In a first for US sports, Qatar’s sovereign wealth fund has struck a deal to buy a stake in a company that owns a trio of franchises, including the National Basketball League’s Washington Wizards, according to a person familiar with the situation.
The Qatar Investment Authority plans to acquire 5% of Monumental Sports and Entertainment, according to the person, who asked not to be identified because negotiations were private. Sportico reported the deal earlier and said the transaction would value Monumental, which also owns the National Hockey League’s Washington Capitals and the Women’s National Basketball Association’s Washington Mystics, at about $4 billion.
NHL owners have already approved the transaction, but the NBA Board of Directors must vote on it, the website said. A spokesperson for Monumental declined to comment.
The investment by QIA underscores the ambitions of Gulf states to buy into the world’s most prestigious sports leagues. It’s seen as a potentially profitable investment that can offer autocratic governments an opportunity to launder their reputations through what’s known as sports-washing.
Any international deal for an NBA team would however face significant scrutiny and likely require a lengthy due diligence process before securing league approval. The governments behind many of the Gulf sovereign wealth funds have been criticized for human rights violations. A proposed merger between the Saudi-backed LIV Golf league and the PGA Tour is now under investigation by the US Senate and the Department of Justice over antitrust concerns.
Booming valuations of NBA teams have made it difficult for the world’s richest people to buy franchises on their own, creating an opening for investment funds. In December, months after Abu Dhabi hosted the first-ever NBA preseason games in the Middle East, the league started allowing sovereign wealth funds to buy as much as 20% of a franchise.
Last week, NBA legend Michael Jordan sold his majority stake in the Charlotte Hornets for $3 billion after purchasing it for $275 million in 2010. And in December, Mat Ishbia bought a controlling interest in the NBA’s Phoenix Suns and WNBA’s Mercury that valued the teams at $4 billion.
Bloomberg reported earlier this year that executives at Abu Dhabi’s Mubadala Investment Co. and the QIA were interested in NBA ownership. In April, Peter Biche, chief financial officer of Monumental, said the moves by the leagues had created opportunities to engage many more investors.
“That’s a whole new pool of capital that didn’t exist before,” Biche said in an interview with Bloomberg.
As part of the Gulf states’ spending spree in sports, Saudi Arabia and Abu Dhabi each own an English Premier League football team, and this year the region will host four F1 races. Meanwhile, Qatar holds stakes in Paris Saint-Germain and Portuguese team SC Braga, and Qatari investors are bidding for Manchester United Plc. Qatar also spent an estimated $300 billion to host the 2022 FIFA World Cup.
--With assistance from Kailey Leinz and Isabella Steger.
(Updates throughout.)
