Author: Monojit Mandal
The Qatar Investment Authority (QIA), Qatar’s sovereign wealth fund, is studying a major investment in the ownership group of the NBA’s Washington Wizards, according to an NBA official on Thursday. QIA would acquire a minority investment in Monumental Sports & Entertainment, the company run by Ted Leonsis, owner of the Wizards, the Mystics of the WNBA and the Washington Capitals of the NHL. If successful, this will be the first time that a sovereign wealth fund has entered the world of professional team sports in the United States.
NBA spokesman Mike Bass issued a statement saying that the NBA board is continuing to evaluate QIA’s proposed investment in Monumental Sports & Entertainment, the parent company of the Washington Wizards and other sports companies. According to the Washington Post, citing an unidentified source, the Qatari state fund is trying to acquire a 5% stake in Monumental Sports & Entertainment.
Bass emphasized that the NBA would change its laws in November 2022 to allow institutional investors, such as sovereign wealth funds, national and international pension funds and university endowments, to take passive, non-controlling minority stakes in NBA clubs. Any such investment, however, is subject to extensive review by the league, approval by the NBA Board and adherence to established policy criteria. If authorized, QIA’s investment in the club would be passive and minority, with no involvement in operational or decision-making matters, according to Bass.
According to The Athletic, a “high-ranking NHL source” revealed that the league has never ruled out the possibility of a sovereign wealth fund investing. The Athletic noted that the acquisition of a stake in a team requires authorization from the league’s board of governors.
NBA commissioner Adam Silver recently addressed the issue of state funding in sports on “The Dan Patrick Show”, referring to a financial agreement between the PGA Tour and the Saudi Arabian Public Investment Fund, which supported the LIF Golf circuit. Silver noted the enormous attention that nations like Saudi Arabia receive when they invest in sports, emphasizing that these investments also extend to several important American companies. He understood the controversy surrounding the idea of “sports laundering”, but saw the benefits of greater awareness and a worldwide dialogue as a result of these efforts.
Qatar has spent significantly on world sports over the last decade. Qatar Sports Investments, owner of French champions Paris Saint-Germain, is reportedly in discussions to buy a stake in Italy’s Sampdoria. Since 2011, QSI has owned the French club, which has effectively elevated its position to become one of the most important clubs in Europe. QSI also owns 22% of Braga, Portugal’s leading football team.
The fact that Qatar hosted the World Cup last year attracted attention to the country, with headlines about its treatment of migrant workers and human rights record in the run-up to the event.
Qatar’s continued investment in global sports initiatives is reflected in this pioneering foray by a sovereign wealth fund into professional sports in the US. As the NBA Board considers the possible investment, the completion of this transaction could have far-reaching repercussions for the connection between sovereign wealth funds and professional sports ownership, further blurring the barriers between international finance and professional sports ownership.