It all began with a Tweet over the weekend by a Houston Rockets’ executive, showing support for the Hong Kong protestors. The official Chinese reaction was swift and decisive – broadcasts of pre-season NBA games to be played in China were cancelled; Chinese fans were in support of the games being called off; charity events were stopped; and Chinese companies broke off relationships with the NBA and other U.S. entities.

The NBA came out strongly in favor of free expression on the part of their players and executives. NBA players who have been outspoken on other free speech and human rights issues have remained silent. As I’m writing this, the story is still unfolding.

While western sports brands have not yet been pulled into this dilemma, the potential implications are dire. From my observations, China has fueled much of the growth for most of the western brands. If sales in China were to slow, I believe it would have a major negative impact on quarterly results.

The performance basketball shoe business in the U.S. has been in decline for the past four years, as NPD’s retail sales data has shown. On the other hand, basketball shoe sales in China have been robust, with hundreds of millions of kids playing the sport. From what I’m seeing, endorsed NBA players still drive sales in China while they do not here in the U.S. If Chinese kids stop buying western basketball shoes, I see the investments in athlete endorsements being worth even less. The same goes for NBA licensed products; if Chinese kids stop wearing NBA jerseys, the sales and investments in the licenses will, in my opinion, likely be in jeopardy.

All of this comes at a time when native Chinese brands have ramped up efforts to take back market share they gave up to western brands. Should the situation worsen between the NBA and China, we could potentially see a move by Chinese consumers back to the native brands. On another front, I believe the trade war with China could potentially cause consumers there to turn their backs on western brands, which could also have negative consequences.

Let’s hope the NBA can bring this PR crisis to an end, and reduce any potential shakeups for sports brands in the basketball space.

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