Lebron James financial future is tied to fortunes of NBA, Nike in China

LeBron James defense of communist China over American ideals of free speech is a move that likely has more to do with his bank account rather than his beliefs.

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The Los Angeles Lakers superstar, one of the biggest pitchmen in the business, is all-in on the Chinese market and understands its importance. In years past, James has traveled to China on behalf of Nike, appearing at camps and clinics as well as engagements to promote their global brand. The Chinese market is massive for Nike and one which the sneaker and apparel company wants to safeguard and expand.

James also has reportedly signed endorsement deals with Chinese interests in the past, such as media company Tencent, which inked the NBA superstar to promote the NBA2K video game. And three years ago, James signed an endorsement deal with Nike that will pay him $1 billion over the next three decades. There are a lot of reasons for James to bow to Nike as well as China’s whims.

Monday night, James said that Daryl Morey, the Houston Rockets general manager, was “misinformed” when he posted a tweet that kicked off a costly dispute between the NBA and its Chinese fans and sponsors.

Morey drew widespread criticism in China earlier this month after he tweeted support for pro-democracy protesters in Hong Kong. Nearly all of the NBA’s Chinese sponsors suspended ties with the league after commissioner Adam Silver issued a statement supporting Morey’s right to freedom of expression while apologizing to Chinese who were offended by the content of Morey’s message.

“We all talk about freedom of speech. Yes, we all do have freedom of speech but at times there are ramifications for the negative that can happen you’re not thinking about others and only thinking about yourself,” James said on Monday night in his first comments on the situation. “I don’t want to get into a word or sentence feud with Daryl Morey, but I believe he wasn’t educated on the situation at hand when he spoke. And so many people could have been harmed not only financially but physically, emotionally, spiritually. So just be careful what we tweet and what we say and what we do.”

His comments were met by surprise and dismay from the protesters in Hong Kong. But perhaps it shouldn't be a surprise given how much China means to Nike. The message that emerged was not one of solidarity for democracy and freedom. Instead, it was clear that the league needs the emerging market of China and was willing to do anything to hang on to it.

Nike stands to lose billions if China should suddenly cut ties with anything and everything American basketball. With a global revenue of $34.5 billion in 2018 for Nike, $6.20 billion came from China. Much of that is attributed to the growth and popularity of the NBA in the world’s largest nation.

The footwear sales alone for Nike in China are $4.26 billion, which represents 68.6 percent of the company’s revenue in the country. China has an estimated 300 million basketball players, there is only room for that number to continue to grow, which it did along with footwear revenue up that was up 22 percent compared to 2017. That $6.2 billion in 2017 represents 40 percent of the company’s growth.

There is no denying that the NBA has a China problem, after a tweet earlier this month from Houston Rockets general manager Daryl Morey that expressed support for the democracy movement in Hong Kong. China responded with anger over the tweet, unleashing a variety of threats on the NBA.  Morey was quick to apologize and players also made clear their love for China.

In later comments, James went on to say that Morey was “either misinformed or not really educated on the situation” when he tweeted in support of the democracy movement in Hong Kong. The bottom line for James, however, is the bottom line of his checkbook. Nike’s endorsement deal with James will pay him north of $30 million in 2019.

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Correction: The Houston Rockets general manager Daryl Morey sent a pro-democracy tweet in support of protestors in Hong Kong. Morey's title was incorrect in an earlier version of this story.