Globalization: NBA ChinaEddie HernandezCasey EllinChris OsterleMike Valdes

• NBA China, formed in 2008, is a new entity that will conduct all of the Chinese Basketball Association’s business throughout Greater China.

• Started as an Idea to have an exhibition game between the CBA’s Champion and NBA Champion 20 years ago.

• Now a 100 Employee Enterprise• Transitioned CBA from FIBA rules to NBA Rules• Now an official NBA affiliated league

What is NBA CHINA?

450 Million1.2 Billio

n

Less Than

20 Yrs O

ld

300

Mill

ion

310 Million

MARKETING POWER

NBA in China

People in China

Estimated NBA Fans83% of people between 15-24

Estimated Chinese Basketball Players

US Population

ESPN and China Merchant BankCombined $250 Million in total Investments

AEG and Chinese Sports MinistryCombined to design and build 12 NBA style Arenas Throuhout China, starting with Shanghai.

China is the Largest Merchandise Market Outside the USThey have built 8 Offically Licenced NBA Stores which have doubled revenues since being opened.

NBA is on 51 Different Networks throught ChinaUp 31% since 2008

NBA.COMTraffic on NBA.COM has risen 60% since 2008

MARKETING PROCESS

Shaq In China

Baron Davis & Jose Calderon

on Li Ning Tour

NBA Jam Van

Touring China

NBA Partners with Tsingtao

Beer

Take-Two's NBA Online

Game In China

NBA Reality TV Show in China

Completed a tour throughout several major cities in China

Met fans and played ping pong in busy shopping

area

NBA implemented an interactive tour

for fans to get closer to the

game

Multi-year sponsorship with

China’s Largest Beer Brewer

Take Two Interactice and Tencent enter online gaming

NBA reality show in China called

“Mengniu Basketball Disciple”.

The Shaolin Temple in Henan -

birth place of Kung-Fu

Davis reveals his plan to make a documentary

Allows fans to show off their skills on 7’, 8’, 9’

and 10’ rims

Will fund Sport & Dance Competitions

for NBA CHINA

Launched Top Rated NBA 2K sports

franchise in China

45 min show showing Chinese

Amateur Basketballers

Animated attempt to learn the art of Kung

Fu

Shows Sino-US basketball culture &

basketball bridge between China & US

Chinese online gaming market grew by 61% last year ; now $2.75

billion in revenue.

1 MVP Choses; Gets tryout with

NBDL Team

Promotional POWER

STIMULUS PACKAGEChina recently received

$585 billion with including funding for

Sports-Related Infastructure

Barack ObamaOn record stating he will work with Tim Chen to use NBA China to cultivate a stronger relationship with China

Tim ChenNBA China CEO who led 2 fortune 100 business in China

Basketball Diplomacy PROCESS

Universal Support

• Population and Interest• Disney, Mercedes Benz, AEG.. You• Tim Chen• Growth• Basketball Junkies• An Investment that will pay for itself for years to

come

NBA CHINA: KEY REASONS TO INVEST

SWOT ANALYSIS: STRENGTHS

• Young Innovative League• NBA China has backing• "Basketball Diplomacy"• NBA China has stores in place• The NBA Brand Recognition • NBA on TV• Tim Chen • CHINA has taken a lead role in the development in NBA CHINA• 17 Teams already in place.• Chinese Stimulus Package• League Revenue Sharing• Central Location in ASIA

• Unfamiliarity• Imbalanced Roster• Revenue Sharing• Lack of experience and reputation• Superior talent• International basketball previously operated under FIBA rules• Lack of history of the sport within the country• Lack of current “star” power

SWOT ANALYSIS: WEAKNESSES

• Population• 450 Million People Interested In basketball• 300 million play basketball• Merchandise Sales • New International Market• Ticket Sales• TV Ratings• Growth of Chinese talent, coaches, and management positions.• Uniting of Chinese and American Culture

SWOT ANALYSIS: OPPORTUNITIES

• European Basketball • Westernization of China• CBA Already in Existence• Minor League Basketball Feel• Different currency rate • American players willingness to play overseas

SWOT ANALYSIS: THEATS

Monthly salary of foreign players was not

allowed to go above $60,000 (limit 2 players

per team)

820,000 U.S. dollars per team

Allows a capitalist system for its local

players to compete and the most successful

being rewarded heavily

League is protecting the domestic industry from

foreign domination

Foreign player influence is down and an

incentive to make the national team pushes

competitive level of play from Chinese players The motivation to play

good is making the Chinese National Team

where players can make up to $146,000 for making the team

The total salary for players and coaches

must be below 55 percent of a club's

revenue

Salary Cap

Chinese club players will not exceed 300,000 yuan

($44,000)

Season Length and Competition

No competition with other leagues since it is the only pro basketball league in China. Due to the fact that you can only have 2 Non-Chinese Players, the aim is to stick to the Domestic fan

base!!

Playoffs End April

25

Season Ends March 14th

Playoffs Begin March

24th

Season is Approx 4 months

Season Begins Dec 20

32 Game Season

Highest NBA Team Valuation

The most valuable franchise was the defending champion, Los Angeles Lakers at $607 million.

Lowest NBA Team Valuation

The least valuable franchise was the Milwaukee Bucks with a value of $254 million.

INVESTMENT ONE: THE 18th TEAM

Values in the USA

Average Cost

The median value of NBA

franchises for the year

2009 and 2010 was $341

million.

“The average asking price

for NBA franchises is

about 300 Million US

dollars. However, NBA

franchises rarely come on

the market, so when they

do competition can be

fierce and Bidding wars

can quickly drive prices

up to $600M or higher”

$341 Million

$600 Million

INVESTMENT ONE: THE 18th TEAM

]]• Currently the US dollar can get you 6.65 Yuan in

China. • If you take the median price for the value in the US

and try to get a team in China it will come out to 2.3 billion Yuan.

• If bidding wars ride prices up you could be looking at 3.9 billion Yuan to start a franchise.

Conversion into Yuan

INVESTMENT ONE: THE 18th TEAM

150 170 180190

210

230+

2010 2011 2012 2013 2014 2015

So

urc

e: S

po

rts

Bu

sin

ess

Jou

rnal

“…That could put the NBA China revenue at roughly

between $150 million and $170 million.”

Expected Revenue Increase

Revenue POTENTIAL

Increased Revenue

INVESTMENT TWO: THE ARENA

AEG, the sports and entertainment presentation company, already has 12 arena deal in place with NBA China.

Tim Chin, CEO, projects total cost for first arena by AEG to be $277 million (Shanghai). Others likely similar.

Compare to Orland Magic’s Amway Center ($480 million in 2010) and Dallas Mavericks’ American Airlines Center ($420 million in 2002).

13 Basketball ready arenas

$15-$200USD for premium seating

in new arenas

Tickets range from $5-$47 USD

Newer arenas being able to hold

around 20,000

Average capacities for the stadiums are

15,000

ARENAS and Tickets

Beijing has 5

Arenas

12 NE

W A

renas

being built

Qingdao has 1

Gua

ngzh

ou

has

1

Changchun has 1Tianjin

has 1Shanghai

has 1

Nanjing

has 1

Taipei has 1

Hon

g K

ong

has

2

INVESTMENT TWO: THE ARENA

Company endorsement deals potentially provide hundreds of millions of dollars in additional revenue.

Mercedes-Benz: 10 year $75 – 100 million naming rights deal for new arena in Shanghai

Naming rights deals of this size prior to league becoming a household name indicate potential for even larger deals in the future.

Investors wise to invest now before league entry and franchise fees skyrocket as popularity increases.

INVESTMENT TWO: THE ARENA

Estimated arena cost of $277 million in USD converted to 1.8 billion “yuan”.

Lower production costs, labor costs (compared to U.S.) result in cheaper investment yielding a greater return.Sponsorship deals and naming rights are large part of

new arena construction.

THE ARENA

Beijing Wukesong Culture &

Sports Center

Population in Beijing is approx 18

million

Opened January 2008

for Beijing Olympics

18,000Seat

Capacity

Owned by Peoples

Republic of China (Gov’t)

Tenants are Chinese Olympic Committee and 2008 Summer

Olympics

The center is an important part of Beijing's Olympic Games heritage Allows citizens in the western districts and Beijing as a whole to enjoy cultural, sports, leisure, recreational and

commercial activities

http://video.foxbu

siness.com/v/41

68663/nba-looks

-to-china-for-gro

wth

Hear from CEO of NBA China Tim Chen

Better Investing

Better Future

Building Relationships

Additional References

• http://www.nbainchina.com/chinese-basketball-association-cba-salary-cap/

• http://www.sportsbusinessjournal.com/article/65803

• http://www.worldwideticketing.com/bookings.htm