Report: Rockets Lost Nearly $20M in Sponsorship Revenue After Daryl Morey Tweet

Timothy Rapp@@TRappaRTFeatured ColumnistNovember 12, 2019

PHILADELPHIA, PA - JANUARY 21: General Manager Daryl Morey of the Houston Rockets arrives before the game against the Philadelphia 76ers on January 21, 2019 at the Wells Fargo Center in Philadelphia, Pennsylvania. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 2019 NBAE (Photo by Jesse D. Garrabrant/NBAE via Getty Images)
Jesse D. Garrabrant/Getty Images

The Houston Rockets are continuing to feel the effects of Daryl Morey's tweet supporting the protestors in Hong Kong that sparked tensions between the NBA and China. 

According to Kevin Arnovitz of ESPN, "No team has felt the brunt of the fallout more than the Rockets. League sources say the franchise has lost more than $7 million in revenue this season from canceled Chinese sponsorship agreements and nearly $20 million overall when terminated multiyear deals are calculated."

The backlash from China has extended beyond just the Rockets.

As Arnovitz wrote, "Chinese companies that had existing sponsorship deals with NBA teams notified franchises early the previous week that those partnerships were being terminated until further notice. One NBA team says it immediately slashed revenue projections derived from Chinese sponsorship for the 2019-20 season to zero."

The league's broadcasts in the country have also been affected, with CCTV—the country's state-run network—refusing to show NBA games. ESPN partner Tencent has been streaming NBA contests except for those involving the Rockets.

The standoff with China has also impacted many players, from those with endorsement deals with Chinese footwear and apparel companies to James Harden, whose "endorsement agreement with Shanghai's SPD Bank Credit Card is imperiled."

And the situation has also created image issues for the league. While the NBA has publicly supported Morey's right to free speech, its distancing from his remarks has earned the ire of some American citizens and politicians. They have suggested the league is more concerned with its bottom line than supporting the protests in Hong Kong, which began as a response to extradition laws between Hong Kong and China but have extended to protest China's reach and influence in the region. 

The NBA's growing international reach brings with it complexities. As Arnovitz noted, "Many executives said they would like the NBA to develop guidelines for dealing with China and other politically sensitive topics, rather than leaving teams, players and executives to formulate them on their own."

The NBA exists on the world stage now. As the incident with China has shown, something as simple as a tweet can create a political and economic firestorm for the league.