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Monumental Sports & Entertainment, which owns the Wizards, Capitals and Mystics, has asked D.C. for $600 million of public funding for a major renovation of Capital One Arena, according to two people with knowledge of the situation.
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The funding would make up the bulk of an $800 million renovation plan Monumental has outlined to the city, according to the two people, who spoke on the condition of anonymity to discuss sensitive negotiations. The remaining $200 million would be covered by Monumental, which is owned by founder and chief executive Ted Leonsis.
One of the people outlined the ask: Monumental would receive the $600 million over four years and use it mostly on construction. The major priorities are to transform the seating bowl — fewer nosebleed seats, more seats close to the court and ice — as well as add a food court that would be open during nongame hours and a new, glassy entrance at Seventh and F streets. Monumental wants to do incremental construction over four consecutive summers, starting in 2024, to avoid disrupting the playing seasons of the Capitals or Wizards, this person said.
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A spokesperson for D.C. Mayor Muriel E. Bowser (D) issued a lengthy statement that she said was jointly attributable to Monumental.
“The District and Monumental Sports are proud to have had a longstanding and positive relationship that has contributed greatly the vibrancy of this city,” the spokesperson wrote. “ … The District recognizes that Capital One Arena serves as an important economic anchor as we continue to reimagine and reinvigorate our Downtown.”
Monumental’s request comes after the Nationals, in September, sent local leaders a letter asking the city to repurpose parts of the existing “Ballpark Revenue Fund,” which is dedicated to paying off the municipal bonds floated to fund the construction of Nationals Park, into a “Ballpark Modernization & Sustainability Fund.” The proposal would put taxes on tickets, food and merchandise, taxes on parking and the lease payment into a new fund to maintain and modernize the city-owned ballpark, but it wouldn’t create a new tax or pull from other budgets.
Bowser (D) must juggle requests from the wealthy sports owners with a host of other issues, including onerous budgetary constraints, a struggling downtown and the looming competition with Maryland and Virginia over the next Commanders stadium.
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Bowser, a vocal champion for the Commanders to return to the site of RFK Stadium, recently met with skeptical community members as she waits for a bill that would give the city control of the federal RFK site to advance through Congress. Maryland Gov. Wes Moore (D) has already said he’d support giving the football team public funds for the construction of a stadium in his state.
Last month, Bowser’s administration selected two contractors for a $394,000 “sports study” to consider ways to fund a Commanders stadium, as well as address the financial requests of the other sports franchises, which are owned by Leonsis, the Lerners and private equity billionaire Josh Harris (Commanders).
The owners’ asks of the city come as franchise values across pro sports continue to skyrocket. Pro teams routinely sell for multiples of the revenue they generate, in part due to ownership real estate holdings and TV contracts.
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According to Sportico, a sports business website, the Wizards are the 14th-most valuable team in the NBA at $2.7 billion, and the Capitals are the ninth-most valuable team in the NHL at $1.22 billion.
The city is not obligated to pay for upgrades at Capital One Arena, which was built in 1997 and is one of the older facilities in the NHL and NBA. But D.C. Council Chairman Phil Mendelson (D) has said he supports giving Monumental public funds because the arena is an economic anchor in a fragile downtown. In a recent interview, Mendelson said he did not have firsthand knowledge of Monumental’s request for $600 million and did not know any details about how it would be structured or over how many years, making it difficult to say what he would or wouldn’t support.
“The impact is different depending on the structure,” he said.
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In an editorial in The Washington Post over the summer, Council member Charles Allen (D-Ward 6) argued Monumental deserves public funds more than the Commanders because the multipurpose arena downtown hosts more events and brings in more money than a football stadium would.
Meanwhile, Monumental remains in negotiations with Virginia officials about relocating to a site in Alexandria’s Potomac Yard neighborhood, according to a person familiar with that effort, who spoke on the condition of anonymity to share confidential information. One potential site could be near the graduate engineering school Virginia Tech is building in the area and a new Metro station serviced by the Blue and Yellow lines.
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Virginia Gov. Glenn Youngkin (R) and members of his office have taken the lead in those negotiations, with the Virginia Economic Development Partnership (VEDP) playing a supportive role, that person said. There is a sense among at least some members of the commonwealth’s team that Monumental would prefer to remain in D.C. and is using the prospect of a move to Virginia as a bargaining chip with the District, that person said.
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Youngkin spokeswoman Macaulay Porter declined to comment, referring questions to VEDP, which did not respond to requests for comment.
Alexandria Mayor Justin M. Wilson (D) declined to comment but said that the city is “bullish” about economic development in the Potomac Yard area. A spokeswoman for the Alexandria Economic Development Partnership declined to comment.
Even if Virginia offered Monumental a lot of money to lure it away from D.C., the company’s continued investment around Capital One would seemingly make it more difficult to actually leave. 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.
Over the summer, Leonsis strengthened his empire by striking a prospective deal with Qatar’s sovereign wealth fund and rebranding NBC Sports Washington, the regional sports network he acquired last year, as Monumental Sports Network. But, according to a person with knowledge of the company’s internal workings, the business staff has “outgrown” the arena and significantly expanded into neighboring Gallery Place, the mixed-use development attached to the arena.
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Gallery Place is for sale because an affiliate of Oxford Properties, the real estate company that owns it, defaulted on a loan secured against the development, the Washington Business Journal reported. Meanwhile, Monumental has snapped up vacancies for office space, employee parking and an esports center, which opened in March. The company is also building a new MSN studio that’s scheduled to open early next year.
Leonsis, who acquired full control of the arena from the late Abe Pollin in 2010, has for years complained about having to pay a mortgage with unfavorable terms. In 2016, Leonsis said he was paying $14 million per year in interest, $9 million in principal and maintenance costs that the year before totaled $13 million. By comparison, he said, most teams pay rent of $3 million to $4 million to play in municipally owned arenas.
At the time, Leonsis said he had “the worst building deal in professional sports” and suggested that he could leave the city when he paid off the mortgage. It’s unclear how much Leonsis is now paying annually on the mortgage, as well as how much remains on the principal.
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There’s a ground lease on the arena, which means Monumental owns the building and the city owns the land below it. In 2007, the city invested $50 million of public funding into capital improvements to the arena, and in exchange, Pollin exercised two 10-year options to extend the lease from its original end date, 2027, to 2047.
But Monumental could get out of the lease earlier. If it pays off the bond on the lease — and it’s allowed to pay the remaining $35 million in principal in a lump sum at any time — then the lease extension would be nullified, reverting the end date back to 2027.
In 2019, Monumental finished a $70 million, privately funded renovation project at the arena. The company installed a new scoreboard and upgraded suites and seats. But, according to a team official, the building still needs additional structural improvements, such as to the HVAC systems and upgrades to the ceiling that would allow Capital One to host bigger concerts and events.
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Around the same time, Leonsis started to grow frustrated with the area around the arena. He was particularly bothered by buskers, who played loud music outside his office. In the last few years, the pandemic and remote work have hurt downtowns across the country, and Leonsis has complained about the neighborhood and the city’s lack of investment in the building.
In May, Mendelson said he met with Bowser to discuss Monumental. Mendelson said Bowser was “quite clear” she wanted to work with Leonsis even though, according to two people, the relationship between Leonsis and Bowser is strained.
In June, Mendelson met with Leonsis and Monica Dixon, Monumental’s president of external affairs and chief administrative officer. The meeting focused on “how they could stay at the arena and deal with the deferred maintenance,” Mendelson said.
In the arena’s neighborhood, residents and business owners have voiced concerns about criminal activity on the busy sidewalks near Gallery Place, including suspected drug-dealing that they believe can lead to violence.
In the past, D.C. has provided 27 police officers to patrol the perimeter of Capital One during games. But in recent years, D.C. police has struggled with staffing, and the number of officers has fallen to three, according to one Monumental official. The company has made up the difference by paying off-duty officers.
Teo Armus, Michael Brice-Saddler, Meagan Flynn and Jonathan O’Connell in Washington, and Laura Vozzella in Richmond contributed to this report.
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