Qatari Wealth Fund Buying Into Wizards Parent in $4.05B Deal
The Qatar Investment Authority is buying a passive minority stake in Washington Wizards and Capitals parent Monumental Sports & Entertainment, according to multiple people familiar with the details. It marks the first time a sovereign fund has invested in major U.S. team sports.
QIA, as the Qatari state fund is known, is buying about 5% of Monumental, which includes the WNBA’s Washington Mystics, Capital One Arena and NBC Sports Washington, according to one of the people, who was granted anonymity because the details are private. The deal values the group at $4.05 billion, the source said.
It’s a landmark deal for U.S. sports, which has gradually opened its ranks to investment from institutional money such as private equity, family offices and sovereign wealth. The NBA’s rules, for example, state that no fund can own more than 20% of a franchise and that institutional investors can only buy passive stakes.
The investment comes as U.S. sports teams appreciate dramatically—the average NBA team is now worth $3 billion—making it harder for even the world’s richest people to buy them outright. QIA has more than $450 billion under management, making it one of the 10 largest sovereign wealth funds in the world. It is already a prominent investor in the U.S. The fund’s portfolio includes a 10-acre development project just a few blocks from Capital One Arena.
Representatives for both Monumental and QIA declined to comment. Sportico values the Wizards at $2.7 billion and the Capitals at $1.22 billion. NHL owners have approved the transaction, which must still be OK’d by the NBA Board of Governors.
Led by managing partner Ted Leonsis, Monumental will retain all operational control in the deal, according to the people. QIA will not have a board seat, nor any voting power within the organization. The investment will be used to fuel growth in the group’s existing properties and future acquisitions.
The NBA in 2020 became the first major U.S. league to approve private equity investments—a move soon matched by the NHL, MLB and MLS. Last year, that was expanded to include endowments, family offices and sovereign wealth funds.
The influence of sovereign money has become a controversial topic in sports. Qatar received criticism when it hosted the World Cup last year amid concerns over human rights abuses. Earlier this month, meantime, the PGA Tour announced its plans to merge its commercial assets with those of the Saudi-backed rival LIV Golf. The deal includes additional investment from the Saudi sovereign wealth fund (PIF), which has prompted criticism from golfers, fans and politicians.
"In November 2022, the NBA Board of Governors decided to permit passive, non-controlling, minority investments in NBA teams by institutional investors, including university endowments, foreign and domestic pension funds, and sovereign wealth funds, subject to a set of policy guidelines adopted at that time," said Mike Bass, an NBA spokesman. "All such investments require league review, NBA board approval and compliance with the policy. The NBA board is currently reviewing a potential investment by QIA in Monumental Sports & Entertainment, the parent company of the Washington Wizards, among other sports properties. In accordance with the policy, if approved, QIA would have a passive, minority investment in the team, with no involvement in its operations or decision-making.”
Founded in 2005, QIA is a separate entity from Qatar Sports Investments (QSI), which owns French soccer team Paris Saint-Germain. Though QSI chairman Nasser Al-Khelaifi sits on the QIA board, the two groups share no ownership or broader governance. QIA wasn't directly involved in the 2022 World Cup, and it isn't involved in Qatari Sheikh Jassim bin Hamad Al-Thani’s pursuit of Manchester United. QIA is an investor in a number of global sports properties, including MMA platform ONE Championship, and Viacom18, which holds cricket streaming rights in India, via the fund’s partnership with Bodhi Tree Systems.
QIA, which opened a New York City office in 2015, has said it is committed to investing $45 billion in the United States. Its portfolio includes a number of American companies across healthcare, tech, AI, and sustainability. It is also an investor in Peter Chernin's production studio North Road.
QIA's CityCenterDC development gives it a presence in a city with obvious geopolitical significance. It’s not uncommon for companies to partner with D.C. sports teams because of their proximity to the city’s political power structures.
Monumental is structured in the mold of modern sports ownership—a handful of prominent franchises are at the center of a wider business that includes real estate, media and technology. The portfolio also includes the Wizards’ G League team, esports franchise Team Liquid, and Monumental Sports Network, plus a number of other gaming clubs and facilities.
Monumental investors include billionaires Jeffrey Skoll and Laurene Powell Jobs; BET co-founder Sheila Johnson; and Nationals owner Mark Lerner. QIA’s equity is not coming from a single seller, the people said, meaning all Monumental equity holders will be diluted evenly.
Source: Sportico
