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US sports the latest goal for Mena investors

The Mavericks and the Timberwolves go head-to-head in Dallas on February 13. In October the NBA teams will play in Abu Dhabi Kevin Jairaj-USA Today Sports
The Mavericks and the Timberwolves go head-to-head in Dallas on February 13. In October the NBA teams will play in Abu Dhabi
  • Sovereign wealth funds can now buy a stake in NBA teams
  • Team valuations are rising sharply in basketball and other US sports
  • NFL is holding out and refuses SWF investment

The $500 billion American sports market could be the next target for Middle East investors, analysts have said, as two more NBA teams unveil plans to play pre-season games in the UAE.

The Dallas Mavericks will face the Minnesota Timberwolves at the Etihad Arena in Abu Dhabi in October this year.

They follow in the footsteps of the Milwaukee Bucks and Atlanta Hawks, who took part in the first NBA Abu Dhabi Games last year under a deal between the basketball league and the emirate’s Department of Culture and Tourism.

Europe’s football leagues are still the first port of call for Middle Eastern investors looking to buy a team, but interest in basketball is growing in the Gulf, said Neil Joyce, founder and CEO of data consultancy CLV Group.

It was reported in February that two of the region’s sovereign wealth funds, the Qatar Investment Authority and Abu Dhabi’s Mubadala, were interested in buying minority stakes in NBA teams.

“Given that funds are drying up, given the financial and banking crisis in the US, Middle East investment would both be welcomed and also would be at an opportune time,” said Joyce.

The door to possible NBA ownership was opened towards the end of last year by the league’s board of governors, who decided to allow wealth funds to buy stakes of up to 20 percent.

“All such investments are subject to league review and NBA board approval,” said Mike Bass, the league’s principal spokesperson, at the time.

Baseball and ice hockey have also loosened ownership rules in recent years – Major League Baseball and the National Hockey League now allow private equity firms to take minority stakes – but American football is holding out.

Valuations of sports teams have soared, making Middle East investment more attractive

In February, the Washington Post described the NFL's ownership rules as "the most restrictive in sports" – one mega-rich lead investor who takes an equity stake of at least 30 percent, no private equity firms, no public corporations, no sovereign wealth funds.

NFL team valuations have soared in recent years, making the pool of potential buyers ever smaller. This may force the league to look at loosening its restrictions "sooner rather than later", according to the Post.

Valuations for basketball teams have risen sharply too. The NBA’s Phoenix Suns and WNBA’s Phoenix Mercury were sold earlier this year for $4 billion in total. Their previous owner Robert Sarver paid a then-record $401 million for them in 2004.

In 2019 the NBA's Brooklyn Nets were sold to Alibaba co-founder Joseph Tsai for $2.35 billion, then a record for US professional sports.

The current record is the $4.65 billion paid for the NFL’s Denver Broncos by Walmart heir Rob Walton in 2022. That mark is set to be surpassed this year, when the long-running sale of the Washington Commanders is completed. The price tag is $6 billion.

“The return on investment has been massive for recent sales and valuations keep going up,” said Ben Gordon, a sports diplomacy expert at London-based Dentons Global Advisors.

US golfer Talor Gooch celebrates victory in the Liv Golf tournament in Adelaide, South Australia. The series is funded by Saudi's Public Investment FundMike Frey-USA Today Sports
US golfer Talor Gooch celebrates victory in the LIV Golf tournament in Adelaide, South Australia. The series is funded by Saudi's Public Investment Fund
'Gulf investors need to be shrewd and patient'

The topic of Middle Eastern investment in sports is sometimes divisive in the US, however. LIV Golf, the breakaway competition funded by Saudi Arabia's Public Investment Fund, has become a major talking point.

Golfers have been criticised for taking Saudi money, with some losing US sponsors. The tournament itself failed to secure the services of major broadcasters.

Simon Chadwick, professor of sport and geopolitical economy at Skema Business School in Paris, said: “Appropriately targeted, negotiated and transacted investments are always possible. But as LIV Golf and Saudi Arabia have shown, these are sensitive times which many in the US are responding to in hostile terms. 

“Gulf investors currently need to be diplomatic, shrewd and patient in pursuing sports investment opportunities in the US.”

Gordon suggested that, for now at least, American sports teams could view the Middle East as untapped territory to increase their fanbases, rather than courting investment from the region.

“Agreements to play more exhibition games – or even meaningful regular season games – in the Middle East are certainly possible.”

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