The NBA faces a no-win situation in China. Here's what it stands to lose

Houston Rockets General Manager Daryl Morey sent what may be the most problematic and potentially damaging tweet in corporate America this year.

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Chris Isidore
, CNN Business
CNN — Houston Rockets General Manager Daryl Morey sent what may be the most problematic and potentially damaging tweet in corporate America this year.

Morey set off an international firestorm over the weekend when he tweeted support for pro-democracy protestors in Hong Kong.

"Fight for freedom, stand with Hong Kong," said the tweet, which has since been deleted.

Chinese authorities, challenged by months of protests in Hong Kong, have made it clear that business as usual with the league will cease until the NBA totally repudiates Morey's statement.

The tweet has left the league and the Rockets with untenable choices. They can fire Morey and apologize, which would be seen in America as putting profits ahead of free expression and caving to anti-democratic forces in China. Or they could stand behind him and risk losing the sport's largest growth market.

The Rockets in particular have a lot to lose: They are the most popular NBA team in China, because Yao Ming, the Chinese, seven-foot-six-inch star, played eight seasons with the team before retiring in 2011.

The NBA doesn't break out what the Chinese market is worth for professional basketball. But it does make up at least 10% of the league's current revenue, according to David Carter, executive director of the USC Sports Business Institute. And China is expected to contribute even more than that over the next decade, perhaps reaching 20% of the league's revenue by 2030.

"There's no other market where the incremental upside is greater for the NBA," he said.

But if American basketball fans believe the NBA is kowtowing to Chinese authorities in this dispute, that could damage the league's reputation with fans and some American sponsors.

The league could fire Morey under the guise of violating a social media policy or some similar infraction -- most fans won't care about an executive getting fired. But that will set a precedent, and if the next social media controversy involves a top player, fans will care very much how it's handled.

"The NBA has to be true to its domestic brand and what it stands for," Carter said. "That's why finding a work-around is critical. If they manufacture a technicality to let [Morey] go, that's a slippery slope."

Morey is known by devoted NBA fans, but probably not by casual fans outside of Houston. He has been the general manager, in charge of putting together the team's roster of players, for the last 12 years. He is credited as an innovator who brought statistical analysis into the NBA; the Rockets have finished first in their division in three of the last five seasons. In 2012 he traded for James Harden, who won the MVP award as the league's best player for the 2017-18 season. That same year, Morey won the NBA executive of the year award.

The NBA is trying to walk a tightrope. After an initial league statement was criticized for being too beholden to the Chinese authorities, NBA Commissioner Adam Silver defended Morey's right to send the tweet in a statement Tuesday in Tokyo. He said that the league would not pursue profits over principles.

"The NBA will not put itself in a position of regulating what players, employees and team owners say or will not say," Silver said in the statement. "We simply could not operate that way."

But that only escalated the dispute with Chinese authorities. CCTV Sports, a division of China's state broadcaster, said it would not broadcast preseason games set to be played in China, including one between the Brooklyn Nets and the LA Lakers later this week in Shanghai.

"We believe any remarks that challenge national sovereignty and social stability do not belong to the category of free speech," CCTV Sports said in a statement.

Tencent Sports, which is the NBA's exclusive digital partner in China, said it would suspend live streaming for Houston Rockets games, and stop reporting any news about the team. Nearly 500 million people in China watched NBA programming on Tencent platforms during the last season, according to the companies.

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