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Fans of NBA could feel impact of China trade wars

Mon Sep 16 10:57am ET
By ANNE D'INNOCENZIO
AP Retail Writer

Players: LeBron James

NEW YORK (AP) That LeBron James jersey could get a little more expensive.

Companies that make clothing and shoes for the National Basketball Association players are in the crosshairs of President Donald Trump's escalating China trade wars.

So, the question is, will American fans of sports stars like Los Angeles Lakers' James be willing to pay higher prices for the gear?

The stakes are high as U.S. sales from sports licensed merchandise including NBA items rang up $21 billion last year, according to Licensing International, a trade group. Sales on NBAStore.com rose 15% during the 12-month period through August, according to the league. And many of the sports brands ranging from Adidas to Puma rely on China for at least some of their sourcing.

Moreover, experts worry China could impose penalties on Western brands who sell there at a time when business in that country is exploding. Some also believe U.S. fans might turn to counterfeit merchandise if they don't want to pay higher prices.

''When you raise prices on legitimate goods, you encourage the production of illegitimate goods,'' said Steve Lamar, executive vice president of The American Apparel and Footwear Association, a trade group. "We're definitely seeing pressure on brands. We're just waiting for the other basketball shoe to drop.''

Until now, consumers were largely spared from higher prices in Trump's previous round of import taxes. That has changed. Starting Sept. 1, the U .S. government began collecting 15 percent on $112 billion in Chinese imports, on a wide array of merchandise including basketball jerseys, basketball shoes, basketballs and even hoops. Higher tariffs are set to hit another batch of Chinese products - $160 billion worth on Dec. 15 and include other sports products, according to the American Apparel & Footwear Association.

President Trump tweeted Wednesday that planned tariff increases on another $250 billion in Chinese imports, which would include sports bags, would be delayed until Oct. 15, from Oct. 1. Tariff increases are set to go from 25% to 30%.

Many sporting goods companies, including Adidas, Under Armour and Spaulding declined to comment on how their business is being affected by the China trade wars. But like many companies, sport brands have been diversifying their sourcing away from China to factories in Vietnam and Bangladesh for the last several years even before escalating tensions between the U.S. and China.

Take Puma, which announced earlier this year a new multi-year partnership that will make the international sports brand an official marketing partner of the NBA.

''Our sector in China has been very strong. We've been growing 15% every quarter,'' says Puma U.S. CEO Bjorn Gulden, noting it's the fastest growing market ahead of the U.S. and Europe.

But he added, "Tariffs and trade wars are not good for the market. It carries uncertainty.''

Puma has been moving its sourcing out of China over the past two years and now the country accounts for 20 percent of its overall production. Still, Gulden says costs are going up, and he's not sure whether the company will have to raise prices.

Gulden and others believe that the top end of the market may be less vulnerable than the lower end.

For customers who buy sneakers ranging from $150 to $250, an increase may not hurt sales, but that could be a different story for customers who buy shoes in the $60 to $70 range, he said.

Still, he says no one ''has an appetite for higher prices.''

The tensions between the U.S. and China come as many sports brands have been digging deeper into China where basketball is a massive business and the NBA's fan base is exploding through social media.

The good news is that American brands including Nike who sell there say business remains strong and they haven't seen consumers in China pull back because of the strain.

''We have not seen any impact on our business to-date and we continue to see strong momentum as we enter fiscal year 2020, '' Mark G. Parker, chairman, CEO and president of Nike told analysts during a conference call following its fiscal fourth quarter earnings in June. It reported revenue growth in China up 21% this past fiscal year.

Nike says it produces about a quarter of its product in China for the globe. However, its exposure in terms of product produced in China to North America is ''relatively modest.''

There's a silver lining for sportswear makers to Trump's trade war with China, however.

Puma's Gulden says that the company is using the same factories in China that used to produce merchandise for the American market for the Chinese market. Previously, factories outside of China produced goods for China. Now, Puma can stay on top of trends faster.

''You are much quicker. No duty. No freight, '' Gulden added.

Player Notes
Domantas Sabonis Oct 18 6:40pm ET

Indiana Pacers forward Domantas Sabonis is not close on a contract extension with the Monday deadline looming. The Pacers are reportedly actively shopping Sabonis to see what they can get. It's unlikely that the Pacers move Sabonis, but it's possibly if the two can't come to an agreement. T.J. Warren, T.J. Leaf, and Goga Bitadze would see extended roles if the Pacers did move on from Sabonis to start the season.

Marquese Chriss Oct 18 6:40pm ET

Golden State Warriors forward/center Marquese Chriss made the cut for the regular season roster, according to Shams Charania. Chriss played very well in the preseason and the Warriors will need him to open the season. Willie Cauley-Stein (foot) is sidelined, so there will be minutes for Chriss in the rotation. He's more of a deep league guy than anything else, but we'll see what Chriss can do. Alfonzo McKinnie has been waived by the team, clearing room for Chriss on the roster.

Blake Griffin Oct 18 6:30pm ET

Detroit Pistons forward Blake Griffin (hamstring) is expected to be fully healed and ready to play in the regular season, according to head coach Dwane Casey. Griffin ended last season with a left knee issue that required surgery. He's been battling a hamstring issue in camp, so hopefully it's not something that lingers. Griffin is expected to be ready for the season opener, but should get plenty of rest games along the way.

Willie Cauley-Stein Oct 18 6:30pm ET

Golden State Warriors center Willie Cauley-Stein (foot) was able to participate in a light workout after shootaround on Friday. Cauley-Stein suffered a left foot injury in late September and hasn't done much work since then. He's expected to miss the first few weeks of the season, but it could be longer. It's unclear at the moment how long Cauley-Stein is going to be sidelined. Kevon Looney will continue to gain fantasy value in the meantime.

De'Aaron Fox Oct 18 6:20pm ET

Sacramento Kings point guard De'Aaron Fox (back) and center Dewayne Dedmon (illness) were able to return for Friday's practice. Fox has been dealing with some back issues, but appears to have put it behind him. He's expected to be fine for the regular season opener. Dedmon was battling an illness, but is set to be the starting center to begin the season. Dedmon should be worth grabbing at the back end of most drafts.

Harry Giles Oct 18 6:10pm ET

Sacramento Kings center Harry Giles (knee) is likely going to be sidelined to begin the regular season. Head coach Luke Walton said that he's going to take his time with Giles and bring him along slowly. Giles already has serious knee issues and Walton doesn't want to put his career in danger. Richaun Holmes should get the backup center minutes to begin the season, but is basically just a deep league asset.

Avery Bradley Oct 18 6:10pm ET

Los Angeles Lakers guard Avery Bradley (rest) and center Dwight Howard (rest) are sitting out of Friday's preseason game against the Golden State Warriors. Both players had strong preseasons, but head coach Frank Vogel will let the young guys play in this one. Howard is worth grabbing in the last few rounds of standard drafts, while Bradley isn't a great option, but could be worth a look as a last pick or two.

Jonas Valanciunas Oct 18 6:00pm ET

Memphis Grizzlies center Jonas Valanciunas (knee) is beginning to do some conditioning work this week. It doesn't sound like he's been able to go through a full practice yet, but the Grizzlies are being cautious here. Brandon Clarke has been playing well and is seeing his stock quickly rise in standard leagues. Valanciunas will drop a bit on draft boards, but he's still worth grabbing in the middle rounds.

Kevon Looney Oct 18 6:00pm ET

Golden State Warriors center Kevon Looney (hamstring) is expected to be ready to play in Thursday's season opener against the Los Angeles Clippers. He suffered a hamstring injury in early October, but returned to practice a few days ago. Looney is expected to share the center minutes with Marquese Chriss to open the season. He'll be worth grabbing around the 90-100 range in most formats.

Victor Oladipo Oct 18 6:00pm ET

Indiana Pacers guard Victor Oladipo (knee) is expected to play some 5-on-5 in the next couple of days. Oladipo is progressing faster than he was expected and could beat his December timetable. He is worth grabbing in the 75-100 range in most drafts, assuming there is an IR spot available. The Pacers are going to be cautious here, but Oladipo will hopefully be able to return before December.

Furkan Korkmaz Oct 18 5:50pm ET

Philadelphia 76ers forward Furkan Korkmaz will jump into the starting five for Friday's preseason game against the Washington Wizards. Ben Simmons (back) will sit out, so the backups will get some more run in this one. However, Josh Richardson is looking strong and healthy in a Sixers' uniform. He'll be worth drafting in the middle rounds of most drafts, while Korkmaz can be ignored.

Zion Williamson Oct 18 1:28pm ET

Adrian Wojnarowski of ESPN is reporting that Williamson is now expected to miss the first few weeks of the regular season with an injured knee. Williamson's knee injury is not believed to be severe.

Tomas Satoransky Oct 16 7:00pm ET

Chicago Bulls guard Tomas Satoransky has been named the starting point guard for the regular season opener, according to head coach Jim Boylen. Dunn was the favorite to win the job in camp, but that quickly faded. Boylen likes Dunn's defense off the bench, so that's how the team will begin the season. Satoransky is worth grabbing in the middle of most drafts.

Chris Paul Oct 16 6:50pm ET

Oklahoma City Thunder guard Chris Paul (rest) won't play in Wednesday's preseason game against the Memphis Grizzlies. This is just a regular rest day for the veteran point guard. It's unclear how the Thunder plan on working Paul into their gameplan, so fantasy owners should draft him with caution. There is a good chance that Paul does sit out games this season until the Thunder can find a trade partner.

Dennis Smith Jr. Oct 16 6:50pm ET

New York Knicks guard Dennis Smith Jr. (back) is available for Wednesday's preseason game against the Atlanta Hawks. Smith has been sidelined due to back spasms, but appears ready to play now. Head coach David Fizdale wants to see how Smith plays as the starting point guard. He's a late round option in most formats because the Knicks have depth at guard and could easily change it up at any moment. Smith doesn't have a secure starting spot at the moment.

Mitchell Robinson Oct 16 6:40pm ET

New York Knicks center Mitchell Robinson will come off the bench with the second unit in Wednesday's preseason game against the Atlanta Hawks. Robinson got into foul trouble last game, so the Knicks will give Bobby Portis a chance with the starting five. Robinson should be locked as the starting center, but the Knicks probably just want to see how Portis plays with Julius Randle. Robinson is a great option in the early rounds of category leagues.

Terry Rozier Oct 16 6:40pm ET

Charlotte Hornets guard Terry Rozier (knee) won't play in Wednesday's preseason game against the Detroit Pistons. He's dealing with a left knee issue, but most likely is just a precautionary move. Devonte Graham and Dwayne Bacon should see more minutes without Rozier. He should be fine for the regular season and is worth targeting in the middle rounds of most standard drafts.

Jalen Brunson Oct 16 6:40pm ET

Dallas Mavericks guard Jalen Brunson (hamstring) is listed as questionable for Thursday's preseason game against the Los Angeles Clippers. He wasn't able to play in Monday's contest, so the Mavs might be just playing it safe here. There is a good chance that he doesn't play on Thursday, but should be fine for the regular season opener. Brunson doesn't carry huge upside, but could be late round guy or a nice piece in a deep league.

Luke Kennard Oct 16 6:30pm ET

Detroit Pistons guards Luke Kennard (rest) and Derrick Rose (rest) will not suit up for Wednesday's preseason game against the Charlotte Hornets. This appears to be a normal rest game for them so the bench players can get some extra minutes. Both players should have late round value in fantasy leagues. However, the injury history could make some fantasy owners nervous about Rose.

Blake Griffin Oct 16 6:30pm ET

Detroit Pistons forward Blake Griffin (hamstring) won't suit up for Wednesday's preseason game against the Charlotte Hornets. Griffin is dealing with a minor hamstring issue, but doesn't believe it will cost him time in the regular season. The Pistons are going to be careful with Griffin, especially because of his injury history. He has solid upside, but fantasy owners should know the high risk of injury.