SportsAll Eyes on Virginia as Arena Deal Stalls in General Assembly

All Eyes on Virginia as Arena Deal Stalls in General Assembly

Since Ted Leonsis announced the Washington Wizards and Washington Capitals’ move to a new arena in Potomac Yard, District and Alexandria, Virginia residents have organized in opposition to the deal that’s making its way through the Virginia General Assembly.  

At the latest juncture in that movement, Don’t Mute DC is producing a video featuring Ashley the Preaching Poet who’s responding, in spoken word, to arguments that higher-ups at Monumental Sports & Entertainment (MSE) are making in support of the move to northern Virginia. 

Don’t Mute DC founder Ronald Moten said the video, scheduled to be released within the next couple of weeks, counts as part of an effort to expose what he describes as lies perpetuated by the organization that owns the Wizards, Capitals, and Washington Mystics. 

“We live in a time where Monumental Sports is trying to rush things down people’s throat so people don’t get the truth of what’s happening,” Moten said. “People are seeing that [MSE CEO] Ted Leonsis’ deal makes no sense for no one but Ted Leonsis. If it doesn’t fail, the team is going to fail because no one from D.C. and Maryland is going out there.”

Since December, Moten has hosted at least two mass protests outside of Capital One Arena. He has also traveled across the Potomac River, standing alongside Alexandria residents and subject-matter experts who’ve raised concerns about traffic congestion, flooding and long-term economic costs that come with a new stadium in Potomac Yard. 

Moten explained that recent attempts to sit down with Leonsis have been unsuccessful. 

He also recounted previous conversations with the Mystics’ chief business officer Alycen McAuley about crime around Capital One Arena, telling The Informer that his offers to help quell drug activity around the arena have gone unanswered. 

For Moten, such situations show that Leonsis has no interest in serving current and former D.C. residents. In referencing a point that MSE leadership raised about 15% of its ticket holders being D.C. residents, Moten argued that a closer look would show more of a nuanced picture.   

“In this region, Maryland is D.C.,” Moten said as he pivoted his attention to concession workers and events staff that he said could be severely inconvenienced by the move. “You’re talking about Washingtonians who moved out to Maryland. It’s not convenient to go on a train [to Potomac Yard] and be stuck on a train and stuck in traffic. The way Ted talks, it’s like these people don’t mean nothing to him.” 

Legislators in Virginia Talk the Move, ‘Stop the Arena’ Movement Advances in Virginia 

An MSE spokesperson said that while McAuley and Moten have spoken about go-go music, they never engaged in conversation about crime surrounding Capital One Arena. 

They however mentioned a meeting that Moten had with Crispus Gordon III, MSE’s director of Government Relations and Community Affairs, last fall about the issue. Gordon, they said, requested that Moten draw up a proposal. Moten never followed through, they said.  

In regard to MSE’s move to Potomac Yard, the MSE spokesperson told The Informer that, after receiving Moten’s request to meet about this matter, MSE attempted to schedule a meeting a few times, all to no avail. 

In mid-February, the Virginia House of Delegates passed a bill establishing the Virginia Sports and Entertainment Authority as a political subdivision that finances the construction of the Potomac Yard sports and entertainment arena. 

The $1.4 billion allocation would later be added in the House’s version of the budget. 

Per the bill, the sports and entertainment authority would be able to issue bonds with a maximum maturity rate of 40 years. The authority would be entitled to revenue from construction and transaction sales tax, entity revenue and corporate income tax revenue, and personal income tax revenue generated from employment and campus-based business activity. Such revenues would be deposited into the Virginia Sports and Entertainment Authority Financing Fund. 

It remains unlikely that the Potomac Arena bill would advance through the Virginia Senate before March 9, when the session ends. This is due in part to comments Virginia Governor Glenn Youngkin (R) made about President Joe Biden (D) and Democrats while appearing next to former President Donald Trump (R) at Washington and Lee College earlier this month. 

Virginia Senator Louise Lucas, a Democrat who chairs the Senate’s FInance and Appropriations Committee, took to the social media platform formerly known as Twitter and questioned his sincerity about working with Democrats for the Potomac Yard arena, which she named “Glenn Dome.” 

Upon blocking the Potomac Yard arena deal on the Senate’s Finance and Appropriations docket, Lucas expressed her concern that the deal “places too much risk on the commonwealth.” She also noted what she described as Youngkin’s failure to negotiate in good faith with legislators. For her, approving the deal would open the floodgates for similar arrangements that prioritize billionaires over educational institutions, natural resources, and the state’s credit rating. 

During the latter part of January, a coalition of Northern Virginia residents known as the “Stop the Arena”  hosted a virtual event that featured Dr. Dennis Coates, a sports economist who presented research showing that major sports franchises didn’t have a significant impact on the economic growth of cities. 

Since December, members of the “Stop the Arena” Coalition have organized their movement on the basis of this and several other arguments. 

They say that a default on the bond issued would pose a liability to taxpayers. Other concerns focus on the decimation of affordable housing, game-day gridlock along Route 1, air pollution, and what they call a departure from the North Potomac Yard Small Area Plan. 

Andrew Macdonald, Alexandria’s former vice mayor, counts among the nearly dozen residents who formed the coalition. Over the past few weeks, he and other members have been engaging state lawmakers in Richmond, all in the hopes that the majority would strike down the deal, or at the very least pass a bill that allows Alexandria residents to make the final call via a referendum.  

In recent weeks, coalition members have embraced Virginia Senator Lucas as an ally in their cause. 

Finding a similar level of support among local elected officials has been a bit more difficult, Macdonald told The Informer. He said the Alexandria City Council continues to support the arena deal, despite growing community opposition. He went on to describe the city council’s community engagement process as performative and ineffective. 

With the clock winding down to March 9, Macdonald and others wait with bated breath about the final outcome. Even with Lucas’ influence, Macdonald said he anticipates a vicious fight ahead. 

“The General Assembly is…basically a place that revolves around lobbyists so it’s hard for the public to get a word in, even though you have people representing your district,” Macdonald said. “We’re in this situation where Democrats who wouldn’t support such a thing are on board and a governor is trying to offer these gifts in exchange for their vote.” 

Monumental Sports & Entertainment Speaks

Though MSE’s ground lease with the District ends in 2047, the lease agreement allows for a repayment of the remaining balance on the $50 million bond that the District took out to provide finance to Abe Pollin. 

In 2007, Pollin used that money on arena upgrades and upkeep, and his team wrote into a contract a stipulation that repayment could come in a large lump payment of the remaining balance in 2027. If that happens, then the end date of the lease reverts to 2027, the original end date of the ground lease agreement when the building opened in 1997.

The Office of Chief Financial Officer, citing confidentiality, declined to disclose the amount of tax revenue collected from arena ticket sales since 2007. A spokesperson said the District makes mandatory debt service payments of between $1.6 million and $2.2 million twice a year to pay off the bond. 

As of Monday night, the outstanding principal balance on the bond stands at approximately $34.6 million, the spokesperson told The Informer. 

Leonsis’ announcement about the move to Potomac Yard last December followed more than two-and-a-half years of discussions between MSE and the D.C. government about upgrading Capital One Arena. 

The spokesperson said that John Falcicchio, then-deputy mayor of Planning and Economic Development, told MSE leadership that both sides would need to reach an agreement by September 1, 2023 in order for the District’s funding contribution to be included in D.C. Mayor Muriel Bowser’s upcoming budget proposal.  

Falcicchio’s resignation last March jeopardized those plans, the spokesperson said. They went on to tell The Informer that the $500 million investment that D.C. Mayor Muriel Bowser (D) and the D.C. Council introduced through legislation came only in the aftermath of Leonsis’ impending announcement with Virginia. 

Previous offers, they said, included the District and MSE each contributing $400 million. In another deal, MSE would infuse $800 million into Capital One Arena and funds for the District’s contribution would come from taxes on surrounding businesses. 

The MSE spokesperson rebuffed any notion that crime downtown or disdain toward buskers inspired the move to Potomac Yard. They instead pointed to Leonsis’ efforts to improve the fan experience, attract sports talent, and consolidate the bevy of staff spread between five locations. 

Those locations are: Capital One Arena, 700 6th Street NW, Entertainment & Sports Arena in Southeast, EagleBank Arena on the campus of George Mason University in Fairfax County, Virginia, and MedStar Iceplex in Ballston, Virginia. 

While the Capitals’ front office staff and team will continue to occupy MedStar Iceplex, the other departments will move to Potomac Yard, the spokesperson said. Meanwhile, as reported in a previous Informer story, the Mystics will return to Capital One Arena. 

“Ted’s focused on the fan experience, first and foremost, and making sure we are competitive in what we are able to offer athletic talent to be excellent,” the spokesperson said. “We have 750 employees spread between five locations. There are inefficiencies when we are not co-located. [At Potomac Yards], we are able to pull everyone together.” 

Since becoming majority owner of the Wizards and Capital One Arena Capitals in 2011, after having become majority owner of the Capitals two years prior, Leonsis has poured $200 million into arena upgrades. 

As recently as 2019, such expenditures have resulted in a new scoreboard and new seats. 

These days, ticket holders either sit in those new seats, or access more exclusive amenities within the arena. Top-tier ticket holders sit in spacious seats on the floor, within proximity of the action, while enjoying a special full-course menu or partaking in libation straight from a nearby bar area. 

Etihad Airways Lounge, an event-level space, has open dining with an upscale buffet, beer, wine and soft  drinks. Patrons in premium seats on other concourse levels enjoy a similar experience. They too can access a full-course menu and large private lounge space that, in some ways, bears a striking similarity to a family restaurant. 

Next door, near the Gallery Place box office, MSE rented and renovated space for District E. For nearly a year, that space has served as a hub for pre-game meals and esports league competitions. Esports enthusiasts watch the members of the Wizards District Gaming and Caps Gaming franchises compete against other teams in their respective esports leagues. They can also watch Team Liquid, a Los Angeles and Netherlands-based esports community in which MSE has a majority stake. 

MSE also rents space to Caesars Sportsbook which includes a connected lounge and restaurant that’s been in existence since 2021. Meanwhile, 700 6th Street NW, located next door to Capital One Arena, has a bevy of office spaces and studio space for Monumental Sports Network, the regional sports network formerly known as NBC Sports Washington. 

Such conditions, the MSE spokesperson said, have spread the organization’s 750 employees too thin across several buildings. 

While Leonsis remains intent on solidifying the Potomac Yard deal, the spokesperson told The Informer that MSE stands ready to help the D.C. government book music and art events at Capital One Arena. They said MSE made a similar attempt to form a relationship with Events DC, the entity responsible for booking 90 events each year at Entertainment and Sports Arena in Southeast, where the Washington Mystics currently play. 

“We feel really bullish about sustaining this building, the spokesperson said. “There are a lot of great uses.”

Source: Washington Informer

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