The rewards for international sports leagues and organizations are plain: lucrative broadcast deals, bountiful sponsorship opportunities, millions of new consumers.
The risks are obvious, too: the compromising of values, the public relations nightmares, the general atmosphere of opacity.
For years, they have surveyed the Chinese market, measured these factors and come up with the same basic math: that the benefits of doing business there outweighed the possible downsides. The NBA might blunder into a humbling political crisis based on a single tweet, and rich contracts might vanish into thin air overnight, but China, the thinking went, was a potential gold mine. And for that reason leagues, teams, governing bodies and athletes contorted themselves for any chance to tap into it.
But recent events may have changed that thinking for good, and raised a new question: Is doing business in China still worth it?
The sports world received a hint last week of a changing dynamic when the Women’s Tennis Association – one of many organizations that have worked aggressively over the past decade to establish a foothold in the Chinese market – threatened to stop doing business there altogether if the government failed to confirm the safety of Peng Shuai. Peng, a top women’s tennis player once hailed by state media as “our Chinese princess,” disappeared from public life recently after accusing a prominent former government official of sexual assault.
The WTA’s threat was remarkable not only for its reasoning, but for its rarity.
But as Chinese President Xi Jinping governs through an increasingly heavy-handed personal worldview, and as China’s aggressive approach to geopolitics and its record on human rights make the country, and those who do business there, a growing target for a chorus of critics and activists, sports leagues and organizations may soon be forced to re-evaluate their long-standing assumptions.
That sort of direct confrontation is already taking place elsewhere: Lawmakers in the European Union recently called for stronger ties with Taiwan, an island China claims as its territory, only months after European officials blocked a landmark commercial agreement over human rights concerns and labelled China a “totalitarian threat.”
For most sports organizations, the WTA’s position remains an outlier. Sports organizations with multimillion-dollar partnerships in China – whether the NBA, England’s Premier League, Formula 1 auto racing or the International Olympic Committee – have mostly brushed aside concerns.
Some partners have acquiesced at times to China’s various demands. A few have issued humbling apologies. The IOC, in perhaps the most notable example, has seemed to go out of its way to avoid angering China, even as Peng, a former Olympian, went missing.
But an evolving public opinion may get harder for sports organizations to ignore. A report this year from the Pew Research Center, for instance, found that 67% of Americans had negative feelings toward China, up from 46% in 2018. Similar shifts have occurred in other Western democracies.
Mark Dreyer, a sports analyst for China Sports Insider, based in Beijing, said the WTA’s standoff with China represented an escalation in the “them or us” mentality that appeared to be forming between China and its Western rivals.
The threat from the WTA, then, could serve as a sign of showdowns to come, in which case, Dreyer said, China could lose out.
“Frankly, China is a big market, but the rest of the world is still bigger,” he said. “And if people have to choose, they’re not going to choose China.”
To some experts, then, the WTA’s extraordinary decision to confront China head-on might actually signal a turning point, rather than an aberration.
“The calculation is one part political, one part moral, one part economic,” said Simon Chadwick, a professor of international sports business at Emlyon Business School in Lyon, France. He said the WTA’s dispute with China reflected the “red line” growing between the country and many of its Western counterparts, with the sides seeming more entrenched in diverging sociopolitical ideologies.
“I think we are rapidly heading toward the kind of terrain where organizations, businesses and sponsors will be forced to choose one side or another,” Chadwick said.
The WTA’s own about-face was stark. Only three years ago, the organization was heralding a deal that made Shenzhen, China, the new home of its tour finals for a decade starting in 2019, accepting promises of a new stadium and a whopping $14 million annual prize pool. In 2019, just before the pandemic, the WTA held nine tournaments in China.
Fast forward to last week, when WTA CEO Steve Simon said in an interview with The New York Times that if China did not agree to an independent inquiry of Peng’s claims, then the tour would be willing to cease operations in the country.
The run-ins have proliferated in only the past few years.
The NBA, for instance, was seen as a pioneer when it played its first games in China in 2004, including a game featuring Yao Ming, the Chinese star for the Houston Rockets. The ensuing years brought prosperity for the league there, and relative peace. It was praised for its patient, culturally sensitive approach to building there. Then, in 2019, Daryl Morey, general manager of the Rockets at the time, tweeted in support of pro-democracy protests taking place in Hong Kong, and in the blink of an eye, a relationship that had developed over several years imploded.
Merchandise for the Rockets – China’s favourite team in China’s favourite sports league – was removed from stores, and the team’s games were no longer broadcast on television. Fans took to Chinese social media to attack the league. Then, when the NBA issued what was widely taken as an apology, it sparked an almost equally robust wave of criticism back home. (The NBA did not immediately respond to a request for comment Wednesday.)
Like other observers, Dreyer suggested the WTA’s stance was potentially game-changing. But he noted, too, that it was possibly easier for the WTA to defy China than it had been for, say, the NBA – for two reasons.
First, because the pandemic had already forced the WTA to cancel its events in China for the near future, the tour was not necessarily forfeiting big sums of money in the immediate term. (Severing ties with China permanently would, of course, require the WTA Tour to replace tens of millions of dollars in revenue and prize money.) Second, because China has essentially erased any mention of Peng and the ensuing international outcry from its news and social media, the WTA’s brand may not take much of a hit there. Many in China simply do not know about Peng, or the WTA’s response.
“With the NBA, they were burning jerseys,” Dreyer said. “You don’t have that reaction against tennis.”
Half a decade ago, the Chinese government, emboldened about sports after hosting the 2008 Summer Olympics in Beijing, announced plans to create an $800-billion domestic sports industry, the largest in the world. That captured the attention of Western sports organizations.
What many organizations did not anticipate, though, were the peculiarities of the Chinese business landscape, the extent to which politics is woven through all aspects of China’s economy, and the growing spirit of nationalism under its increasingly autocratic president, Xi.
“I absolutely think over the long term that major sporting events will be hesitant moving forward to schedule out in China right now,” said Thomas Baker III, a sports management professor at the University of Georgia who has done extensive work in China. “The China that welcomed the world in 2008 is not the same China that people are doing business with in 2021.”