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This is really staggering news. Last week, John Lombardo of the SportsBusiness Journal reported that NBA China has entered the following agreement with AEG...
The two will join forces to develop and operate up to 12 arenas in China, representing another key step in the NBA’s vision for its own league in Asia, while adding more facilities to the global expansion effort under Tim Leiweke at AEG. Who is AEG? Well, let's just say the Staples Center is one of the many different sports arenas around the globe that they run (yeah, 'nuff said).
Logic would dictate that the NBA expects to have at least 12 franchises in various cities in China. Oh yeah, and with only the Beijing Olympic arena built, NBA China with its projected Chinese audience is currently worth -- I kid you not -- $2.3 billion!...
The deal helps cement the NBA’s aggressive goals in China. The league last year created its NBA China entity, which conducts all of the league’s business there. NBA China has attracted private investment from five companies that have put in a total of $253 million to acquire 11 percent of the entity.
The partners are Disney, Bank of China Group Investment, Legend Holdings Limited, Li Ka Shing Foundation and China Merchants Investments. For those of you who flunked math, divide $250 million by 11 percent and there you have the paper value of NBA China.
Putting on my old venture capital hat and just doing some back-of-the-napkin stuff, I would speculate that the investors in NBA China have to believe they'll get at least a 2x return, therefore NBA China is probably roughly guessed to ultimately be worth $5 billion maybe in the next 10-15 years.
Btw, that would suggest the NBA itself has to be worth more than $5 billion right now. Lessee, about $250 million per franchise times 30 teams gets you to $7.5 billion. The TV deals are definitely worth in the billions, so all these numbers seem about right.
If you backtrack, that means each NBA China franchise could or should be worth about $400 million or so in maybe 10-15 years.
NBDL? WNBA? Meh. One unmistakeable conclusion: the NBA is serious about China.
Here are some of my thoughts...
- This is great for the Chinese, the NBA, the world, America, and of course Asian-Americans.
- The PBA (go Ryan Reyes!!!) might be in big trouble, unless NBA China opens rosters up to more Asians, not just native Chinese. If NBA China remains isolated from the PBA, it will quite simply and quite quickly dwarf the PBA. The PBA is pretty strong in the Philippines. The NBA would have interest if the current PBA market starts consuming NBA China. In short, the PBA or Philippines government should do everything in their power to express interest in working with NBA China.
- American-born Chinese (and other Asians, let's hope) will have more opportunities to become pros back in the "motherland".
- NBA China will accelerate faster towards its projected valuation if it opens up its rosters to all the surrounding Asian countries. Hmmm, sounds a lot like dreamleague's Asian American leagues (haha, I told you so, what happens in the NBA happens in dreamleague!).
- If the Chinese market can't get enough of NBA China (as in consumption addiction, which I think will happen), NBA China could become the "real" NBDL and rival FIBA. Yes, I said FIBA.
- Let's not forget what made the NBA great: slam dunks, baby! NBA China absolutely must import the best not-quite-NBA talent it can. That means a lot of star NBDL players will be making their residence in China within a few years. The question is, how many per team? How many Chinese players per team? How many Asians per team?
- FIBA blew it, but as an American and as someone who has embraced the NBA's rules and regulations, I'm happy, relieved, and elated that the NBA beat FIBA to China. Who knows if China was even on FIBA's radar screen?
- It follows that FIBA will have no choice but to merge with the NBA 25 years from now. Yup, NBA China becomes the death-knell of FIBA, with all due respect to FIBA.
- I'm very impressed that the Chinese pulled off this deal with the NBA. I hate to get all political and stuff, but IMHO that just goes to show you that China will inevitably become a capitalistic country. Maybe it will take 100 years from now, but it is inevitable. Most Chinese indeed have pretty good common sense.
- The high tide lifts all boats. I have to trust that the success of NBA China can only lead to success in dreamleague, in a myriad of facets both real (plausible) and imagined (only-if-you-work-your-ass-off-and-get-lucky). Opportunity begets opportunity.
Of course, I could be dead wrong and I'll be the first to admit, I've been wrong before.
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