I work in and around this area of research, and this has always been what has pissed me off about the term.
We know that countries use sport for soft power and image reputation. We also know that it rarely "launders" a reputation. No one came away from Beijing 2008 saying "wow, that Chinese government sure has a good human rights record" but they probably did think, if they didn't think it already, "wow, China has a lot of money, a lot of power, and is now a serious player on the world stage". If you want to make the world think you're a good country, I can't think of a worst thing to do than buy a football club where, by definition, most other people will have a longstanding and extremely passionate dislike of you. If you want to open up new trade possibilities, build brand ecosystems, diversify a stock portfolio, and show the world how powerful you are...well that's something else entirely. But are those things "laundering" your human rights records? Does the UAE care what the world thinks about its human rights records? I don't know.