The National Basketball Association is open to potential investments from Gulf states including the United Arab Emirates and Saudi Arabia, according to a senior league official.
(Bloomberg) — The National Basketball Association is open to potential investments from Gulf states including the United Arab Emirates and Saudi Arabia, according to a senior league official.
Deputy Commissioner Mark Tatum said he could see a path for sovereign wealth funds from Abu Dhabi and Riyadh to take minority passive ownership in teams. That would potentially follow the Qatar Investment Authority, which struck a deal in June to take a 5% stake in the parent company of the Washington Wizards.
“There’s been no specific discussions at the league level about that but if that were to happen with a club, the team would have to bring that to us and we’d have to go through our process and extensive background checks — like we would with any investor,” Tatum said in Abu Dhabi, where the Minnesota Timberwolves beat the Dallas Mavericks in the first of two preseason games in the city.
“There’s no lack of interest from institutional investors,” he said, declining to comment on potential talks between team owners and prospective buyers.
Booming valuations of basketball teams have made it difficult for the world’s richest to buy franchises on their own, creating an opening for investment funds. Meanwhile, Gulf states are aggressively deploying their oil wealth in the world of sport to diversify their economies beyond hydrocarbons.
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Abu Dhabi owns an English Premier League football team alongside neighboring Saudi Arabia, which this week confirmed plans to bid for the 2034 World Cup. Qatar also holds stakes in Paris Saint-Germain as well as the Portuguese franchise SC Braga, and it spent as much as $300 billion to host last year’s World Cup.
Outside of football, Gulf wealth has upended the economics of other sports, including golf. Basketball is also on the radar.
Bloomberg reported earlier this year that executives at Abu Dhabi’s Mubadala Investment Co. were interested in NBA ownership.
Read more: NBA Teams Become Target for Gulf Sovereign Wealth Funds
In December — months after Abu Dhabi hosted the first-ever NBA preseason games in the Middle East — the league started allowing sovereign wealth funds to buy as much as 20% of a franchise. Institutional investors can hold stakes in as many as five franchises at one time.
Abu Dhabi wealth fund ADQ, chaired by powerful royal Sheikh Tahnoon bin Zayed Al Nahyan, served as this year’s presenting partner for the NBA games in the UAE capital.
Last month, Bloomberg reported that a chunk of the Golden State Warriors is up for sale, with a potential valuation of $7 billion having been discussed. Tatum said it’s only a matter of time before a team’s valuation surpasses $10 billion.
“Many investors are bullish on the NBA’s continued growth and the growth of the valuations of these franchises,” he said.
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–With assistance from Ira Boudway and Randall Williams.
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