China suspends business ties with NBA's Houston Rockets over Hong Kong tweet

Hong Kong(CNN Business) Several Chinese businesses are suspending ties with the Houston Rockets after the American basketball team's general manager expressed support for Hong Kong's pro-democracy protests.

Daryl Morey set off a firestorm in China over the weekend when he posted an image on Twitter that read, "Fight for freedom, stand with Hong Kong." Tensions between Hong Kong and Beijing, which controls the former British colony, have been fueled by months of political unrest.

The backlash from China followed quickly. The Chinese Basketball Association said Sunday it would suspend all cooperation with the Texas-based team. The association's chairman is Yao Ming, a former Rockets player.

China's consulate general in Houston also urged the team to "clarify and immediately correct the mistakes" in a statement on Sunday.

The NBA team's partnerships in China were thrown into doubt. CCTV 5, the sports channel of China's top state broadcaster, announced that it would suspend airing Houston Rockets events on television.

And Tencent Sports said it would suspend live streaming for Houston Rockets games, as well as news about the team. Tencent (TCEHY) is the NBA's exclusive digital partner in China. Nearly 500 million people in China watched NBA programming on Tencent platforms during the last season, according to the companies. They recently signed a five-year extension of that partnership.

Sponsors distanced themselves from the Houston Rockets as well. Li-Ning Company, which makes sportswear, and Shanghai Pudong Development Bank each said over the weekend that they would suspend cooperation with the team.

NBA expresses regret

The backlash triggered responses from the NBA and Morey. The NBA said Monday that it recognizes that Morey's views "have deeply offended many of our friends and fans in China, which is regrettable."

"While Daryl has made it clear that his tweet does not represent the Rockets or the NBA, the values of the league support individuals educating themselves and sharing their views on matters important to them," NBA Chief Communications Officer Mike Bass said in a statement, which was published on the Chinese social media website Weibo. "We have great respect for the history and culture of China and hope that sports and the NBA can be used as a unifying force to bridge cultural divides and bring people together."

Morey's original tweet on the subject has since been deleted. In a new series of tweets on Monday, he said that he was speaking on his own behalf.

"I did not intend my tweet to cause any offense to Rockets fans and friends of mine in China," Morey said. "I was merely voicing one thought, based on one interpretation, of one complicated event. I have had a lot of opportunity since that tweet to hear and consider other perspectives."

Houston Rockets owner Tilman Fertitta tried to distance the team from politics. The team is in Tokyo for a series of preseason games against the Toronto Raptors this week.

Morey "does NOT speak for the @HoustonRockets. Our presence in Tokyo is all about the promotion of the @NBA internationally and we are NOT a political organization," Fertitta said Saturday on Twitter.

Big business

Basketball is a big deal in China. It's popularity exploded in part because of Yao, who was born in Shanghai and played for the Rockets from 2002 to 2011. Roughly 300 million people in the country — nearly one-fifth of its population — now play the sport, according to the Chinese Basketball Association.

There's a lot at stake for the NBA in particular. It's the most watched professional sport in the country, according to Tencent. The number of people watching NBA games on Tencent's streaming services in China has nearly tripled in the last four years. And during the 2017-2018 season, more than 600 million people watched NBA games on Chinese television networks.

The NBA does not routinely publish how much revenue it generates from China. But NBA China, which it established in 2008 to manage the NBA-related events, was worth more than $4 billion, NBA deputy commissioner Mark Tatum told Forbes in an interview last year.

The NBA also partners with Chinese companies, which sell authorized NBA products — including sportswear, beer, dairy drinks and electronics. Partners include Alibaba, (BABA) Li-Ning, and Mengniu Dairy.

The sport and its stars are also popular on social media. The league has 180 million followers on Chinese social media, according to NBA China. And star players also have huge followings: Kobe Bryant, the former Los Angeles Lakers legend who retired in 2016, has 8.25 million followers on Weibo.

Brock Silvers, managing director at investment firm Kaiyuan Capital, said the league's response was quick and predictable, given how politicized Hong Kong has become.

"But a league renowned for marketing savvy may be committing an uncharacteristic turnover," he added. "The NBA's response reflexively expressed an extreme political correctness, one that may be at odds with the NBA's players and fans. And at some point there may be a broader backlash that leaves the NBA seeming both out of touch and less entertaining. "

Controversy in the United States

The NBA's response has already been criticized by several US politicians.

"It's clear that the NBA is more interested in money than human rights," said Senator Rick Scott, a Republican from Florida, on Twitter. "The NBA is kowtowing to Beijing to protect their bottom line and disavowing those with the temerity to #standwithHongKong. Shameful!"

Beto O'Rourke, a Democrat from Texas who is running for the party's presidential nomination in 2020, called the NBA's response "an embarrassment."

"The only thing the NBA should be apologizing for is their blatant prioritization of profits over human rights," he wrote on Twitter.

Joe Tsai, the executive vice chairman of Chinese tech giant Alibaba (BABA) and owner of the Brooklyn Nets NBA franchise, sought to defuse the tensions.

"The NBA has been very progressive in allowing players and other constituents a platform to speak out on issues," Tsai wrote in a lengthy Facebook post, before outlining the problem with supporting what he described as a "separatist movement" in a territory controlled by China.

"Chinese citizens stand united when it comes to the territorial integrity of China and the country's sovereignty over her homeland. This issue is non-negotiable," he said.

Tsai also partially defended Morey, while urging Chinese fans to "keep the faith" in the NBA.

"I am sure he's a fine NBA general manager, and I will take at face value his subsequent apology that he was not as well informed as he should have been," he said. "But the hurt that this incident has caused will take a long time to repair."