It was always in the background, the idea that Saudi Arabia’s Public Investment Fund was interested in buying WWE. The PIF is one of the largest sovereign wealth funds in the world, with $260 odd billion in estimated assets under management, has already dabbled in sport investment — see LIV Golf and Newcastle United — and the wrestling promotion has developed closer and closer ties with the Kingdom over the past couple of years.
Late Tuesday night, confusing reports popped up about whether the PIF actually bought WWE, and the company is still “exploring options” about potential sales. Whether or not it happens, the PIF seems like a natural fit, and it’s just the latest example of sovereign wealth funds delving into the world of sports as a way to build goodwill and positive associations with their controlling government — in a word, sportswashing.
You could argue that MLB already has a sportswashing problem. Steve Cohen is seen as a boon for baseball, turning the Mets into one of the most exciting franchises in baseball ... and also the managing partner of a hedge fund hit with one of the largest insider trading penalties in history, and banned from managing outside money. Cohen himself avoided criminal charges, although his fund did not.
Ask most Mets fans, or even just general fans that want more spending across the game, and they’re probably less concerned with reputation laundering than they are with the increased competition for free agents and the hopeful ripple effect Cohen’s spending will have across all free agent classes.
I think it’s fair to be worried about the way the public has moved past Cohen’s robber baron history, and to think that the “Uncle Steve” memeification of ownership is a bit of a turnoff. Moreover though, Cohen is the resident example of how spending a bunch of money on baseball makes people forget about your rather ghoulish behavior, but is an order of magnitude lesser than the risks of a sovereign wealth fund inserting itself into team sports. Steve Cohen is just a guy, looking to have a little better personal branding. Saudi Arabia, Qatar, United Arab Emirates, are political actors wielding real power, projecting military force, and chairing climate change conferences.
The World Cup was a perfect example of this. Thousands of “migrant” (read: slave) workers died building the infrastructure required for the tournament in a state with effectively zero democratic representation. There was at least an attempt by multiple outlets to effectively contextualize the problems with legitimizing the actions of Qatar through sport ... and it all kinda got lost once we watched what might have been the single best match in World Cup history.
Emir Al-Thani, who owns Messi’s club PSG, adorning his employee with a bisht as a final reminder of the Qatari-ness of the whole event, was the cherry on top.
Given the success of events like the World Cup, as well as the deep history of reputation laundering through international club soccer, I don’t think it’s long before this becomes a major challenge in the Big 4 American sports. The NFL already has ownership rules barring funds or investing houses from owning a team, insisting a sole owner system. MLB does not have such restrictions, in fact loosening the rules three years ago to make it easier for investment funds to purchase shares of teams.
MLB does at this time ban foreign owners from having day-to-day control over baseball operations — their contributions to the club must be purely financial. In a way, though, this doesn’t really block an entity like the Abu Dhabi United group, a UAE-based private equity firm under the effective control of Mansour bin Zayed, brother of the current President of UAE, from taking an interest in MLB. Indeed, these rules might actually play to the advantage of a sovereign wealth fund.
Abu Dhabi United bought EPL club Manchester City in 2008, and immediately poured millions of pounds into the club. A league with no salary cap and an owner with virtually unlimited financial resources seem to be a perfect match for each other, and Man City has won the league six times since being bought by the deepest possible pockets. It’s easy to see this kind of model being replicated in MLB, especially for teams with well-developed analytical staff but underperforming financials. These are the kind of teams that would work well with hands-off owners who simply write checks, exactly within current MLB ownership rules.
What can we do about this?
Trusting MLB ownership to deny proposals of their own free will is a losing game. Owners will see the opportunity for franchise appreciation and jump all over it — even if some are afraid of being outspent, Cohen’s bid was approved. I think the best plan forward is to re-restrict the influence that investment funds get to have in ownership bids. MLB won’t allow the return of sole ownership as a requirement; such a move would force the sale of Atlanta and Toronto’s franchise, but reducing the ability of targeted funds to own bits and pieces of franchises can work, and in fact has.
The last bit is up to us. Fanbases have done a terrific job of laundering Steve Cohen’s reputation already, and being prepared for an eventual SWF injection in North American pro sports is key. All the incentives line up for repressive states to sportswash themselves through baseball and other arenas, especially with two MLB clubs expected to sell either partially or wholly.