Virginia lawmakers plan to take up a proposal to help fund a new arena for Capitals, Wizards

ALEXANDRIA, Va. — Supporters of Virginia Governor Glenn Youngkin's plan to build a new professional sports arena and entertainment district in northern Virginia say the project would create a generation of jobs so lucrative it will pay for itself.

Critics, meanwhile, argue that the proposal to lure the NBA's Washington Wizards and the 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.

During the upcoming 2024 legislative session, which starts Wednesday, Virginia lawmakers will have to make their position on that gap clear as they pass complex legislation to make the move possible.

Youngkin, a Republican, and entrepreneur Ted Leonsis, an ultra-wealthy former AOL executive and the CEO of Monumental Sports and Entertainment, publicly announced in December that they had agreed to a deal to relocate the teams. If it comes to fruition, Youngkin could claim a big win. Virginia is the nation's most populous state without a major pro sports franchise, something administration officials from both parties have tried to change over decades.

The plan – part of a new wave of sports facility construction across the country – calls for the creation of a $2 billion project in the Potomac Yard section of Alexandria that would include an arena, practice facility and headquarters for Monumental , plus a separate performing arts venue, all just a few miles from Capital One Arena, where the Washington teams currently play. Monumental hired some of Richmond's top lobbying shops to broker the deal.

Monumental has pledged to advance $403 million. Alexandria would commit $106 million upfront for the performing arts venue and parking, pending City Council approval. Most of the rest of the $1.5 billion in financing would come in the form of bonds issued by a stadium authority, a government agency that lawmakers are required to create, which would own and lease the land and buildings to Monumental.

Under the proposal, according to public documents and details from Youngkin's office, approximately $1 billion in bond revenue would be repaid through new tax revenue from the project, money that Youngkin said would not exist without 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 conservative in size,” with revenues expected to be two to three times the debt service coverage needed . However, officials did not do this. , has publicly released the external analysis that came to that conclusion.

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

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

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

But opponents, who have stepped up their organizing, disagree with this characterization. Andrew Macdonald, a former Alexandria councilman and organizer of the Coalition to Stop the Arena at Potomac Yard, pointed out that taxpayers would be blamed if the arena project did not generate enough revenue.

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

“Tax revenue is taxpayers' money. It doesn't belong to the governor. It is not the mayor's property. It's not from Ted Leonsis,” she said. “It's public money.”

The group also questioned predictions of an economic windfall, citing the work of sports economists who say the economic benefits of professional sports franchises have been exaggerated.

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

“It is not a new economic benefit. You simply take it from somewhere else and put it in this new, splashy area,” Curtis said.

Many Republican lawmakers, who have generally been aligned with Youngkin's agenda over the past two years, want to hear more about the details and potential benefits. While top Democratic lawmakers have generally indicated they are open to supporting the project, its approval is far from certain, something Alexandria Mayor Justin Wilson acknowledged at a nearby town hall.

“At every step of the way, this could absolutely still go away,” said Wilson, who is personally advocating for the deal.

Scott Surovell, the new Senate Majority Leader, has said in interviews with AP that the project appears to have merit, but lawmakers will be left with a long list of questions. New Democratic House Speaker Don Scott told the AP he was “optimistically cynical” about the future of the plan. And Democratic Sen. Louise Lucas of Portsmouth, who will lead the powerful Senate Finance Committee, has made clear she has no plans to hand Northern Virginia a gift without considering her Hampton Roads region's wish list , including toll lighting.

Monumental hired some of Richmond's top lobbying shops to broker the deal.

Efforts to bring major professional sports to Northern Virginia go back decades. Three decades ago, the then government decided. L. Douglas Wilder, a Democrat, and then-Washington NFL team owner Jack Kent Cooke unveiled a plan to bring Cooke's team to the same Potomac Yard location. The deal failed.

Twenty years ago, Virginia also tried to bring Major League Baseball to the Commonwealth. But concerns arose about financing, which bore many structural similarities to what is now proposed. MLB instead chose a location in Washington, DC.