Measuring the Need for Reform in Chinese Basketball: Cues from the NBA
The rapid expansion of the NBA in China overshadowed the premier professional basketball league in China— the China Basketball Association (“CBA”). Beyond the superior play, the CBA currently underperforms the NBA in many other aspects.
By Wang Rui, Partner at King & Wood, William Gould, Alvin Attle, and Peter Gall
In 2004, when acting as Director of the Chinese Basketball Management Center (“CBMC”) and the Chinese Basketball Association, Yuanwei Li launched the “Polaris Program”, in which the CBA was to be transformed through assuming the NBA operational model with the hope that the implementation of this program could promote reforms for Chinese professional basketball.
After five years, the CBA appears to have developed some “NBA characteristics”, such as using the “corporate run model” to operate the league and to prioritize the needs of fans, sponsors and media. However, the CBA has been long haunted by “a reputation for poor play, officiating and TV production” and in some regions, “its broadcasts are cut short for gymnastics or table tennis.” Since November of 2008, four clubs announced their withdrawal from the CBA because their investors did not see returns on their investment.
Why did the adoption of NBA characteristics in the CBA not bring it the success of the NBA? The problems of ownership that exist in the CBA are a significant obstacle for the league’s development, and, accordingly, impede the reforms of Chinese professional basketball.
Current Ownership Structure within the CBA and its Participants
The Chinese sports administration system is currently in the midst of reforms initiated in the 1990’s intended to make the transition from a completely state-funded system to a market-oriented system. To this end, the General Administration of Sport of China (“GASC”) and its predecessors wished to emulate the success seen in foreign countries and have thus promoted professionalization reforms for a number of sports— in 1995, basketball became the second sport to begin the road to professionalization (after football).
The general idea of basketball professionalization was to encourage “the emergence of a sport management market and business-structured systems.” Namely, bringing to the sport a higher degree of commercialization, changing the sport association into a profit-making entity, introducing a club system, form professional leagues and improve China's basketball environment overall.
The path to professionalization has had many road bumps. In 2004, as the development of the CBA remained stagnant since its establishment and the CBA brand had been significantly devalued, the Chinese Basketball Association as the regulating authority of Chinese basketball, announced the “Polaris Program” to radically reform the CBA league.
The reforms promoted the advancement of Chinese basketball to some extent. As of 2008, the CBA has expanded from the initial 10 teams to 18, and the Chinese sports administration seemed to be very satisfied with the league’s achievements thus far. However, there are still many unresolved issues surrounding the CBA which could endanger the league’s operations if additional measures are not taken.
In many ways, compared to the complexity of the ownership and administration structure of China’s professional basketball system, the structure of the NBA is clear and straightforward where the investors have relative transparency in their investment.
In contrast with the CBA, neither the USAB (USA Basketball) nor other governmental agency in US has a direct relationship with the NBA that will intervene with the operational activities of the NBA or receive direct financial benefits. The revenues of the NBA are allocated to the teams—the league only keeps the necessary funds to maintain its normal operational activities. Due to the current financial climate surrounding the Chinese Basketball Association, and its subsidiary Zhong Lan Ying Fang, clubs may only explore commercial opportunities from the sale of the naming rights to the club and the tickets of the home court matches, from which the clubs receive very limited benefits. In the meantime, the Chinese Basketball Association retained the de facto final say on the allocation of the league’s revenues among all participants. Article 43 of the Articles of Association of the Chinese Basketball Association, and the Articles of Association of the China Basketball Association League Committee (CBA AOA) specified that the league’s revenues should be allocated in accordance with a plan “jointly determined by the League Committee and the Chinese Basketball Association.”
Hello,
I am a basktball coach and trainer from California. I recently received an email from the Lanxiang Basketball Academy. It is supposedly a new Academy that is to be launched in 2010 in the Shandong province in China. I was trying to get information about this Academy and was looking at the status of basketball in China when this article popped up. They have asked me to send in my resume for a coaching position. Have you heard anything about this Academy that is being sponsored by the Chinese Sport Council and Chinese Basketball Council??? Any Information would be appreciated. Thank you