The Qatari Investment Authority has bought a minority stake in Monumental Sports & Entertainment, the parent of the NBA’s Washington Wizards and NHL’s Washington Capitals. While that might seem similar to Saudi Arabia’s Public Investment Fund (PIF) backing a new venture between LIV Golf and the PGA Tour—a move the Senate Homeland Security and Governmental Affairs Committee and Department of Justice are investigating—the two developments are different in importance , legally significant ways.
The proposed and still-unnamed global golf league that aims to unite the backers of LIV Golf, the PGA Tour and the DP World Tour is facing plenty of scrutiny, driven by several considerations, most of which are not in play with QIA’s purchase.
More from Sportico.com
The new golf league has raised antitrust concerns, since it would unite golf organizations that have aggressively competed for golfers and fans. A drop in competition could eventually mean fewer competitions, lower pay and other detrimental outcomes that sometimes arise when business competitors join hands.
QIA’s purchase of a stake in Monumental raises no such antitrust concern.
For starters, unlike the PGA Tour which will have a new business relationship with a previous rival, the NBA and NHL will continue to operate as they have for decades. The NBA and NHL are also for-profit entities that oversee joint ventures of independently owned teams and negotiate working conditions with their respective players’ unions.
The PGA Tour, a membership organization where the golfers are not employees or unionized, is quite different. The tour intends to preserve its tax-exempt status as a 501(c)(6) entity even after joining hands with PIF. Sen. Richard Blumenthal (D-Conn), chair of the Senate’s Permanent Subcommittee on Investigations, recently raised concern that “a foreign government may directly benefit from provisions in US tax laws” used by non-profits if the LIV-PGA Tour venture advances.
The PIF is also more politically problematic than the QIA, although both have issues. The Saudi fund is run at the direction of Crown Prince Mohammed bin Salman, whom President Joe Biden has denounced for the torture and murder of Washington Post writer Jamal Khashoggi. Members of Congress (among others) have sharply criticized the Saudi government for human rights abuses and other geopolitical concerns. They have also suggested LIV was an attempt to sportwash its international reputation.
Qatar, which hosted the 2022 FIFA World Cup, has also been criticized for human rights violations and accused of sportswashing, although not to the same degree—especially in the US
Finally, QIA will have a passive, minority stake in Monumental, while the PIF will play a major funding and leadership role in the new golf venture. Although the PGA Tour will appoint a majority of the new entity’s board of directors to oversee operations, businesses and investments, the PIF is expected to provide much of the funding and decide who else can invest. The PGA Tour statement announcing the merger said PIF “will initially be the exclusive investor in the new entity” and “will have the exclusive right to further invest in the new entity, including a right of first refusal on any capital that may be invested in the new entity.”
In a statement to SporticoNBA spokesman Mike Bass emphasized that if its purchase of a “passive, non-controlling, minority investment” in Monumental is okayed by the league, QIA would have “no involvement” in Wizards’ operations “or decision-making.”
Click here to read the full article.