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Chinese corporate boycott reportedly could cost Rockets $25 million this season

Los Angeles Lakers v Brooklyn Nets - NBA China Games 2019

SHENZHEN, CHINA - OCTOBER 12: LeBron James #23 of the Los Angeles Lakers in action before the match against the Brooklyn Nets during a preseason game as part of 2019 NBA Global Games China at Shenzhen Universiade Center on October 12, 2019 in Shenzhen, Guangdong, China. (Photo by Zhong Zhi/Getty Images)

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With the Lakers and Nets back on American soil, the storm around Rockets’ GM Daryl Morey’s Tweet supporting Hong Kong protestors is dissipating. While a few politicians are still trying to use this for lazy points with their base, most of the involved actors on both sides are ready for this controversy to fade away.

The impacts are real and will linger, however.

The Rockets, in particular, will feel a $25 million financial hit from sponsor pullouts, reports Marc Stein of The New York Times.

An extensive sponsor and media boycott of the Rockets soon spiraled. China’s punitive response could cost the Rockets around $25 million in sponsorship losses this season, according to one person with knowledge of the situation who was not authorized to discuss it publicly.

A hit in team revenue also would mean a hit to the league’s “basketball related income” on some level, which has teams scrambling to figure out the impact on the salary cap for next season. While teams may be running doom-and-gloom scenarios with a 10-15 percent lowering of the salary cap (just in case), sources I have spoken to, and others reported by Stein (and others) expect it to be far less than that. Maybe next to nothing.

However, there could be a lowering of the projected $116 million salary cap by as much as a couple million. That impacts teams in the next week as they near the deadline for offering rookie contract extensions to players such as Boston’s Jaylen Brown or Sacramento’s Buddy Hield. Teams are asking the league for more information, but the league is still trying to assess the potential damage themselves.

The fraught issue of American/China relations is also not going away soon.

Protests continue in Hong Kong — if nothing else, this storm did raise awareness of the issue in the United States — and China’s record and habits with human rights violations are not going away. There will be future issues, and in a league where players and team officials are encouraged to speak out and make their voices heard, there will be a temptation to wade back into these waters. There may be situations where they should.

Now, however, the league and its players — especially the stars who make money selling shoes in the massive Chinese market — understand what the reaction and potential consequences would be. Chinese government officials also understand now how popular basketball in general, and the NBA in particular, are with the youth in China. It’s not a situation where the government can just cut the league out and have no backlash or repercussions.

Everyone has a better idea of how things could play out for future issues, but like China wanted this storm will make NBA players and officials more cautious next time.