NBA sovereign wealth workaround? Abu Dhabi backs record Lakers' buyer

The Buss family has agreed to sell its majority stake in the NBA’s Los Angeles Lakers to Guggenheim Partners CEO Mark Walters for $10 billion, setting a new record for a sports team valuation in a deal that further ties sovereign wealth into American sports.

Walter is also the founder and CEO of TWG Global Holdings, which owns the annuities company Gainbridge as well as stakes in MLB’s Los Angeles Dodgers and English soccer’s Chelsea FC. In April, TWG announced a $10 billion investment from Mubadala Capital, the alternative asset manager arm of the $330 billion Abu Dhabi sovereign wealth fund, Mubadala Investment Company. TWG also gained a 5% stake in Mubadala Capital. 

With the value of pro sports teams skyrocketing in recent years, the NBA and other leagues have introduced various rules to govern how institutional investors such as private equity and sovereign wealth funds can invest in teams. ESPN reported in 2023 that sovereign wealth funds are allowed to own no more than 5% in an NBA team. That same year saw the Qatar Investment Authority buy a 5% stake in Monumental Sports & Entertainment, the parent company of the NBA’s Washington Wizards, NHL’s Capitals, and WNBA’s Mystics. 

The QIA thus far remains the only sovereign wealth fund to directly invest in a major US professional sports team. However, Robert Boland, a sports law professor at Seton Hall Law School, sees the new Lakers owner being financially backed by Mubadala Capital as a mechanism for the Gulf nation to workaround the NBA’s sovereign wealth restrictions. 

“TWG is partnered to a large degree with the Abu Dhabi sovereign wealth fund, it certainly provides opportunity for growth and there are a lot of good synergies from that,” said Boland. “It also provides a way around the directed global investment idea. It gets around rules on institutional capital investment, it gets around rules on international investment or approvals.” 

Saudi Arabia’s Public Investment Fund is another oil-rich sovereign wealth giant with global sports holdings - including Newcastle United and LIV Golf - whose attempted merger with the PGA Tour is being scrutinized by the US Senate. Senator Richard Blumenthal said the agreed upon golf merger “raises concerns about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution.”

Mubadala Capital and the NBA did not respond to email requests for comment on this story.

Walter’s TWG Global held an existing minority stake in the Lakers, who have been owned by the Buss family since the 1970s. TWG Global’s sports portfolio also spans the Cadillac Formula 1 team, LA Sparks, the Professional Women’s Hockey League, Billie Jean King Cup tennis, and TWG Motorsports. The UAE’s growing ties to Western sports over the past few years have included NBA preseason games and UFC events held in Abu Dhabi. The Lakers’ official Instagram account posted photos from Abu Dhabi when stars LeBron James and Anthony Davis played in the capital city for Team USA ahead of the 2024 Paris Olympics

“It provides a great deal of synergy for the Guggenheim group to actually develop a lot of global sports properties in partnership with the Abu Dhabi fund. So the Lakers may not be the end of this,” said Boland, who is also co-chair of the sports practice at the Shumaker law firm and was a professor at New York University while it opened its Abu Dhabi campus over a decade ago.

Boland is not the first to highlight Mubadala’s growing exposure to US sports. In early May around Mubadala’s announced deal with TWG, the Singapore-based sovereign wealth fund tracker Global SWF described the partnership as “a new chapter in global finance,” according to Finance World Magazine in Dubai.  

“This partnership provides Mubadala with indirect ownership exposure to iconic Western sports franchises, a shrewd move, amidst the rising valuations of global sports assets and the convergence of content, fan engagement, and streaming monetisation,” Global SWF said before TWG’ Lakers’ majority acquisition. “Through TWG, Mubadala is gaining the sports and leisure exposure that its Saudi counterpart, the Public Investment Fund (PIF), has had to build from scratch, starting its own direct investments.” 

In the hours following ESPN’s breaking news report of Walter acquiring the Lakers for $10 billion, longtime ESPN NBA journalist Brian Windhorst discussed Mubadala Capital’s investment in TWG Global and remarked on “Abu Dhabi’s deep interest in investing in the NBA and American sport.” 

“Mubadala Capital wouldn’t be able to directly buy the Lakers, but certainly they could invest in something to buy the Lakers,” Windhorst said on ESPN’s YouTube channel. “[TWG] announced a $15 billion raise with $10 billion from Abu Dhabi to invest in sports assets. Two months later, they buy the Lakers for $10 billion. I’m just pointing that out.” 

Institutional capital to invest in other NBA teams has included the RIA firm Certuity and CAZ Investments, whose stakes have been through funds from private equity firms Blue Owl and Arctos Partners, respectively. In a statement to InvestmentNews, CAZ Investments partner Matt Lindholm said that “major franchises with international brand recognition have expanded beyond regional entertainment assets into worldwide content platforms and global businesses.”

“The Lakers transaction represents an important milestone that reinforces the inherent value and scarcity of premier sports franchises as an asset class, particularly in a complex macroeconomic and geopolitical environment,” Lindholm said. “Alongside the growth of institutional capital flows into sports assets, we expect this transaction will influence valuation benchmarks across major leagues, as professional investors continue to recognize sports franchises as a distinct asset class offering highly compelling, uncorrelated long-term return."