Saudi Sports Investments Draw Federal Scrutiny

Middle East sovereign wealth funds are eyeing sports franchises in the US, where a slew of potential mergers and acquisitions has positioned counties, such as Saudi Arabia and Qatar, as major players. It has also raised concerns about “sportswashing” among Congressional leaders.

The Saudi Public Investment Fund-backed LIV Golf and the PGA Tour announced in June a $3 billion merger after a bitter feud for supremacy of men’s professional golf that had divided players, fans and corporate sponsors. The PGA Tour and LIV Golf were embroiled in antitrust litigation until the surprise announcement on June 6, which ended all outstanding lawsuits.

The National Basketball Association accepted its first sovereign wealth-fund investment from the Qatar Investment Authority, which bought a 5% stake for $200 million in Monumental Sports & Entertainment (MSE), the parent company of the NBA’s Washington Wizards, the NHL’s Washington Capitals and a number of other ventures. The deal valued the MSE at $4.05 billion, according to Sportico.

“As one of the largest integrated sports and entertainment companies in the country, MSE’s platform provides unique opportunities and scalability for growth and partnerships,” the Qatar Investment Authority, which has assets worth around $450 billion, said in a statement on July 10. This marks the first time a sovereign wealth fund has invested in the US sports industry.

Major League Soccer may also allow sovereign wealth funds to invest in its teams, MLS commissioner Don Garber said on July 13 at the Allen & Co. Sun Valley Conference. “The NHL and NBA have looked at having sovereign funds and pension funds,” Garber said in a Bloomberg TV interview. “The MLS is looking at the same thing.”

Gulf oil-producing nations are eyeing sports as they look to diversify their economies away from hydrocarbons. Sports acquisitions could help boost foreign investment, increase domestic employment, and spur tourism. Qatar hosted the FIFA World Cup last year, an event that drew more than 1.4 million fans from across the globe.

“There’s something to the fact that Saudi Arabia wants to be known for something other than oil, religious extremism, and the past in which women couldn’t drive,” Council on Foreign Relations’ Senior Fellow for Middle East and Africa Studies Steven A. Cook said on July 13. “That’s, of course, part of what is driving the Saudi investment in sports.”

But the investments are getting noticed on Capitol Hill.

The PGA-LIV merger, which has not yet been finalized beyond a framework that was released last month, has sparked vocal criticism in the US. The Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations grilled on July 11 PGA Tour chief operating officer Ron Price and board member Jimmy Dunne.

Sen. Richard Blumenthal (D-Conn.), the subcommittee chairman, repeatedly questioned the pair over the decision to accept money from the Saudis after vehemently opposing LIV Golf for more than a year. Sen. Josh Hawley (R-Mo.), another member of the panel, asked witnesses about the abrupt about-face of the PGA Tour, whose lobbyists lambasted Saudi-backed LIV Golf on Capitol Hill.

“We hope that today's hearing will help us uncover, not only the reasons for the PGA tour's sudden reversal of its opposition to the LIV golf takeover and what it means to golf, but also understand what similar investments by repressive regimes or other countries with deep pockets could mean for our country, for our national security and for the world,” Blumenthal said during his opening remarks.

“For two years, the most vehement opposition to the Saudi government's taking over the sport of golf in America and the most vehement criticism of Saud sportwashing came from the PGA tour leaders themselves.”

Republicans had mixed reactions.

“There’s nothing wrong with the PGA Tour negotiating its survival,” Sen. Ron Johnson (R-Wis.), the ranking member on the subcommittee and a self-described golf fan, said. “ Negotiations are often delicate, and I fear Congress getting involved at this stage could have negative consequences.”