The National Basketball Association (NBA) was to announce yesterday that it had hired Timothy Chen (陳永正), chief executive of Microsoft's China operations, to head a new NBA subsidiary.
NBA China will combine all the league's broadcast, merchandising and other operations in China, Hong Kong, Macau and Taiwan.
The formation of the China subsidiary, the first of its kind by a major US sports league, and the appointment of Chen, one of the best-known executives in China, signal the growing importance of China to the NBA and to basketball.
China has become the NBA's largest market outside the US. Nearly a third of the traffic to NBA.com comes to the Mandarin Chinese side of the site. Branded NBA merchandise is now sold through more than 50,000 outlets here. Still, like Microsoft, the NBA has found that the toughest hoops in China are in the corridors of power.
Microsoft's dilemma has been to persuade China's central, provincial and municipal governments to crack down on pirated software and respect intellectual property rights; the NBA's challenge has been to win government agency approval for arena construction and to persuade television stations owned by local and provincial governments to join national broadcasters in carrying NBA games.
NBA commissioner David Stern said that these challenges helped make Chen the best contender for the job.
"It wasn't just about intellectual property; it was his experience in navigating difficult governmental and business issues," Stern said in a telephone interview.
The league will own 90 percent of the China subsidiary while selling a 5 percent stake to a "US media company" and another 5 percent to Chinese investors, Stern said.
He declined to provide more details, except to say that he would probably identify the other investors during a trip to Shanghai next month for an NBA preseason game. Goldman Sachs is advising the league on the transaction, and while the US media company has already been chosen, the league is still negotiating with potential Chinese investors, mainly corporations, Stern added.
A person with knowledge of the negotiations who insisted on anonymity, said in June that the US media company was the Walt Disney Co, which owns ESPN and ABC.
The NBA is rushing to expand its presence in China as quickly as possible before the Beijing Olympics next year, where the Chinese national team will try to avenge its poor showing at the Athens Olympics in 2004.
For Microsoft, Chen's departure presents a challenge. Before his arrival, a succession of executives had cycled through the top China job but had little success in forcing Chinese leaders to get even government agencies to use licensed copies of Microsoft software.
Chen abandoned a strategy that relied on litigation and public criticism in favor of close cooperation with the central government and much more investment in Chinese software companies. Microsoft's partnership with authorities has provoked the ire of human rights advocates, most notably for having its MSN Internet portal censor searches performed in China on subjects that Beijing deems sensitive, and for killing a blog that offended Chinese authorities.
But Chen had considerable success as the central government urged local and provincial governments to buy licensed software. Chinese law enforcement agencies cooperated with the FBI in July during raids that captured what the FBI called more than US$500 million in counterfeit software.
Raised in Taiwan, Chen took the top job in Microsoft's China operations four years ago. Before that, he was the chairman and president of Motorola's China operations, having worked his way up through the ranks except for a yearlong foray in 2000 and 2001 as the chief executive of a Hong Kong Internet business.
"Certainly his technical background we think is a great fit in our new media and digital area," said Heidi Ueberroth, NBA president of global marketing partnerships and international business operations.
Chen became interested in basketball while studying for an MBA at the University of Chicago and started rooting for the Chicago Bulls, Stern said.
The NBA estimates that 300 million Chinese play basketball, a number equal to the entire population of the US. At nearly a quarter of China's population, that estimate may be high, but basketball has caught on here in a way that other Western sports have not.
The Las Vegas Sands Corp has chosen to have two exhibition games featuring NBA teams next month to mark the opening in Macau of its indoor sports arena attached to the new Venetian hotel complex.
The game, pitting the Orlando Magic against the Cleveland Cavaliers, sold out 10 hours after tickets went on sale.
Yao Ming (姚明), the Houston Rockets center from Shanghai, helped popularize NBA basketball, but the NBA tapped the Chinese market early. In 1979, the Washington Bullets came to China to play the national team.
Tom Doctoroff, the chief executive of greater China operations for the JWT advertising agency, said basketball was particularly suited to the current tastes of young Chinese for activities showcasing agility, ingenuity and individualism.
"In China, the quickest and cleverest guy is also the sexiest," he said.
"The NBA is Eve's apple; it's brash individualism," he added. "It's something to admire from afar."
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