Investment
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.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
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