Leonsis, Youngkin to make joint appearance as arena talks escalate

Monumental has not definitively said whether it would move the Capitals and Wizards across the Potomac River. But news of the joint appearance by Leonsis and Youngkin prompted D.C. officials to make an 11th-hour attempt to keep both teams downtown.

The Wednesday event with the team owner and governor was confirmed by seven people, all of whom spoke on the condition of anonymity to share private discussions.

The joint appearance comes as District officials have been in talks with Leonsis over renovations to the Capitals’ and Wizards’ current home at Capital One Arena downtown.

Late Tuesday, after news of the event was reported, D.C. Mayor Muriel E. Bowser (D) announced an 11th-hour bill with Council Chairman Phil Mendelson (D) that, if passed, would offer Monumental, which owns the Capitals and Wizards, $500 million in financing toward the rehabilitation of Capital One Arena as well as an extension of its ground lease until the end of 2052.

Monumental has asked the District for $600 million in public funds for a major renovation of the arena, and some D.C. officials have framed that project as key to revitalizing the struggling downtown around the facility. But Bowser said in a statement that the bill represented D.C.’s “best and final offer.”

The tentative proposal drafted between Virginia and Monumental, which requires additional approval from state and local lawmakers, would move the Capitals and Wizards to a new facility anchoring a much larger mixed-use development in Alexandria. Tents were visible near the Potomac Yard Metro station Tuesday evening in advance of Wednesday’s event.

If the plan with Virginia moves forward, both the National Basketball Association and National Hockey League teams would relocate to a new facility in Alexandria, according to seven people familiar with negotiations over the plan, all of whom spoke on the condition of anonymity to discuss details.

The District, which is facing severe budgetary constraints, is also juggling looming competition over the future site of the next Commanders football stadium and requests from the Washington Nationals baseball team for upgrades.

Bowser’s bill authorizes a development agreement between her office and Monumental in which the company would receive $167 million in public funds per year between 2024 and 2026. Bowser said the bill had the backing of the full D.C. Council.

“Mr. Leonsis and Monumental Sports have been critical partners in keeping our downtown thriving, especially after the pandemic,” the mayor said in a statement. “The modernization of the Capital One Arena will be an invaluable investment for continued success and our future prosperity.”

She added that the bill “is the next step in partnering with Monumental Sports to breathe new life and vibrancy into the neighborhood and to keep the Washington Wizards and the Washington Capitals where they belong — in Washington D.C.”

Mendelson said in an interview that he and Bowser met with Leonsis on Tuesday morning to discuss a presentation that the two D.C. leaders had shared with him on Sunday. The pitch included the $500 million offer, pledged to ramp up security in the area and envisioned turning the Gallery Place-Chinatown neighborhood into an “entertainment epicenter.”

While Mendelson described Leonsis as “impressed” by the presentation, the D.C. leaders also learned of Virginia’s announcement Wednesday morning, causing Mendelson and Bowser to leave the meeting in agreement to accelerate drafting the legislation.

But the city’s proposal may be too late. One person who was briefed on the Alexandria deal said a Virginia stadium authority would own the larger mixed-use complex and lease it to Monumental. The “little mini-city development” would also include a smaller concert venue and a “huge” underground parking area, that person said. It would be built on land owned by real estate developer JBG Smith.

The state’s Major Employment and Investment Project Approval Commission, which is made up of a dozen Virginia lawmakers, voted unanimously Monday afternoon to approve the plan, according to two people with knowledge of the negotiations. Any deal between the state and Monumental would require additional approval from the full General Assembly and the Alexandria City Council.

A spokeswoman for Youngkin did not respond to requests for comment.

Leonsis has for several years complained 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.

The arena, built in 1997, is one of the older facilities in the NHL and the NBA. It could still host concerts and college basketball games if Monumental’s deal with Virginia goes forward. Monumental also owns the WNBA’s Mystics, who play at a different arena in Southeast Washington.

The Federal City Council, a nonprofit business and civic group that has worked with Bowser’s office on downtown recovery efforts, said losing the Capitals and Wizards would be “a blow to DC greater than the sporting events we lose.”

“A thriving downtown has driven our economy and tax base,” Anthony Williams, the group’s CEO and a former mayor, said in a statement. “It will be a huge blow to our downtown recovery and all the services it pays for. Capital One Arena has been a big part of D.C.’s comeback story. Downtown is down but not out, and the Arena can be part of our comeback again.”

Potomac Yard, a former rail hub that was at one point considered as the site for a football stadium, has long been targeted by Alexandria officials as a potential site for redevelopment. But any arena and adjacent complex would also create pushback from residents in the suburban areas nearby about additional traffic and flooding impacts.

Two people familiar with Virginia’s proposal said it includes about $200 million for transportation improvements to support the new arena, though it does not specify what roads would be affected. Both people said there has been conversation over expanding capacity at the Potomac Yard Metro station, including adding a ramp that would connect the station directly to the proposed arena.

Youngkin has pitched several House and Senate Democrats on the project, according to two people familiar with his efforts, who spoke on the condition of anonymity to share private conversations.

That outreach — notable for a governor who has not had warm relationships with many Democrats and does not regularly lobby legislators of either party — started immediately after Republicans lost control of the House of Delegates and failed to flip the Senate in the Nov. 7 General Assembly elections, the two people said.

With Democrats leading both chambers, Youngkin will need them to pass legislation creating a sports authority to oversee financing of the project and approve the additional transportation funds.

Several prominent Democrats declined to comment on the project Tuesday, saying they wanted to wait until Youngkin formally unveils it. But the few who spoke signaled they were not yet on board.

“I’ve been told this deal will use no state $$ & no impact on debt capacity of the City of Alex or Virginia. Obviously this is a trust but verify situation, needs to be a true win-win to earn my support,” Del. Marcus B. Simon (D-Fairfax) wrote on X, formerly known as Twitter.

State Sen. L. Louise Lucas (D-Portsmouth), incoming chairwoman of the powerful Senate Finance and Appropriations Committee, framed the project as a bargaining chip for regional or Democratic priorities.

“While some people want sports stadiums … I want tolls to disappear from Hampton Roads *and* I want recreational sale of marijuana,” she tweeted. “Guess we will have to find compromises this session.”

Meagan Flynn, Nicki Jhabvala and Sam Fortier contributed to this report.