By Stu Woo

SINGAPORE -- Five years ago, the NBA faced a crisis when the Chinese government, angry over an internet post from the Houston Rockets' then-general manager, banished the league from playing and broadcasting games in its most important international market.

Now, the NBA and Beijing are taking a cautious step toward reconciliation, demonstrating a potential playbook for foreign businesses looking to repair relations with China.

Starting in 2025, the NBA will play preseason games in the Chinese territory of Macau as part of a multiyear agreement, the league said. The Brooklyn Nets and Phoenix Suns will play in the inaugural games next year at an arena owned by casino operator Las Vegas Sands.

The Nets are owned by Joe Tsai, the co-founder of Chinese e-commerce giant Alibaba who acted as a mediator between the NBA and Chinese officials during the 2019 standoff. Las Vegas Sands and the Dallas Mavericks are both controlled by the Adelson family.

The choice of Macau signaled that these games are designed as a test, one that could eventually lead to the NBA's return to mainland China. Macau is a specially administered Chinese region of 700,000 people with its own currency as well as casinos, which are illegal on the mainland.

"China is saying, 'This is an experiment, and if you play along properly, we'll be able to move it to another area,' " said Alexander Shapiro, a branding consultant who works with businesses in China.

China's appeal is clear to the NBA: The country has hundreds of millions of basketball fans, and many would rather watch the Los Angeles Lakers than, say, the domestic league's Nanjing Monkey Kings.

But for China, the rapprochement has benefits too. It signals that China remains open to foreign businesses -- and that it looks favorably upon those who put in the effort to build a relationship with Beijing, Shapiro said.

For years, the NBA has tried to build a foothold in basketball-crazy China, where Kobe Bryant and Stephen Curry jerseys are common. The relationship was positive until 2019, when then-Houston Rockets general manager Daryl Morey tweeted an image that supported antigovernment protesters in Hong Kong.

That enraged the Chinese government. They pulled the NBA games off Chinese television and stopped playing host to preseason games, which had been an annual event. Chinese sponsors also cut ties with the league.

The Chinese government asked the NBA to fire Morey, league commissioner Adam Silver later said, but he publicly backed the executive's free-speech rights, even as the league lost hundreds of millions of dollars in revenue from the standoff.

Still, the NBA worked to restore its image in China. Shortly after Morey's tweet, it apologized for "hurt feelings," which drew condemnation from some U.S. lawmakers whom it saw it as bowing to Beijing. In 2020, it hired a new executive for its China business, Michael Ma.

In 2022, Chinese television resumed regular broadcasts of NBA games.

Since then, there have been hints that the NBA was getting closer to normalizing its relationship with Beijing. Tsai, the Nets owner, said at a conference in Macau in February that the two sides had moved past the Morey incident and were on good terms. Silver said in October that he thought NBA games would return to China.

Write to Stu Woo at Stu.Woo@wsj.com

(END) Dow Jones Newswires

December 06, 2024 08:02 ET (13:02 GMT)

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