WASHINGTON — The NBA’s Washington Wizards and NHL’s Washington Capitals are staying in D.C. for the long term after ownership and the city reached an agreement on a $515 million arena project.
Owner Ted Leonsis and Mayor Muriel Bowser signed a letter of intent Wednesday for the deal, which keeps the teams in the area through 2050. They announced the development at a joint news conference at Capital One Arena minutes later.
“It’s a great day and I’m really relieved,” Leonsis said. “It was not only the right thing for the community, the right thing for the city, the right thing for us, it’s a really smart business deal.”
The project is set to include a 200,000-square-foot expansion of the arena complex into the nearby Gallery Place space, the creation of an entertainment district in the surrounding Chinatown neighborhood, and safety and transportation improvements.
“We are the current home and the future home of the Washington Capitals and the Washington Wizards,” said Bowser, who donned a Wizards jersey. “As Ted likes to say, we’ll be together for a long time.”
In a statement, D.C. Attorney General Brian Schwalb said residents “could not have been louder or clearer in expressing their desire for the teams to remain.”
“This result will have a significant positive impact on economic development, public safety and the overall energy and spirit of the District generated by the millions of people who attend games, shows and concerts at Capital One Arena,” Schwalb said.
The D.C. Council will review the deal next week and is expected to pass it, Chairman Phil Mendelson said at the news conference.
The agreement between Monumental Sports & Entertainment and the city came as Alexandria officials said negotiations for a new arena that would move the teams to Virginia have ended. Leonsis acknowledged that Virginia has land as an asset that the district does not.
“You’re in this arms race to build bigger, better, higher quality, and we’re running out of space,” Leonsis said, referring to the new entertainment community the agreement envisions, which is not as large as The 12 acres that were dedicated to the Virginia arena. “But it’s enough.”
The uber-wealthy entrepreneur said he generally wanted to avoid discussing Virginia, but he took several jabs at the state, where political disagreements between Republican Gov. Glenn Youngkin and the Democrats who control the Virginia General Assembly contributed to the plan’s demise.
“You can’t do it alone, and I felt like we were really in a good partnership,” Leonsis said, “as opposed to where I thought I was going to have a great partnership.”
The development is a blow to Youngkin, who announced months ago with fanfare the outlines of a proposal negotiated with the teams’ parent company to move them across the Potomac River.
In a statement Wednesday, the governor expressed disappointment and frustration, blaming Democrats.
“This should have been our deal and our opportunity, all the General Assembly had to do was say, ‘Thank you, Monumental, for wanting to come to Virginia and create $12 billion in economic investment, let’s make it happen. . But no, personal and political goals drove the deal, he said.
Democrats responded by saying Youngkin mismanaged the proposal from the start. House Speaker Don Scott said he was struck by Youngkin’s statement, which Scott said sounded like it was written by a teenager, and bristled at the suggestion that the Legislature should have easily signed off on the deal.
“He’s lost his sense of good judgment right now,” said Scott, who had not fully approved the deal but expressed openness to it.
He added that from the tone of the statement, he said Youngkin could retaliate by vetoing the budget lawmakers sent him earlier this month.
Alexandria, which first broke the news, said in a statement posted on its website that it was also disappointed.
“We negotiated a framework for this opportunity in good faith and participated in the Richmond process in a manner that preserved our integrity,” the statement said. “We trusted this process and we’re disappointed in what happened between the governor and the General Assembly.”
Matt Kelly, chief executive of publicly traded real estate company JBG SMITH, a partner in the Alexandria deal as the proposed developer, issued a fiery statement blaming “partisan politics” and raising the prospect that “potential pay-to-play” influences had finger in the failure of the project.
“Beyond the arena, state and local governments will lose needed tax revenue, confidence in economic development and what could be Virginia’s last best chance at a professional sports franchise for at least a generation,” Kelly said.
The Virginia plan called for the creation of a $2 billion development district on the Potomac Yard portion of Alexandria, with not only a new arena, but also a practice facility and corporate headquarters for Monumental in addition to a separate performing arts venue.
The General Assembly was asked to create an authority to issue bonds to finance the bulk of the project, backed in part by city and state governments and paid for through a combination of projected tax revenue recovered from the development.
Youngkin and other supporters said the development would generate tens of thousands of jobs, along with new tax revenue beyond what would be needed to cover the financing.
The plan faced opposition from unions, Alexandria residents concerned about traffic and D.C. officials who feared losing the teams would devastate downtown Washington.
Youngkin and other supporters also failed to win over powerful Democratic Sen. L. Louise Lucas of Portsmouth, who chairs the Senate’s budget-writing committee. She used that position to block the legislation, citing a number of concerns, but most notably the financial structure of the deal: Using moral bonds puts taxpayers and the state’s finances at risk, Lucas said.
Lucas celebrated the motion being dropped on Wednesday. On social media, she posted a cartoon of herself swinging a basketball with the words “REJECTED.” She wrote, “As Monumental announces today that they are staying in Washington, we celebrate in Virginia that we avoided the Monumental disaster!”
Leonsis has changed his tone on social media in recent days, pointing to large crowds at Capital One Arena this month for everything from the Capitals and Wizards to the ACC basketball tournament and a Zach Bryan concert. He posted Wednesday that Monumental expects more than 400,000 fans to pass through the turnstiles in March.
He and Bowser began talking about keeping the teams in the district shortly after Virginia unveiled its offer, including through regular meetings in a luxury hotel lobby, Leonsis said.
“Until 10 minutes ago, I had never signed a piece of paper,” Leonsis said.
This report uses information from the Associated Press.