Why are foreign autocracies buying Washington sports properties?

Ted Leonsis, the ebullient owner of Washington’s hockey and basketball teams, is almost certainly the capital’s most popular sports honcho. As CEO, he’s celebrated diversity, staging Japanese and Caribbean heritage nights, launching a Hebrew-langauge Twitter handle and festooning the scoreboards with Pride-night rainbows. As owner of the WNBA’s Washington Mystics, he’s been a champion of women’s sports. Beyond the arena, he’s a philanthropic titan who has invested in independent documentaries about things like juvenile incarceration and human rights atrocities.

But as of Monday, fans who buy tickets — and the corporations that entertain Beltway VIPs in private boxes at the arena — may in some small way be underwriting human rights abuses against LGBT people, women and independent media.

That’s because Leonsis has just closed on a reported $200 million investment from the sovereign wealth fund of Qatar, the fantastically rich Persian Gulf state where women’s freedoms are restricted, LGBT rights are nonexistent and media inquiry is curtailed. In exchange, the Qatar Investment Authority gets a roughly 5 percent stake in Monumental Sports & Entertainment, the parent company of the NBA’s Washington Wizards, the NHL’s Washington Capitals and a number of other ventures.

The transaction makes Washington the first franchise to take advantage of an NBA rule change that came into place last winter: For the first time, a major American team-sports league is permitting partial ownership by sovereign wealth funds, the investment organizations that steward the wealth of resource-rich foreign states — and, in many cases, serve as instruments of autocratic governments’ foreign policies.

In Europe, where Qatari properties include the storied Paris Saint-Germain soccer team, foreign sports ownership is a familiar phenomenon. In the U.S., where a confused Congress this week held hearings about the merger of the Saudi-run LIV Golf tour with the American PGA, it’s a newer thing. Critics have a word for it: Sportswashing. By associating themselves with popular athletes, the logic goes, controversial regimes sanitize problematic reputations.

“It’s almost an arms race between some of these Gulf autocracies,” Minky Worden, the director of global initiatives for Human Rights Watch and a longtime chronicler of the phenomenon, told me. “You'll remember that in D.C. in the last decade, they were very focused on purchasing influence through think tanks. It looks to me as an observer both of Washington and sportswashing, that they’re moving the money. … They’ve identified sports as a way to easily burnish their reputations, and without any obstacles.”

Monumental declined to make Leonsis or other executives available for comment. But their vociferous argument has been that the Qatari investment isn’t sportswashing because of the deal’s built-in limits: The fund will be a passive investor with no role in steering the team. There will be no Qatari input on audience development, no Qatari logo on the team jerseys, no Qatari skybox full of senators.

In other words, the general public won’t even know unless they peruse a list of minority owners that’s already 21 partners deep. If the goal is reputation laundering, that’s not much of a detergent.

Instead, Monumental and Qatar have argued, the deal is just about smart money. With profit lines in emerging businesses like esports, Leonsis’ firm is simply a good investment for a fund whose purpose, after all, is to grow Qatar’s national wealth in anticipation of a future where the natural gas supply runs out. The folks on the Qatari side of the table are finance pros, they say, not influence-peddlers.

Worden doesn’t buy it. “It always starts on a small scale,” she said. “It’s a pretty slippery slope from a minor sponsorship into demands.” At the World Cup, she noted, initial promises of inclusivity curdled into denying admission to people in rainbow-colored attire. Might not a passive investment today lead to a friendly game in Qatar, or a regional media deal there, or some other step that further knits a foreign state into a buzzy Washington institution? (Adding another wrinkle, Leonsis has also been mentioned as a bidder for baseball’s Washington Nationals.)

The fund declined comment and Qatar’s embassy in Washington did not immediately respond to questions. In the past, Qatar has rebutted activist criticism of overseas investments by saying they respect local customs (rainbows are welcome when the Paris team plays). The fund’s press release about the sale said Monumetal’s “platform provides unique opportunities and scalability for growth and partnerships.

But even if you do accept the idea that the investment is entirely about the bottom line, it still leaves a major question: Why link arms with this particular government?

Just as some fans might not like having ticket or merchandise proceeds benefit a tobacco company or an overt racist, it’s reasonable to want to keep your dollars away from an authoritarian regime, too. Sure, a $200 million investment is chump change for the $475 billion Qatari fund. It still may make it a wee bit less joyous to do business with Leonsis, a man whose memoir was titled The Business of Happiness","link":{"target":"NEW","attributes":[],"url":"https://www.amazon.com/Business-Happiness-Secrets-Extraordinary-Success/dp/1596981148","_id":"00000189-53d0-dfeb-aded-77df5d6f0000","_type":"33ac701a-72c1-316a-a3a5-13918cf384df"},"_id":"00000189-53d0-dfeb-aded-77df5d6f0001","_type":"02ec1f82-5e56-3b8c-af6e-6fc7c8772266"}">The Business of Happiness.

He isn’t the only boldface name tied to Qatar via the deal, either: The list of partners in Monumental includes Laurene Powell Jobs, the philanthropist who controls the Atlantic, a magazine that has devoted important resources to chronicling human rights abominations, including in Qatar.

Jobs declined comment via a spokeswoman, who noted that Leonsis runs Monumental’s business.

The Capitals and Wizards are also not the only iconic Washington sports brands with new Persian Gulf ties. When the likes of Coco Gauff, Daniil Medvedev and hometown favorite Frances Tiafoe take to the court at Rock Creek Park this month for the annual tennis tournament formerly known as the Citi Open, the contest will have a new name: The Mubadala Citi DC Open.

It’s not exactly a household name. Not here, at least. Headquartered in Abu Dhabi, the Mubadala Investment Company acts as a sovereign wealth fund of the United Arab Emirates, Qatar’s Persian Gulf rival (and frequent competitor in the Beltway influence wars). Chaired until March by the nation’s authoritarian ruler, Mohamed bin Zayed, and now chaired by his brother, Mubadala’s $284 billion portfolio ranges from an Italian aerospace concern to a Brazilian municipal transit system to stakes in major U.S. industries.

In contrast to the hush-hush basketball deal, the tennis rebrand is all about publicity. Washington entrepreneur Mark Ein, the tournament’s chairman, said the arrangement came about because he wanted to expand the 54-year old event to include a women’s tournament of equal status — which Mubadala was currently sponsoring in Silicon Valley. In joining forces, the Emirati firm became the name sponsor of a Beltway event.

Ein says Mubadala sponsors sports events all over the world, from a regatta in San Francisco to another tennis tournament in Rio, and they do so in the name of boosting dealmaking prospects, not buffing its government’s image. “It’s just the same as all the other people who support events,” Ein said. “Citi. JP Morgan Chase. …They do it all for the same reasons.”

But why would what amounts to a giant holding company need to put its name in front of tennis fans in muggy, summertime Washington? Ordinarily, sponsors buy naming rights because they have some good or service they want to sell the audience. By contrast, spectators can’t just drive down to the mall and stop at a Mubadala store.

As with so many Washington sponsorships by defense contractors or others in the influence game, what the arrangement lacks in retail relevance, it makes up for in political upside. For a sovereign wealth fund, having a Beltway audience think of you as just another star in a Washington-branding firmament that includes Fedex or Capital One (or Lockheed Martin) brings an extra benefit — a chance to normalize the fund, and by extension the government that owns it.

But the thing is, it’s not just another conventional corporate sponsor. It’s a foreign government. In this case, it’s a non-democratic foreign government that has been simultaneously a U.S. partner, a signatory of the Abraham Accords peace treaty with Israel and a trading hub for a Russian regime dodging sanctions over its invasion of Ukraine. Mohamed bin Zayed was Vladimir Putin’s guest in St. Petersburg last month.

That doesn’t have to mean that a random tennis sponsorship is sinister. It does mean that there are some complicated acts of messaging going on that ought to cause folks to prick up their ears.

Chances are that fans around Washington will need to prick up their ears more frequently in the years ahead. The NFL’s Washington Commanders just sold for a record-breaking $6 billion, an indication that sports inflation is galloping along. Though football does not include foreign sovereign wealth ownership, basketball has historically been a trailblazer. With prices accelerating, even hidebound sports moguls are eager for more liquidity. And as the ownership situation in European soccer shows, oil money seems to enjoy sports investments. When it comes to wooing America, Washington is the logical place for that money to land.

Should we care? You could argue that injections of foreign capital into hometown institutions are a pleasant fringe benefit of being in a superpower’s capital city. Both Qatar and UAE already spend significant sums around town, winning goodwill via gestures like Qatar’s 2018 underwriting of late-night hours for Metro trains during a Capitals playoff run.

Still, I’m not sure it’s all that harmless.

Michael Abramowitz, president of the Freedom House nonprofit, notes that entanglement with autocratic overseas money can be corrosive to liberties at home. The NBA’s business interests in China, for instance, led the league to silence a Houston Rockets executive who tweeted in favor of Hong Kong human rights, a piece of free speech that risked Chinese government ire and imperiled league financial prospects. “The point that I would make is that the impact of China’s entanglement with Western sports is that it’s not just a threat to what’s happening to people in China, but it’s a threat to the values that we hold dear in democracies,” he said this week.

When Abramowitz’s organization compiled its most recent index of freedom around the world, Qatar scored a 25 and UAE an 18, putting both countries in the “not free” category. (For the record, the U.S. rated an 84, Norway a 100 and North Korea a 3.) A 40-year fan of Washington basketball, Abramowitz says he’s not sure if the deal will make him forego tickets, but cheering his team won’t feel as good.

“It’s basically normalizing regimes that have significantly violated the rights of their citizens,” he told me, before offering a thought experiment: “If an American organization espoused the kinds of views that these regimes are actually imposing on their people right now — repression of women, LGBTQ people, guest workers and so on — would we let them get away with this kind of reputation laundering?” The owner of the NBA’s Los Angeles Clippers, not long ago, was forced to sell his team after racist comments were caught on tape.

Of course, if you turn your attention from Washington-the-capital to Washington-the-hometown, there’s a more prosaic way in which Qatar’s investment could complicate matters for Leonsis. Last month, Monumental met with Virginia officials for preliminary conversations about possibly moving the teams across the river. The real aim, many suspect, may be securing money from D.C. taxpayers to improve the existing downtown arena. Either way, local government challenges await.

Ordinarily, the “no” side in a stadium-subsidy debate has an argument that boils down to: Why should taxpayers help a billionaire? In this case, those naysayers will have extra ammunition. In addition to helping the deep-pocketed principal owner, the local government would also be helping the authoritarian monarchy of one of the world’s richest countries.

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By: Michael Schaffer
Title: Why Are Foreign Autocracies Buying Washington Sports Properties?
Sourced From: www.politico.com/news/magazine/2023/07/14/saudi-arabia-sports-ownership-00106108
Published Date: Fri, 14 Jul 2023 03:30:00 EST

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