
Tickets range Qingdao has 1
from $5-$47 USD
20. INVESTMENT TWO: THE ARENA
Company endorsement deals potentially provide hundreds of
millions of dollars in additional revenue.
Mercedes-Benz: 10 year $75 – 100 million naming rights deal
for new arena in Shanghai
Naming rights deals of this size prior to league becoming a
household name indicate potential for even larger deals in the
future.
Investors wise to invest now before league entry and
franchise fees skyrocket as popularity increases.
21. INVESTMENT TWO: THE ARENA
Estimated arena cost of $277 million in USD
converted to 1.8 billion “yuan”.
Lower production costs, labor costs
(compared to U.S.) result in cheaper
investment yielding a greater return.
Sponsorship deals and naming rights are large part of
new arena construction.
22. THE ARENA
18,000
Seat
Capacity
Opened Owned by
January 2008 Peoples
for Beijing Beijing Republic of
Olympics China (Gov’t)
Wukesong
Culture &
Sports Center
Tenants are
Population in
Chinese Olympic
Beijing is
Committee and
approx 18
2008 Summer
million
Olympics
The center is an important part of Beijing's Olympic Games heritage
Allows citizens in the western districts and Beijing as a whole to enjoy cultural, sports, leisure, recreational and
commercial activities
23. Building
Relationships
Better
Investing
Better
Future
