Tensions between China and the Houston Rockets appear to be cooling down, but the global fiasco that started with a simple tweet from general manager Daryl Morey will likely still hit the team’s bottom line hard.
A conservative estimate reveals the NBA pulls in about $500 million in revenue from China and its nearly 500 million fans, but any losses would disproportionally hurt the Rockets, the most popular team in the nation. According to a report from the New York Times’ Marc Stein, the flare-up could cost the team $25 million this year.
During Thursday's game between the Brooklyn Nets and Los Angeles Lakers, Chinese logos were taken off the court, and it wasn't broadcast on state-run TV. How long this continues could still greatly affect the league as a whole.
Loss in revenue would hurt the whole league
The NBA has been very vocal about issues in the U.S. but quiet about the issue of democracy in Hong Kong because of how much money is on the line.
As Yahoo Sports’ Keith Smith reported on Wednesday, at least five NBA teams are worried that the salary cap will drop by 10 to 15 percent from its projected $116 million figure for 2020-21. The cap is determined by league revenue, so massive losses would hurt players as well as owners.
Teams have been planning how to fit key players under the cap — or stay under the luxury tax — but may have to scramble if their hands are tied tighter than expected.
Rockets will still have plenty of money to spend
One important thing to remember is that even if the Rockets lose the equivalent of Giannis Antetokounmpo’s annual salary, that’s still a drop in the bucket for Rockets owner Tilman Fertitta.
According to Forbes, Fertitta is worth $4.8 billion, which puts him in the upper crust of an already unfathomably rich group of NBA owners. Part of the reason the Rockets rank as the seventh-most highly valued NBA franchise is because of their outsized presence in China, but the team will be OK either way.
Houston is also in a unique position because the core of its team — James Harden, Russell Westbrook and Clint Capela — is locked up for the next three to four years. Morey won’t be faced with the prospect of having to choose which star to retain because those decisions were already made.
Some teams may have to make tough calls if the cap and luxury tax fall below their expected levels, but given the Rockets’ locked-in salaries and deep pockets, any reduction in spending on the Rockets’ behalf will be a personal choice by Fertitta to chose saving money over trying to win.
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