Monday, September 25, 2006

Show me your money – The National Football League heads to China

Sunday night, National Football League commissioner Roger Goodell confirmed the New England Patriots will meet the Seattle Seahawks on August 8, 2007 in the first NFL game to be contested in China. According to the NFL’s release the game “will serve as the kickoff of the one-year countdown to the opening of the XXIX Olympic Games in China.” The game will be played at Beijing’s Workers Stadium (corporate stadium right agreements are not permitted in China).

It’s interesting to note the Beijing Olympic Organizing Committee selected an American style football game as its key event to mark its one-year countdown to hosting the biggest event ever held in China. When you consider American football is contested (only) in the United States (NFL Europe always lives on deaths door), is only played by Americans and isn’t even in anyway part of the Olympic Games. How important the Chinese market is to American based sports groups as well as businesses becomes that much more obvious to even a casual observer.

This is the same country the National Basketball Association and the NFL so lovingly covet, on Thursday was condemned by Amnesty International, the London based human rights group for failing to improve human rights conditions in China. Amnesty International’s report focused on what they believe is some of the key human rights issues less then two years before the start of the Beijing Olympic Games.

"With just two years to go until the Olympic Games take place in Beijing, the Chinese authorities are failing to meet the human rights commitments they made when Beijing was awarded the Olympics in April 2001," the group said in a report. "Serious human rights violations continue to be reported across the country, fueling instability and discontent."

The 1989 Tiananmen Square crackdown on student dissidents may have cost China the right to host the 2000 Games (awarded to Sydney in 1993). Not a great deal changed in the eight years between when Sydney being selected to host the 2000 Games and 2001 (when Beijing was chosen to host the 2008 Games) politically in China. The country is still a Communist country – freedom does not ring out in a country home to a fifth of the world’s population. While nothing has changed politically, businessmen like New England Patriots owner Robert Kraft can only hope time will help people forget the horrific images of students being gunned down in the streets of Beijing in 1989.

“My family has been doing business in China for nearly 20 years and we are proud that The Kraft Group is New England’s number one exporter to China,” said the Patriots’ Kraft. “Based on our own experiences in China and the growing interest in American sports there, we launched a Patriots website in Chinese in 2004. It was the first of its kind. It is a privilege and an honor to be selected to participate in the NFL’s inaugural China Bowl in 2007. I think our players and staff will be terrific ambassadors for the game of football and I hope that it will be an experience that they will never forget. I look forward to developing new relationships and building a legacy for the Patriots and the NFL in such a great country.”

More likely Kraft and ‘the Lords of the Pigskin’ enviously watched David Stern and the NBA take full advantage of Yao Ming’s presence in the NBA. The Houston Rockets selected Ming with the first overall pick in the 2002 NBA draft. Ming became the first ‘big name’ Chinese athlete to play in a major American sports league. Two years later, the NBA headed to Beijing for two pre-season games before the start of the 2004-05 season.

"In order to bring two teams here, and over 100 NBA employees, to pay for travel, accommodation ... we have spent several millions of dollars," NBA commissioner David Stern told the media who traveled to Beijing for a pair of games that featured Ming’s Rockets and the Sacramento Kings.

"This is an extraordinary investment in an economy and country which is the largest in the world in respects of population and an economy that is outstripping the rest of the world in terms of growth.”

"Over the next 20 years, the growth of the NBA in China will mirror or parallel the growth in China."

Stern has always felt that China was an untapped market. China was always seen as a potentially important market down the road, he said. He continued, “I think it’s fair to say Yao Ming is the most important thing in the world for the development of the NBA in China that has ever occurred. With Yao Ming, this is even more extraordinary. But it would be historic with any NBA team. More than even that, however, it electrified a country.”

Never one to stand in the way of progress, the NBA announced earlier this month, the league would dramatically enhance its Chinese website The new multi-year deals, which further position as a leading sports destination in China, will provide fans in the country with access to a record 87 web casts of NBA games in Chinese, including live video web casts of regular season and playoff contents, and complete game replays of select NBA games.

Additionally, the comprehensive site entirely in Chinese will feature a series of NBA classic games, hundreds of hours of on-demand broadband video and highlights, an exclusive NBA fantasy game, live stats, blogs, extensive photo galleries, player trackers, interactive forums, chat rooms and more, all throughout the NBA season.

“Renewing our partnership with NuSports and Sohu, two experts in China’s sports Internet landscape, will impart us with more opportunities to connect with our expanding fan base,” said Heidi Ueberroth, President, Global Marketing Partnerships and International Business Operations of NBA Entertainment. “As broadband usage in China continues to grow, will provide fans with access to more game action and unique broadband features than ever before.”

How important is the Chinese market to the NBA? An August Wall Street Journal reported that 500 million Chinese residents purchased 400 million branded pieces" of National Basketball Association products, from jerseys to basketballs, last year.

Stern has visited China three times in the last two years – each trip the foundation for increasing the NBA’s business presence in China. Stern has even met with a company that produces Inner Mongolian milk about possibly sponsoring the league.

Mr. Stern said sponsors outside of China always bring up the country before he does. "Very little of the discussion we have with our international sponsors doesn't move very quickly to opportunities in China," he said. He adds wryly that he is pleased that the Chinese government labels his sport "important for fitness, exercise and harmony."

That may be nice, however Reporters without Borders offered their own insight last month – two years before the Beijing Games, offering their perspective on what they believe the reception the world’s media can expect in two years time.

"This silence allows the Chinese government to shamelessly continue its massive human rights violations," Reporters Without Borders said. "Already marred by corruption, the preparation of the games has been accompanied by a crackdown on dissent, which officials say is necessary to make sure they are safe." The press freedom organization also fears that all the surveillance and crowd-control equipment that China has bought from US, Israeli and French companies to ensure security at the games, will afterwards be used for repression.

None of that seems to concern David Stern who met with a company that produces Inner Mongolian milk about possibly sponsoring the league last month on his way to the World Basketball Championships in Japan. More likely when Stern met with Inner Mongolian milk representatives he pointed out that one of their major competitors Yili was going to be front and center at the Beijing Games.

Yili (a Chinese based milk company), whose corporate goal is to become a global brand by 2010, has been one of the most aggressive Olympics advertisers since it announced its sponsorship of the Games in November 2005. "Sports resources are limited, and whoever strikes first prevails," says Yili's brand director, who declined to be named. The company according to the WSJ report tried to sign up athletes before Yili had won the official sponsorship.

SA's Leo Burnett ad agency, told the WSJ he is recommending to some of his clients, which include McDonald's, to start planning -- but wait on delivering ads until the second half of 2007. "Local brands are now trying to build a competitive presence against multinationals," he told the WSJ. "But in terms of Olympic experiences, there is nothing going on right now. A lot of multinationals were using the World Cup to stay engaged instead."

The multinationals and Chinese brands may be on different schedules because they are looking for very different results from their expensive marketing rights. "The message for the multinationals is that, “We are here in China, and we are going to be part of this transformation that is taking place,” says Scott Kronick, president of WPP Group's Ogilvy public-relations agency in Beijing in the WSJ report. "The message for local companies is that, 'We are a famous Chinese company that has the potential to be a global brand.' "

Two weeks ago on the eve of the start of the 2006 NFL season, the league and Yahoo announced NFL would offer video streaming of their games into Europe, Asia, South America, Australia and Africa, but not into China. China Central Television (CCTV) is broadcasting NFL games in China this year and will be at Super Bowl XLI in Miami in February.

Is it wrong for the NBA and NFL to offer their product to the Chinese market – of course not. Let’s be very clear about one point, the comments of David Stern and Bob Kraft aside, both men, the sports leagues they’re a part of are going to China because it’s a good business decision.
Ask any NFL coach how he feels about uprooting his team for a pre-season game on the other side of the world? The only reason the NBA and the NFL are paying so much attention to China is because it’s a sound business decision.

However, it’s very important that everyone understand the political system that remains in place in China. The freedom’s that are so central to life in America, the everyday freedom Americans take for granted isn’t offered to anyone living in China. Hopefully, seeing Yao Ming excel in the NBA or experiencing an NFL game in China will offer hundreds of millions of Chinese citizens a glimpse of what freedom represents.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Wall Street Journal