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IEG In The News

Yao Ming and the Rockets’ Weak China Effect

MarketWatch, July 14, 2011

By Sam Mamudi

NEW YORK – Chinese basketball superstar Yao Ming’s decision to retire is a blow to the sport’s hopes for international growth. But it may not make much difference to the Houston Rockets’ coffers.

Yao’s main asset to the Rockets was, of course, his on-court abilities as one of the National Basketball Association’s best centers. But as the team and the league contemplates the effects of his retirement, sponsorship revenues suggest he had smaller-than-expected commercial value to the team — which may lead teams to pause before they sign a foreign star in the hope of cashing in.

Yao was the face of the Rockets from the moment he was drafted number one overall in 2002. And while he indisputably raised basketball’s profile in China, his presence and profile wasn’t enough to deliver big overseas bucks to the team.

Estimates from sponsorship experts IEG are that the Rockets earned somewhere between $800,000 to $1.25 million in deals from all their China-related sponsorships. That’s not negligible, as it’s about 5%-10% of the average NBA team’s annual sponsorship income, but it’s less than a percentage point of the Rockets’ estimated $150 million a year revenue. IEG said that the Rockets’ overall sponsorship revenue wasn’t notably higher than other NBA teams during Yao’s time with the team.

One of the Rockets’ deals with a Chinese company, Hong Kong-based Boshiwa International Holding, paid a low six-figure amount each year, according to a person familiar with the deal. Representatives for Boshiwa didn’t reply to requests for comment.

“It shows the idea of teams cashing in with Chinese companies [after signing Chinese players] is something that hasn’t really materialized,” said Mike Powell, analyst at OneSportsSource. “The logic that because consumers in China would watch the game, Chinese companies would advertise with the team is a bit of a reach.”

Yanjing Beer, Founder Group, Peak Sports Products Co. and Anta Sports Products Ltd. were other Chinese sponsors of the Rockets, according to SponsorPitch, a professional network that tracks sponsorship data.

The Houston Rockets declined comment for this story.

This isn’t to say that Yao wasn’t an off-court phenomenon. His presence in the league helped establish the NBA on television in China. The league says its games and related programming “have reached more than one billion viewers in China for four consecutive seasons.” Meanwhile, Yao’s jersey was a top-10 seller in China each year except the last two.

But that money didn’t go to the Rockets directly; in the NBA the revenue from those jersey sales, as well as foreign TV rights, are equally distributed between all 30 teams.

The Associated Press reported this week that an online poll by Weibo, a Chinese microblogging service owned by Sina Corp., found that 57% of respondents said they’d stop watching NBA games in the wake of Yao’s retirement.

The poll provides a snapshot and may just reflect sadness over an icon’s retirement. For his fans, there's hope — some observers don’t see it as the end of his involvement in the sport.

“As great as he has been over his career, Yao is far more than just a basketball player,” said Dianne Hayes, head of sports marketing at Reebok, which sponsors Yao. “We have no doubt that in the coming years his impact off the court will be as large as his presence on it.”