Virginia proposal seeks new arena for Wizards, Capitals

ALEXANDRIA, Va. — Advocates of Virginia Gov. Glenn Youngkin’s plan to build a new professional sports arena and entertainment district in northern Virginia say the project would be a generational job-creator so lucrative it will pay for itself.

Critics, meanwhile, argue the proposal to lure the NBA’s Washington Wizards and NHL’s Washington Capitals across the Potomac from the nation’s capital will amount to an extravagant taxpayer handout to the wealthy owners of the teams’ parent company.

In the coming 2024 legislative session that kicks off Wednesday, Virginia lawmakers will have to make their position on that divide clear, as they take up complex legislation to enable the move.

Youngkin, a Republican, and entrepreneur Ted Leonsis, an ultrawealthy former AOL executive and the CEO of Monumental Sports and Entertainment, announced publicly in December that they had reached an understanding on a deal to relocate the teams. If it comes to fruition, Youngkin could claim a major win. Virginia is the nation’s most populous state without a major pro-sports franchise, something government officials of both parties over the course of decades have sought to change.

The plan — which comes amid a new wave of sports facility construction around the country — calls for the creation of a $2 billion development in the Potomac Yard section of Alexandria that would include an arena, practice facility and corporate headquarters for Monumental, plus a separate performing arts venue, all just miles from Capital One Arena, where the teams currently play in Washington. Monumental has hired several of Richmond’s top lobbying shops to work the deal.

Monumental has pledged to put $403 million up front. Alexandria would commit $106 million up front for the performing arts venue and parking, pending city council approval. Most of the rest of the $1.5 billion in funding would come in the form of bonds that would be issued by a stadium authority, a governmental entity lawmakers are being asked to create, which would own the land and buildings and lease them to Monumental.

Under the proposal, according to public documents and details provided by Youngkin’s office, about $1 billion in bond revenue would be repaid by new tax revenues from the project, money Youngkin argues would not exist were it not for the development.

Christian Martinez, a spokesman for Youngkin, said in response to questions from the AP that the bond package would be “prudently structured and conservatively sized,” with revenues expected to be two to three times the needed debt service coverage. Officials have not, however, publicly released the outside analysis that arrived at that conclusion.

Another $416 million in bonds would be repaid through rent paid by the Capitals and Wizards. It is expected that the teams would commit to Alexandria for 35 years, and if they leave, Monumental would pay off all outstanding authority debt, Martinez said.

City officials who in recent weeks have hosted various presentations and forums on the deal have emphasized that while the city and state will be lending their borrowing power to finance the project, the vast majority of the cash is expected to ultimately be paid out by Monumental.

“Ninety-five percent of this project is being funded by Monumental,” Alexandria City Manager James Parajon said during one public presentation.

But opponents, who have ramped up their organizing, take issue with that characterization. Andrew Macdonald, a former Alexandria council member and an organizer of the Coalition to Stop the Arena at Potomac Yard, pointed out that taxpayers would be on the hook if the arena project generates insufficient revenue.

At a rally Thursday of arena opponents, Alexandria resident Shannon Curtis said it’s still a taxpayer-funded project even if the money comes from taxes assessed on Monumental.

“Tax revenue is taxpayer money. It does not belong to the governor. It does not belong to the mayor. It does not belong to Ted Leonsis,” she said. “It’s public money.”

The group also questioned the projections of an economic windfall, citing work from sports economists who say that the economic benefits from professional sports franchises are overstated.

Several rally speakers said they don’t like the idea that Alexandria is trying to boost its economy by poaching teams from the District of Columbia, where many officials say the Wizards’ and Capitals’ presence is crucial to support to city’s downtown.

“It’s not new economic benefit. It’s simply pulling it from somewhere else and putting it in this new splashy area,” Curtis said.