When the Washington Huskies play the Texas Longhorns in Shanghai on Nov. 13, it will mark the first regular-season pro or college basketball game in China. It’s part of the Pac-12’s Globalization Initiative.
Inside sports business
A Pac-12 news release last week touted upcoming “educational opportunities” the Washington Huskies and Texas Longhorns will experience during next month’s season-opening NCAA men’s basketball game in China.
Players in the Pac-12 China Game will participate in an educational seminar with a Chinese e-commerce giant in Hangzhou, then swing over to Shanghai for tours of landmarks and a night cruise on the Huangpu River. The biggest learning experience likely won’t be for the students, but for Pac-12 administrators hoping to prove a quick study in Overseas Moneymaking 101.
It’s hardly accidental that the Pac-12 is deal-making in the world’s most populated nation, which loves basketball above all sports. The Nov. 13 game at the 18,000-seat Mercedes-Benz Arena in Shanghai, the first regular-season contest in China by an American collegiate or professional league, is part of a “Globalization Initiative” launched a few years back by Pac-12 commissioner Larry Scott.
Earlier this year, Pac-12 Networks and China-based LeTV reached a deal to live-stream 27 NCAA basketball games, then followed with a weekly football package that began last month. Now the Pac-12 is partnering with Alibaba Group, the Chinese equivalent to Amazon, in staging this nonconference opener for the Huskies.
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No terms have been announced, though LeTV’s initial streaming last spring was apparently gobbled up by basketball hungry Chinese consumers and whet their appetite for more.
“The consumption was unbelievable,’’ Pac-12 Networks president Lydia Murphy-Stephans told Reuters TV in an interview last month.
And with China’s population at 1.36 billion and climbing, possibilities abound if the Pac-12 gets consumers there hooked on its brand. Tapping into that market would even help compensate for some revenue lost in the U.S. due to the Pac-12 Networks’ failure to reach a deal to carry their games on DirecTV.
Some analysts estimate the lack of a DirecTV deal is costing Pac-12 member schools up to $2 million annually. No one really knows yet how much extra revenue could be generated by extending distribution beyond U.S. borders and into tens of millions of Chinese homes.
Such international ventures typically involve shared risk by both network and distributor at first, without major rights fees until a proven audience is identified.
But this is “found money” for the Pac-12.
Streaming to China won’t require much new overhead beyond flipping a switch and having overseas announcers dub over the play-by-play.
The content is already bought and paid for by the Pac-12. Maximizing profit means getting that content out to as wide an audience as possible, borders be darned.
“The old adage of ‘content is king’ continues to be true,’’ says Steve Schwartz, a Seattle-based sports marketing agent and former DirecTV vice president of affiliate relations.
“Whether it’s the Pac-12, or anybody else who makes and creates content, they’ve got something that is valuable. And so the key to making that content valuable is finding distribution.’’
Schwartz agrees it makes sense that China would be the lynchpin of Scott’s “Globalization Initiative” for the Pac-12. Especially when the NBA has helped pave the way by staging previous exhibitions there.
“It’s a huge market,’’ he says. “It’s a market that, from a sports perspective, leads with basketball.’’
From a distribution standpoint, LeTV — shorthand for Leshi Internet Information and Technology — is already China’s largest online video company and fastest-growing smartphone maker, with $1.6 billion in revenues last year. Last month, the company set a Chinese record by selling $280 million worth of television sets, smartphones and accessories in a single day — besting Apple and Samsung.
Recently, LeTV raised $130 million for its independent sports division.
Alibaba, which is staging the Pac-12 China Game, is the world’s largest mobile and e-commerce company, with gross trading volume already surpassing Amazon and eBay combined. Alibaba chairman Jack Ma has long been outspoken about his company playing a role in bridging gaps between China and the West.
ESPN is broadcasting the Huskies game live here, and Alibaba will stream the feed on its mobile and distribution platforms.
It doesn’t hurt that the Pac-12’s regular-season foray into China comes when students from Asian countries already form its largest foreign demographic. Those students pay full cost to attend Pac-12 schools, so drawing them in larger numbers clearly benefits the conference.
Nothing is guaranteed, of course. China’s economy has taken a hit, and there could still be some sorting out of just who makes the best TV partner in that country.
But 1.36 billion Chinese aren’t going anyplace and neither is basketball in the nation’s heart.
And with the Pac-12 projected to be garnering fewer TV revenues than the Big Ten and SEC conferences by 2018, the conference must find new revenue sources now to close the gap.
And playing a live game in Shanghai is just another step — albeit a huge one — in getting Chinese fans to care enough about Pac-12 athletes to tune in on a regular basis.