NBA China Brings Ball Worldwide

Over the past few months, the National Basketball Association has been busy forming its subsidiary NBA China. The entity would handle league businesses in the most populous nation in the world, promoting the American league in China, while exploring the opportunity of also creating an NBA-sponsored league in partnership with existing professional leagues. Outside investors, including ESPN, have lined up to take part in the venture.

The NBA China venture represents the perfect type of opportunity for the league—it allows the sport to tap an emerging market that is crazy about basketball. The same cannot be said for the league’s other projects. More dubious are the league’s on-and-off plans to place five full-fledged teams in Western Europe.

It is the goal of any profit-seeking business to expand beyond its current reach into new markets. However, this task is quite difficult if you are running a sports league. Professional athletics are cultural institutions by definition, and each country and region will have its own preferences. Breaking into new territory is always challenging and often disastrous. Sports leagues are also unable to expand without diluting their existing product. There are only so many people with the talent and qualification to play in a league at a certain time. By spreading out this talent over more teams, the performance on the field is bound to suffer.

These challenges are what make the two NBA expansion projects such interesting case studies in what to do and what not to do. The NBA China venture represents a business opportunity that dodges all the pitfalls of expansion—the market the league is entering has proven to be receptive to basketball, and the league does not have to commit any of its existing talent to the project. Even if a league is eventually formed in China, it would not compete against the parent league for talent, and would probably use mostly local players.

On the other hand, a Western European expansion would run into all the aforementioned hassles. The talent in the league would become diluted just when the level of play had been built back up. The league risks expanding into a market where basketball’s popularity is equivalent to soccer’s buzz on this side of the Atlantic. Five-hour flights between U.S. coasts would become 11-hour flights between continents. And while players may not complain about adjusting to three-hour differences in time, it’s hard to see anyone going from Los Angeles to London, a third of the way across the world, without skipping a beat.

What can other leagues and associations learn from the NBA? For one thing, the NBA could follow up its own success in China with an expansion into Eastern Europe, an area that has produced more than its fair share of talent, and whose leagues could use an injection of outside capital. NFL Europe was shut down last year, so the NFL can look into other more culturally similar areas such as Canada. The MLB has a few options for what to do in Latin America—while the region may not be wealthy enough to support full-fledged franchises, there are winter leagues everywhere, and some type of cooperation could be mutually beneficial.

As for the Ivy League? The conference already gets advertising from the academic reputations of its member schools. But the conference will never be at the level of the Power Six. Perhaps it is indeed better to differentiate oneself and retain some dignity, rather than flounder on the edge of Division I.