WASHINGTON BUSINESS JOURNAL: Monumental Sports & Entertainment’s mid-December press conference to announce its plans to move to Potomac Yard in Alexandria where it would build a $2 billion multipurpose entertainmentdistrict had a very “this is final” feeling to it, but the deal is in fact far from done.
The Virginia General Assembly begins its 60-day 2024 session Wednesday and Monumental needs it to not only approve significant funding for the project — close to $1.5 billion — but also create asports and entertainment authority to oversee the new district at Potomac Yard. If the sports authority bill is introduced and passed, it would allow the newly created agency to negotiate and draw up terms for the construction and leasing of a new Potomac Yards arena.
Alexandria also needs to approve its financial contributions to the effort and sign off on many other required municipal minutiae. The state and city’s voting and approvals processes are expected to take much of 2024 to complete.
The project’s substantial scope includes a new 20,000-seat arena for the Wizards and Capitals, a new NBA practice facility, Monumental’s corporate headquarters, a new studio for the company’sregional sports network — Monumental Sports Network — and a 6,000-seat performing arts venue. Monumental, whose plan is backed heartily byVirginia Gov. Glenn Youngkin, hopes to begin construction on the new arena in early 2025 and move the Wizards and Capitals into Potomac Yard by 2028.
In addition to the arena, Monumental’s proposal includes:
- A state-of-the-art Monumental Sports Network media studio, the Wizards practice facility, a performing arts venue, an expanded esports facility, as well as new retail, restaurants, conference and community gathering spaces in the mixed-use portions of the development. Real estate investment trust JBG Smith Properties(NYSE: JBGS) is partnering with Monumental on the project.
- The creation, by the Virginia state legislature, of the Virginia Sports & Entertainment Authority, which would oversee the proposed arena and would issue $1.05 billion in projected revenuebonds and $416 million in lease revenue bonds to help cover the projected $2 billion price tag of the new arena and mixed-use district.
- The bonds will be paid back through lease payments made by Monumental (its contribution will be $403 million, which includes upfront cash); business and sales and use tax revenues generated on-site; parking tax revenues generated on-site; and district naming rights.
The city of Alexandria is currently on the hook for $106M to help cover a performing arts venue — in partnership with Monumental — along with related underground parking and infrastructurecontributions that could reach an additional nine figures.
The announcement has faced public scrutiny — in D.C. from critics concerned about the impact of the potential exit of the Wizards and Caps on the city’s downtown corridor and in Alexandria from locals concerned about the impact on daily life and traffic of a more than 9 million-square-foot development. But one industry source with experience in public policy, real estate and sports ventures in the region said they’ve been encouraged by the open-mindedness of the legislators who will vote on the matter.
“I’m actually struck,” the source said, “by, particularly, a number of the leaders from Northern Virginia saying ‘Look I’m withholding an opinion on this right now, because I want to see it in its legislative form, balancing the budget language. I want to have the opportunity to debate this… then let’s see how the process plays out.’”
Meanwhile, Monumental is working with the state to draw up term sheets and definitive agreements that it hopes to have completed at the same time as the legislation. Monumental President of External Affairs and Chief Administrative Officer Monica Dixon said the company has retained Irwin Raij at Sidley Austin along with Citibank to help advise it on the deal.
While the proposed move caught many off guard, one source with a long history in D.C.’s sports scene wasn’t surprised at all, telling Sports Business Journal, a sister paper of the Washington Business Journal, that Monumental owner Ted Leonsis has “been frustrated with the city for quite some time.” The frustration seemed to stem from when the city fully paid for the Washington Nationals’ stadium in 2007. D.C. gave $50 million that same year for upgrades to what was then Verizon Center, but he continued to pursue bigger arena contributions from the city over the next 15 years. Monumental invested $200 million into the building since it took control of it in 2010 but conversations with the city about renovation money, despite intensifying during the last two years, haven’t borne fruit.
“To be candid, I think the city never thought [Monumental] was going to leave,” said the source.
