According to sources, Monumental is asking DC for $600 million for the Capital One Arena

Monumental Sports & Entertainment, which owns the Wizards, Capitals and Mystics, has asked DC for $600 million in public funding for a major renovation of Capital One Arena, according to two people familiar with the situation.

The funding would make up the bulk of an $800 million renovation plan that Monumental has submitted to the city, according to the two people, who spoke on condition of anonymity to discuss sensitive negotiations. The remaining $200 million would be contributed by Monumental, owned by founder and chief executive Ted Leonsis.

One respondent outlined the request: Monumental would receive the $600 million over four years and use it primarily for construction. The main priorities are to redesign the seat shell – less nosebleed seats, more Seating near the court and ice – plus a food court open during off-seasons and a new glass entrance at Seventh and F streets. Monumental wants to phase in construction over four consecutive summers starting in 2024 to avoid disrupting the Capitals or Wizards seasons, this person said.

A spokeswoman for D.C. Mayor Muriel E. Bowser (D) issued a lengthy statement that she said was shared responsibility with Monumental.

“The district and Monumental Sports are proud of a long-standing and positive relationship that has contributed significantly to 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 reshape and revitalize our downtown.”

Monumental’s request is the second the city has received in recent months. In September, an executive from the Lerner family sports business group, which owns the Nationals, sent a letter to local leaders asking the city to convert a special pot of money in the general fund into a “Ballpark Modernization & Sustainability Fund.”

Bowser (D) must juggle the requests of wealthy sports owners with a host of other issues, including onerous budget constraints, a difficult downtown area and looming competition with Maryland and Virginia for the next Commanders Stadium.

Bowser, a vocal advocate for Commanders’ return to the RFK Stadium site, recently met with skeptical community members while awaiting a bill that would give the city control of the stadium Federal RFK website to advance through Congress. Maryland Gov. Wes Moore (D) has already said he would support providing public money to the football team to build a stadium in his state.

Last month, the Bowser administration selected two contractors for a $394,000 “sports study” to examine options for financing a Commanders Stadium and address the financial issues Inquiries from the other sports franchises owned by Leonsis, the Lerners and private equity billionaire Josh Harris (Commanders).

The owners’ demands on the city come as franchise values ​​in professional sports continue to skyrocket. Professional teams regularly sell for multiples of The income they generate comes in part from owned properties and TV contracts.

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 required to pay for upgrades to 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) said he supports providing public money to Monumental because the arena is an economic anchor in a fragile downtown. In a recent interview, Mendelson said he had no first-hand knowledge of Monumental’s request for $600 million and didn’t know exactly how it would be structured or over how many years, making it difficult to say what it would and wouldn’t support.

“The impact varies depending on the structure,” he said.

In an editorial In the Washington Post over the summer, Councilman Charles Allen (D-Ward 6) argued that Monumental deserves more public money than the Commanders because the downtown multi-purpose arena hosts more events and brings in more money than a football stadium would.

Meanwhile, Monumental continues to negotiate with Virginia state officials about moving to a location in Alexandria’s Potomac Yard neighborhood, according to a person familiar with the effort who spoke on condition of anonymity to share confidential information. One A potential site could be near the graduate engineering school that Virginia Tech is building in the area, as well as a new subway station served by the Blue and Yellow lines.

Virginia Gov. Glenn Youngkin (R) and members of his office have taken the lead in these negotiations, with the Virginia Economic Development Partnership (VEDP) playing a supporting role, this person said. At least some members of the Commonwealth team feel that Monumental would prefer to stay in D.C. and is using the prospect of a move to Virginia as a bargaining chip with the District, this person said.

Youngkin spokeswoman Macaulay Porter declined to comment and referred questions to VEDP, which did not respond to requests for comment.

Alexandria Mayor Justin M. Wilson (D) declined to comment but said the city is “optimistic” about economic development in the Potomac Yard area. A spokeswoman for the Alexandria Economic Development Partnership declined to comment.

Even if Virginia offered Monumental big money to lure the company away from DC, the company’s continued investments around Capital One would seemingly make it harder to actually leave. Over the years, Virginia has been willing to offer large financial packages for sports facilities, but has lost out to DC in venues such as Nationals Park, the Entertainment and Sports Arena in Congress Heights and DC United’s Audi Field.

Over the summer, Leonsis bolstered his empire by striking a potential deal with Qatar’s sovereign wealth fund and rebranding NBC Sports Washington, the regional sports network he acquired last year, as the Monumental Sports Network. But according to a person with knowledge of the company’s internal operations, the arena’s business staff has “outgrown” and expanded significantly into neighboring Gallery Place, the mixed-use complex attached to the arena.

Gallery Place is up for sale because an affiliate of Oxford Properties, the real estate company that owns it, defaulted on a loan secured for the development, the Washington Business Journal reported. In the meantime, Monumental has secured vacancies for office space, employee parking and an e-sports center that opened in March. The company is also building a new MSN studio, which is scheduled to open early next year.

Leonsis, who took full control of the arena from the late Abe Pollin in 2010, has complained for years about having to pay a mortgage with unfavorable conditions. In 2016, Leonsis said it paid $14 million a year in interest, $9 million in principal and maintenance costs, which totaled $13 million the year before. By comparison, he said, most teams pay $3 million to $4 million in rent to play in municipal arenas.

At the time, Leonsis said he had “the worst construction business in professional sports” and suggested he leave town once he paid off the mortgage. It is unclear how much Leonsis now pays annually for the mortgage and how much remaining capital remains.

The arena has a ground lease, meaning Monumental owns the building and the city owns the property underneath. In 2007, the city invested $50 million in public funds in capital improvements to the arena, and in return, 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 deposit on the lease – and it is allowed to pay the remaining $35 million as capital in one lump sum at any time – then the lease extension would be canceled and the end date reset to 2027.

In 2019, Monumental completed a privately funded $70 million renovation project at the arena. The company installed a new scoreboard and upgraded suites and seats. But the building still needs other structural improvements, such as to the HVAC systems and ceiling, which would allow Capital One to host larger concerts and events, according to a team official.

Around the same time, Leonsis began to be dissatisfied with the arena’s surroundings. He was particularly bothered by street musicians who played loud music in front of his office. In recent 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 had made it “very clear” that she wanted to work with Leonsis, although the relationship between Leonsis and Bowser was strained, according to two people.

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 in the arena and deal with the postponed maintenance,” Mendelson said.

In the arena’s neighborhood, residents and business owners have raised concerns about criminal activity on the busy sidewalks near Gallery Place, including suspected drug trafficking, which they say can lead to violence.

In the past, DC provided 27 police officers to patrol the Capital One area during games. But in recent years, D.C. police have struggled with staffing, and the number of officers has dropped to three, according to a Monumental official. The company made up the difference by paying off-duty civil servants.

Teo Armus, Michael Brice-Saddler, Meagan Flynn and Jonathan O’Connell in Washington and Laura Vozzella in Richmond contributed to this report. According to sources, Monumental is asking DC for $600 million for the Capital One Arena

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