<p>The increasing involvement of state-affiliated investors in professional sports has intensified concerns about “sportswashing,” defined as the strategic use of sports to enhance reputation and deflect criticism. Drawing on Friedrich A. Hayek’s theory of dispersed knowledge and markets as discovery processes, our paper interprets sports markets as systems in which prices, performance and reputation serve as informational signals. We argue that state-backed investments distort these signals by introducing capital decoupled from profit-and-loss constraints. This weakens the informational function of markets, leading to inefficiencies such as wage inflation, talent misallocation and reduced competitive discipline. By insulating actors from failure, we also argue that sportswashing undermines competition as a discovery mechanism. From a Hayekian perspective, such interventions impair market coordination and the spontaneous order of the catallaxy, highlighting the need for rule-based institutional safeguards.</p>