Game On: America’s Sports Leagues in Emerging Markets


In 1989, then-National Basketball Association Commissioner David Stern journeyed to China, a first for a commissioner of the league. He came with the offer of free programming to state-owned television, the first bargaining chip in the NBA’s strategy to build its brand in the Chinese market. On a day off, Stern’s delegation visited the Terra Cotta Warriors near the Mausoleum of the First Qin Emperor in Xi’an. When their tour guide inquired as to the nature of their visit, Stern explained that the group was from the NBA. “Ah!” exclaimed the guide, remembering one of the league’s organizations, “the team of the red oxen!”

Twenty-five years later, American sports leagues have moved far beyond the point when an excited Chinese tour guide incorrectly identifies the Chicago Bulls. Despite competing with the cultural phenomenon that is soccer, three of the four major American leagues—the NBA, the National Football League, and Major League Baseball—have capitalized on emerging markets that feature high economic growth rates, large populations, and a middle-class consumer base. By establishing and maintaining a physical presence in these markets, the leagues have successfully grown their brands.


Finding Footholds 

Undoubtedly, soccer (futbol) remains the global sports king. More than a billion people watched the 2014 World Cup Final between Germany and Argentina—nearly  ten times the 2014 Super Bowl’s viewership. Soccer’s role as a cultural centerpiece in much of the world has allowed it to transcend sports. Moreover, soccer is easily and widely accessible. Kenneth L. Shropshire, director of the Wharton Sports Initiative, told the HPR that soccer’s ease of play has been a large part of its success. The only equipment necessary is a ball, and even that is often a sphere molded from assembled refuse. This simplicity, coupled with its cultural advantage, indicates that soccer is unlikely to be unseated by another sport in the foreseeable future.

Therefore, leagues representing other sports often work around the edges of soccer to carve out slices of the available market. David Carter, director of the Sports Business Institute at the University of Southern California, believes the leagues are often just looking to get a foot in the door. “The NFL [probably doesn’t] think there’s a massive market opportunity in many of those nations,” he told the HPR, “but that doesn’t mean they don’t hope to market the league and maybe sell merchandise to build [a] brand.” These marketing efforts don’t shy away from soccer strongholds. Even in Latin America, home of this year’s World Cup and a bastion of futbol fever, “we are going to see interest in other sports,” Lourdes Casanova, academic director of the Emerging Markets Institute at Cornell University, told the HPR.

Targeted Factors 

When judging their ability to penetrate emerging markets, American leagues typically focus on three key elements: economic growth, population size, and a consumer-based middle class. Individuals and families within the markets must be able to afford the merchandise and media platforms of the leagues. The more people can afford these products, the more revenue the leagues can unlock. In written correspondence with the HPR, ESPN basketball analyst Fran Fraschilla listed regions that fit these characteristics: “It seems clear that China, India, and Africa have all been targeted for growth by the NBA.” Because these particular regions represent a large portion of global emerging markets, the leagues focus their efforts there to capitalize on potentially enormous revenue streams.

A burgeoning middle class is also a key criterion in targeting emerging markets. Casanova sees a direct link between the economic success of developing nations’ middle classes and the ability of sports to penetrate their markets. An increase in the middle class’s disposable income not only encourages consumption of professional sports but also enhances participation at a local level. According to Casanova, “As countries become richer, the people can afford to play sports that need a little bit more equipment and a little bit more infrastructure.” In particular, the economic stability of the middle class benefits sports in two ways. First, parents “don’t need the help of the children in the house, or they need it less than before. Second, they can afford to pay a little extra bit for those racquets, or whatever’s needed for the sports.” Local participation opens the door for leagues to gain an economic foothold.

 League Strategies

Such characteristics of emerging markets make penetration possible, but the leagues’ specific strategies are what ultimately determine their economic success in the regions. Participation by local populations, team exhibitions, and importing and exporting players are all part of efforts to have a physical presence in targeted markets. “The best way to develop a fan base, in the long haul, is getting people to play,” Shropshire told the HPR. “None of [the leagues] have a perfect strategy, but it does seem to be, if possible, to get people to play. If not, being sure to have a presence, whether exhibition or otherwise.”

Some leagues are more successful than others in encouraging participation. For decades, the NBA has sent players overseas to hold clinics and make public appearances. Indeed, the NBA has expanded its presence in China to the point that, during the summer of 2013, 47 players journeyed there. By all accounts, these efforts have been successful. Fraschilla estimates that, in a nation of 1.3 billion people, “400 million … play and watch the game of basketball.” Bleacher Report corroborates this figure, reporting a Chinese fan base of 450 million, with 300 million playing the sport. By contrast, the NFL’s efforts to grow participation in American football have sputtered. In two failed ventures, the World League and NFL Europe, the NFL was unable to spur participation abroad. Shropshire points out that these failures caused the NFL to “move away from the multiple participation market” and instead focus on holding a handful of regular-season games in London.

Importing and exporting players allows the leagues to grow their brands on two fronts. First, bringing in talented international players enhances the quality of the games. “[The leagues] are not going to bring in players with an international bent … ‘just because,’” Carter told the HPR. Rather, “they’re going to do it because these guys are talented and can unlock revenue for the teams.” The 2014 NBA Champion San Antonio Spurs are a testament to this strategy: the team used seven foreign-born players (out of a roster of 12) en route to capturing the title. Likewise, the 2013 World Champion Boston Red Sox powered their way through the playoffs thanks to the masterful pitching of Japanese-born Koji Uehara and the strong bat of Dominican-born David Ortiz. Importing foreign talent is a winning strategy.

Additionally, importing and exporting players sparks the interest of fans outside of the United States. Exporting players allows leagues to increase market share without sacrificing their talent pool within the United States. The vast majority of college basketball players are not sufficiently talented to make it to the NBA, but many find success overseas. This increases the quality of the overseas leagues, thereby increasing interest in the game. Naturally, this interest boosts the number of local participants, some of whom are talented enough to join the ranks of the NBA’s international players. These players draw viewership to the NBA, as locals enjoy watching their national heroes compete at the highest level. When leagues master the balance between importing and exporting, Carter says, “it helps build interest in the league domestically and abroad. If you do that, then the fan base will follow.”

Of course, some factors that determine the success of market penetration are beyond the control of the leagues. The degree to which television and social media are present in developing markets has enormous bearing on how easily leagues can reach potential consumers. However, the leagues are left to react to these realities, rather than manipulate them. Government limitations may also interfere with efforts to grow brands. Still, Carter says, “if you look at it long-term, the barriers are being broken down. If you look at the limitations … or opportunities right now in a certain country, that doesn’t mean it’s always going to remain that way. … So I wouldn’t focus on where we are right now.”

Challenges notwithstanding, American sports leagues today are in an excellent position, with much more growth to come. As the economies of developing markets continue to grow, so too will the influence of American sports leagues abroad. Higher rates of participation, viewership, and spending are sure to accompany this expanding influence. For the leagues, a bright future of profit and power awaits. Game on.

Photo Credit: Yahoo Sports

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