Monumental has not definitively said whether it would move the pro teams into Virginia. If the deal goes forward, the company would put hundreds of millions of its own dollars into the project, according to two people briefed on the matter.
The deal, if approved, would constitute a major economic development win for Virginia Gov. Glenn Youngkin (R), who has been hurting for such a victory after his party’s losses in last month’s state elections. It could also be a step in Monumental owner Ted Leonsis taking the company public — a move he openly considered in an interview with Bloomberg over the summer.
And while the plan would supercharge development in a part of Alexandria that is newly accessible by Metro, it could amount to a crushing blow to D.C.’s struggling downtown. District officials have been in talks with Monumental over renovating the Capitals’ and Wizards’ home at Capital One Arena as they struggle to revitalize the surrounding area.
The arena, built in 1997, is one of the older facilities in the NHL and NBA. Monumental has asked the District for $600 million in public funds for a major renovation, but D.C. is also juggling onerous budgetary constraints with requests from pro sports owners and looming competition over the future site of the next Commanders stadium.
“Monumental Sports & Entertainment is committed to delivering the best fan experience, winning championships, giving back to our communities, and becoming the most valuable regional sports and entertainment enterprise in the world so that we can continue to reinvest in our fans and community,” a Monumental spokesperson wrote in a statement. “Our commitment to the DMV is unwavering and we look forward to sharing plans for future investments.”
Bowser’s spokeswoman sent a statement from the mayor’s office: “Mayor Bowser and Chairman Mendelson have worked together closely, and in lockstep, to put forward a strong proposal to Monumental Sports, and after several months of negotiations, we are committed to seeing this through as a vital component of DC’s Comeback.”
Representatives for the Virginia Economic Development Partnership and Youngkin’s office did not immediately respond to requests for comment Monday. A spokeswoman for D.C. Mayor Muriel E. Bowser (D) declined to comment, as did a spokeswoman for the Alexandria Economic Development Partnership.
It is unclear when the deal with Virginia would be announced if it gets the green light. The state’s Major Economic Investment (MEI) Project Approval Commission, which is made up of a dozen state lawmakers, is expected to consider the proposal when it meets Monday afternoon, according to three people with knowledge of the plans. Proceedings for the commission are private under an exemption in state code because it works on economic development deals. The commission could vote Monday or postpone the vote for a week.
Additional approvals would likely be required from the full General Assembly as well as Alexandria City Council for the plan to fully advance.
A person who was briefed said it would feature a basketball and hockey facility as part of a larger complex that would also include a “huge” underground parking area and a separate, smaller concert venue. The person described an artist’s rendering as a “little mini-city development” and said it would be built on land owned by the real estate developer JBG Smith. A spokeswoman for JBG Smith declined to comment Monday.
A Virginia stadium authority would borrow from Wall Street to pay for the project and pay that money back later. The creation of the stadium authority would allow the developer to leverage state and municipal bond rates — which are well below market rate — to finance construction.
State lawmakers would need to vote to create the stadium authority, which would issue bonds and collect the tax revenue to pay them down. Revenue generated on things like ticket sales would be used to pay back the bonds. Such an arrangement probably means that the cost to taxpayers would not be entirely clear until the stadium authority determines what kind of rate it could get on the bonds.
Capital One Arena could still host concerts and college basketball games if Monumental’s deal with Virginia goes forward. Leonsis’s business has also significantly expanded into neighboring Gallery Place as it has “outgrown” the arena, and the company plans to open a TV studio for Monumental Sports Network in early 2024.
For years, Leonsis has grumbled about having a mortgage with unfavorable terms on Capital One Arena, which in 2016 he estimated cost him $36 million annually. He called it “the worst building deal in professional sports” and suggested that he could leave the city when he paid off the mortgage.
Two D.C. Council members, Chairman Phil Mendelson (D) and Charles Allen (D-Ward 6), have championed retaining Monumental in contrast with attracting the Washington Commanders to the RFK Stadium site because the arena hosts far more events than an NFL stadium and drives more economic activity downtown.
Leonsis has in recent years complained about the area around the arena and the city’s lack of investment in the building as his relationship with Bowser worsened. He was particularly bothered by the buskers playing loud music outside his office.
Moving to the Virginia site could offer Monumental more opportunities for non-sports revenue than it is afforded in the District. Franchise owners across professional sports have taken note of the Atlanta Braves’ move to suburban Cobb County, Ga., where the team developed an entertainment district around its new ballpark, making that site a destination and turning the whole complex into a moneymaker.
Monumental would have a more than 30-year lease on the Alexandria property, according to two people familiar with discussions around the project. Leonsis’s teams can leave D.C. as early as 2027. The arena has a ground lease — meaning Monumental owns the arena and the city owns the land below it.
In 2007, in exchange for the city’s $50 million investment, then-arena owner Abe Pollin exercised two 10-year options to extend the lease from its original end date, 2027, to 2047. But if the bond on the lease is paid in full — and Monumental is allowed to pay the remaining principal in a lump sum — the lease extensions would be nullified, meaning the end date would revert to 2027. Earlier this year, the remaining principal was $35 million.
Virginia is the largest state in the country without a major league sports franchise, a fact that politicians and sports fans alike have bemoaned over the years as they’ve sought to attract teams. Over the years, Virginia has been willing to offer large financial packages for sports facilities but lost out to D.C. on venues like Nationals Park, Entertainment and Sports Arena in Congress Heights and DC United’s Audi Field.
A plan to lure the Commanders to a new stadium and entertainment complex in Virginia enjoyed support early last year from Youngkin and leaders of both parties in the General Assembly, who were initially prepared to forfeit about $1 billion in state tax revenue on the project. But the plan fell apart amid concerns about the cost, the impact on traffic and numerous scandals swirling around the team’s then-owner Daniel Snyder.
A deal with Monumental would perhaps help Youngkin turn the page on the defeat he suffered in General Assembly elections last month, dashing prospects for his conservative agenda and his potential last-minute 2024 presidential bid. Saddled with an all-blue state legislature for his remaining two years in office, he will need to focus on broadly popular economic development projects and other bipartisan priorities to get any wins out of the Capitol.
This would not be the first time Virginia state officials have sought to bring a professional sports stadium to Potomac Yard, a former rail hub in Alexandria that has for decades been eyed as a prime target for redevelopment. Plans fell through to put a football stadium there in the 1990s amid intense local opposition, giving way to a mix of apartment buildings and big-box stores within view of the Washington Monument.
The arrival of Amazon’s second headquarters in nearby Arlington County — and a new Potomac Yard Metro station served by the Blue and Yellow Lines — has accelerated efforts to further build out the Alexandria neighborhood. Local officials have promoted the area, where Virginia Tech is building a graduate engineering campus, as part of the larger tech district they call “National Landing.”
JBG Smith is also working on that billion-dollar “innovation campus,” which was a key part of the package to win over Amazon and which is set to open the first of three buildings next fall. The company has frozen some plans to construct residential buildings on the remainder of the area that was once the site of a movie theater.
(Amazon founder Jeff Bezos owns The Washington Post, and the newspaper’s interim CEO Patty Stonesifer sits on Amazon’s board.)
It is unclear exactly where in Potomac Yard the arena would go. The developer in 2019 said it intends to build out a strip mall that is part of that area and immediately west of the new Metro station, and replace it with 13 new mixed-use buildings that would be divided by a street grid and could include a hotel — though no concrete plans appear to be in place yet.
Alexandria lawmakers in 2010 voted to approve a blueprint for the northern end of Potomac Yard that envisions carving the neighborhood up into a street grid of smaller blocks, including a mixed-use “entertainment district” that would bring people to the area near the Metro in the evening.
Any effort to bring a new sports arena to Potomac Yard is likely to draw fierce opposition from some homeowners in nearby low-density neighborhoods like Del Ray, a former bedroom community for rail yard workers now better known for its charming strip of small, independent businesses.
Some residents in Del Ray — where quaint bungalows now sell in the high six figures — have spoken up vociferously against city lawmakers’ votes to add more development in Alexandria in recent years. The Monumental project would be all but sure to divide residents between those who see the project as a threat to their city’s small-town sensibility and those who support additional amenities and a boost to the city’s sagging finances.
The only concern at the moment for lawmakers is transportation and transit along Route 1, according to two people. The General Assembly must approve funding for traffic-calming measures and other road improvements.
State officials are considering a plan to lower a segment of Route 1 — which connects Potomac Yard with downtown D.C. — from an elevated highway into a flattened “urban boulevard,” and the new arena would be all but certain to add to traffic in an area that already experiences heavy gridlock.
Vozzella and Schneider reported from Richmond. Michael Brice-Saddler, Meagan Flynn, Barry Svrluga and Jonathan O’Connell contributed to this report.
This story has been updated with a statement from D.C. Mayor Muriel E. Bowser’s office. The story is developing and will continue to be updated.
