China, Digital & Media, Future Trends, Sport Business | May 18, 2018
Inside the incredible growth story at NBA China.

After seven years at the helm, David Shoemaker left his role as CEO of NBA China earlier this month.

By James Emmett

Replacing him in the role is Derek Chang, and the former DirecTV EVP inherits a booming operation, by some distance the most successful, permanent international outpost of any major global sporting body. With some 200 people spread across four offices in Beijing, Shanghai, Chinese Taipei and Hong Kong, NBA China was recently described by the league’s Deputy Commissioner Mark Tatum as being “worth more than $4 billion.”

Before joining the NBA in 2011, Shoemaker was President of the WTA, leading the women’s tennis tour’s Asia-Pacific operation from its office in Beijing. The Canadian will now return to North America as one of the most experienced and successful international operators in top tier professional sport.

As part of his role on the advisory board for the Leaders Sport Business Summit in Beijing on 25th and 26th July, Shoemaker sat down for a wide-ranging interview reflecting on his tenure at NBA China, the successes, the mistakes, the challenges and the surprises.

On the agenda:

  • The milestones behind the NBA’s record growth in China over the last seven years;
  • The NBA’s tried-and-tested strategy for monetizing audience and activity in China;
  • How the league is going about unearthing and developing the next Yao Ming
  • The processes behind partnerships with the CBA and the Chinese Ministry of Education;
  • The ground-breaking deal with Tencent and why China will set sports consumption trends from now;
  • What’s next for the Chinese sports industry

What do you consider the key milestones across your seven-year tenure at the head of NBA China?

One that sticks out is our 30-year anniversary with CCTV last season. We first started broadcasting games on China Central Television in 1987 starting with an All-Star game featuring Magic Johnson and Michael Jordan and 30 years later we’re still going strong with that partnership. In fact, and I guess this is another milestone, last year, over 750 million different people watched at least one NBA game on television. This statistic still amazes me: if you took the population of China and lined them all up more than one of every two watched at least one NBA game last year.

Another would be crossing the 100 million social media follower threshold, that happened about three years ago and we’re now up to 144 million followers on social media which is sort of not just a larger following than any other sport or sports organisation or league, but bigger than any other company or brand in China, so we’re pretty proud of that.

We’ve hosted 13 NBA games in China since I started in 2011, all were sell outs, all big successes and all a lot of fun to do. And in fact, we haven’t yet crossed this milestone, but I’ll look at it with real pride when we do, we’ve nearly had half of the NBA come to China to play games, we’re at the 14-team mark so far and next October we’ll have crossed that threshold.

And perhaps the partnership I take the most ownership of would have been our comprehensive partnership with Tencent, which is sort of huge for us here in China, but also the NBA’s largest international deal period. And I think it’s fair to say, looking back at it, that it’s really transformed the way in which the viewers of our sport watch and appreciate NBA games.

The NBA was the first international sports league to invest in the potential of the Chinese market as far back as the 1980s. Deputy Commissioner Mark Tatum recently said that NBA China was now ‘worth more than $4 billion’. How have you been able to monetise so strongly in the Chinese market?

We haven’t been able to do it more quickly than anyone, we’ve just been at it for much longer. One of the secrets to monetising the NBA in a challenging environment here in China is that we’ve got this long history and we’ve been very patient and we’ve invested over the course of decades. I say this to many people who ask me how to create a following in China: I think my first bit of advice is to be patient.

I think the second thing that we have really committed ourselves to doing is to be really genuine with our fans and, for example, when we bring our China games on an annual basis to China, we do our level best to stage the most authentic experience we possibly can for our fans so that, let’s say we’re in Shanghai in the Mercedes Benz Arena, if you didn’t know better, you’d say you were in the Staples Center in Los Angeles. The teams are there, the dance teams are there, the dunk teams are there, the DJ shows up, the video boards are fully programmed, all of the entertainment that you come to expect with an NBA game we bring to China so that we can deliver that authentic NBA experience to our fans.

The third thing is that we’ve been very fortunate, although we don’t always get it right, to work with a long list of great partners. And the last thing is we do our best to be creative and adapt; this is a very fast moving and technologically advanced market and so there are many things that we do here in China that we don’t do anywhere else in the world. Adapting our business to the wants of our fans here in China has certainly served us well.

You’ve had 13 games in China since 2011. Would increasing the number of games in the market unlock more potential?

I’m not so sure that having more games in China is the key to untapping further growth. We look at our two games a year as the cherry on top of a 365-day campaign and that the major way that we connect with our fans is through the delivery of the NBA games that are taking place in the United States through technology, whatever media are the current and best ones to use. If we had four, six, eight or ten games in China, surely that would create a little bit more interest, that would create a little bit more revenue to us, but I don’t think it’s the key to unlocking further growth. Our point of view is that the NBA, frankly, with hundreds of millions of fans in China and the feverish way that they follow our sport, clearly has a very high level of engagement already and what we could do to boost that is see a steady pipeline of the next generation of Yao Mings competing in the NBA. We saw a real spike in interest in the NBA when Yao joined the league back in 2002, and with great credit to Yao, we saw no drop-off in that when he exited the league in 2011. But we believe we’ll see another great spike if we can see a generational shift and have the kind of participation in our league that we see from Canada, and Spain, Serbia or Australia.

How do you work with the Chinese Basketball Association (CBA) and the Chinese government to of support the growth of basketball in China and to further that goal of yours to create the next Yao Ming?

We think about development in a pyramid and at the top of the pyramid is the elite level and so today we partner with three sports bureaus to hold, recruit, and train at NBA academies in Xinjiang, Shandong, and Zhejiang where we recruit and develop top male and female international prospects coming out of China. That’s now a two-year-old venture for us but something that is the output of our belief that we need to be shoulder to shoulder with the Chinese government. That’s something we’re doing on a global basis so it fits neatly with a strategy that we’re deploying in Africa and other part of the world.

In the middle of the pyramid is more semi-elite; we’re in the process of forming a layer of NBA schools in China where boys and girls aged 11-17 will go to school and train at an elite level playing basketball. The first one was developed in 2011, again in partnership, in that case with the owners of Shenzhen Leopards CBA team, and that has now had more than 11,000 students pass through it. We’re about to partner with Mission Hills on creating a second school down in Haikou In that space.

And then at the bottom of the pyramid is grassroots. We believe that to have a meaningful impact at that level we had to partner with schools and so our partnership was hatched with the Vice Premier of China, Madam Liu Yandong, and we work with the ministry of education across schools throughout the country. This school year we’ll teach basketball classes as part of the PE curriculum to more than two million students in 2,000 schools. That ministry of education partnership is a phenomenal one that I’m very proud of.

It strikes me that one of the main challenges of working in China is understanding the political environment, who holds the levers of power at any one time, and how best to work with them. How did you manage to forge that ministry of education partnership?

Through a little bit of trial and error. It took us a while to realise that if we were going to meaningfully impact young children with the game of basketball that it wasn’t through the traditional sport avenues but that we need to do it through schools and we found a very receptive person in the then minister of education several years ago now, who shared a common vision and believed a lot of life lessons could be taught through basketball – teamwork, sportsmanship, communication etc. But it took us a while to figure out that that was the right place to go.

Our initial assumption was the people responsible for sport across the country would be the ones likely to help us create a grassroots movement in basketball, and, at least our experience back then was that they’re a lot more focused on sport at the elite level.

We talked about the Tencent deal earlier. Signed in 2015, it’s a five-year agreement worth a reported $700 million to the league, which is an impressive figure to draw from an exciting, but challenging media market. Tencent, especially, has been pushing the boundaries of technological delivery of sports content in China. It’s acknowledged as the digital hub for live sports in China now, and it’s been experimenting with micro-payments. Do you see the Chinese media market as a petri dish for models that might soon be adopted in other parts of the international sports industry?

I think there’s no question that the trends in consumption of sport are going to be set largely from China, and I believe that’s been born of necessity. Our games are broadcast here at times when people are on their way to work, or at school, so when they watch a streaming service, they want to do it discreetly on a mobile phone. Or, if they’re not able to watch full games, they’ll want to consume highlights in a way that is digestible to them where they learn the scores in a way that’s easy for them to use. And so that is why mobile adaption rates are so great here in China. Over 70% of people who watch NBA games on Tencent do it on a mobile phone. When VR becomes mainstream, I feel that it’ll be driven from China. Why? Because Chinese fans, other than twice a year, can’t experience a game in person. They can’t, no matter their resources, they don’t really have the ability to sit courtside but virtual reality has a chance to deliver that courtside experience.

More generally, what developments do you expect to see across the Chinese sports industry over the next three to five years?

This the fun part! Of course I’m going to be wrong, but as I look to the future, I think the first thing we’re going to see in China is the emergence of some superstar athletes in the major professional individual sports. We’ve had Li Na in tennis, a grand slam champion, and we’ve had Feng Shanshan in golf, a multiple major champion, and I think that they will have inspired a generation of young aspiring tennis players and golfers to pick up clubs and rackets and practice like heck and become superstars. I think that is something we’re going to see pretty quickly.

I think the second thing we’ll see is those transformational athletes and teams developing out of China in the major pro team sports. So, this is decades in the making, but when you have the likes of Yao Ming running the CBA and the commitment he’s showing to trying to reform Chinese basketball, I’d have every bit of confidence that the Chinese national basketball team ten years from now will be lightyears ahead of the Chinese national basketball team that is here today. And I have to imagine that with similarly smart people in place at the helm in soccer, that the experience in soccer in China will be the same. And there’ll be an incredibly successful FIFA World Cup in soccer at some point in China that will capture the world’s attention.

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