The future of the NBA’s partnership with China is very much unknown right now after the Chinese government, CBA, sponsors, and broadcast partners cut ties with the Rockets after the tweet from GM Daryl Morey in support of the Hong Kong pro-democracy protests.
While the Lakers and Nets preseason games in China are expected to go on as planned, China continues to push back at the NBA after Adam Silver supported Morey and others’ right to speak freely about issues they believe in. CCTV stopped carrying all NBA preseason games, not just those involving Houston, and there are concerns in the league the relationship between league and country will continue to deteriorate.
There are greater issues at stake than league revenue, but that certainly could be impacted significantly by China removing support from the league, and teams are reportedly beginning to prepare for the ramifications of that. Part of why the league tread lightly at first was how significant a portion of revenue they get from China is, and according to Yahoo’s Keith Smith, teams have cap specialists working on preparations in case next year’s salary cap sees as much as a 10-15 percent drop from the $117 million projection.
At least five NBA teams are having their salary cap personnel plan for a scenario in which the cap for the 2020-21 season could drop between 10 and 15 percent due to the current situation between the NBA and China, league sources told Yahoo Sports.
This is part of the teams’ regular seasonal planning, but “it’s like the cap spike, but opposite,” a league source told Yahoo Sports. “After all the money everyone spent last summer, this would have a major impact on all of us.”
That would possibly drop the cap below this year’s $109 million figure and would significantly impact personnel decisions this coming summer — as well as impacting the value of player max contracts that are tied to a percentage of the cap. Whether this actually happens remains to be seen, and the 10-15 percent seems to be a worst-case scenario type projection — as in, all revenue from China goes away. Teams are regularly making plans for possible changes to the cap number, since projections can change, and the actual figure won’t be known until just before the league calendar flips over, so this is mostly due diligence but indicates fears around the league of a substantial impact for next summer.
Also, for those who have wondered aloud how much the NBA actually makes from its presence in China, this indicates just how big a piece of the pie it is.