NBA salary caps could feel pressure from China rift

Key Points
  • NBA Commissioner Adam Silver admits the league is suffering financially following its spat with China earlier this month.
  • Silver also says the Chinese government asked the league to fire Houston Rockets general manager Daryl Morey after he tweeted support for Hong Kong protesters.
  • Silver was speaking at the Time 100 Health Summit in New York.
Adam Silver, NBA Commissioner.
Getty Images

Reality is setting in for the NBA and its financial losses are "fairly dramatic" after the league refused to fire a team executive who supported anti-government protesters in Hong Kong, Commissioner Adam Silver said at the Time 100 Summit event in New York on Thursday.

Silver made his first public comments in the United States since returning from Shanghai, where he previously said he hoped to smooth relations with Chinese officials after Houston Rockets general manager Daryl Morey's tweet ignited a political and economic firestorm in China.

The NBA has already suffered "substantial" losses as Chinese businesses distance themselves from the league, Silver said. Chinese state-run television network CCTV suspended its broadcast arrangements for the NBA's preseason games in China, and Tencent, which owns the digital streaming rights for the NBA in China, also suspended its preseason broadcast agreement.

"I don't know where we go from here," Silver said at the summit. "The financial consequences have been and may continue to be fairly dramatic."

The Chinese government asked the NBA to fire Morey for his now-deleted Oct. 4 tweet. In an Oct. 8 statement, Silver defended Morey's right to free speech, adding "values of equality, respect and freedom of expression have long defined the NBA — and will continue to do so."

On Thursday, Silver said he told Chinese officials "there's no chance" Morey will be fired for speaking his mind.

"There's no chance we'll even discipline him," Silver said.

A spokesman for the Chinese Foreign Ministry, Geng Shuang, however, on Friday denied that China asked for Morey to be fired, according to Reuters.

"We especially went to the relevant departments to check on this claim," Geng said during the ministry's daily briefing in Beijing, according to the Reuters story. "The Chinese government has never made this kind of request."

A league executive, who asked not to be identified because of the sensitivity of the issue, said it might take the NBA a few months to feel the losses, maybe by next quarter. He said officials have already started best- and worst-case projections, hoping they can prepare for any real decline in revenue.

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"This is the intersection of money and geopolitics," the Western Conference executive said. "They are not easy to maneuver."

Should China continue to blackball the NBA, it could eventually hit the league's basketball-related income, according to league executives. Any decrease in revenue could put pressure on the salary cap. The 2019-20 cap is already set at roughly $109 million, and next year it could reach $120 million. But that increase is at least partly dependent on its revenue from China, they said.

"They are going to want the NBA back," the Western Conference executive said. "I don't think this is permanent. This is, 'We're going to cause a pause to make them feel the pain.' And within the pause, some diplomacy will be necessary."

Silver's comments come days after Lakers star LeBron James called Morey's stance "misinformed." James also received backlash for appearing to support China with his comments. Less than 24 hours after James spoke to reporters in Los Angeles, images surfaced showing his jerseys burning in Hong Kong.

Though the NBA-China partnership is currently strained due to Morey's tweet, the belief in league circles is the relationship will continue at some point. The thinking is the sport is too popular in the country; hence, the business will recommence.