Washington Wizards, Capitals eye move to Virginia

The NBA’s Wizards and the NHL’s Capitals may be headed out of the nation’s capital.

Ted Leonsis, the owner of the Washington Wizards and Capitals, has entered a nonbinding arrangement to relocate the teams from downtown D.C. to a new arena in Northern Virginia by 2028, the Washington Post reported.

The announcement was made at an event in Alexandria’s Potomac Yard neighborhood, where the deal was presented. The proposed facility by Monumental Sports & Entertainment would anchor a 12-acre mixed-use development, subject to multiple state and local approvals.

Virginia Gov. Glenn Youngkin has backed the deal, comparing it to the process undertaken with Amazon’s HQ2. 

While no official agreement has been signed, the proposed move would be a significant economic development win for Virginia and could have implications for Leonsis’s plans to take the company public.

The move stirred last-minute efforts from D.C. leaders, who tried to keep the team in the capital by proposing a bill offering $500 million in public financing for the rehabilitation of Capital One Arena and an extension of its ground lease until 2052. However, Monumental had requested $600 million. 

The loss of both teams is expected to be a huge hit to D.C.’s downtown.

“Whatever vibrancy it has would be greatly diminished as people would not come, nor shop, meaning that the economy would be adversely affected,”  Mark Conrad, an associate professor of law and ethics at Fordham University, told the Commercial Observer. 

D.C. Mayor Muriel Bowser and other D.C. officials are still holding out hope the teams won’t move, but contingency plans are being considered, including moving Washington’s WNBA franchise to Capital One Arena, among other things.

The proposed Virginia project, estimated at $2 billion, includes a 20,000-seat arena, practice facilities, esports facilities, a “fan plaza,” a performing arts venue, and Monumental’s global corporate headquarters.

Under the deal, JBG Smith, a Bethesda-based developer, would sell the Potomac Yard land to a Virginia stadium authority, which would then lease the property to Monumental for 35 years. The complex would be located near a new metro station and Virginia Tech’s upcoming innovation campus. Monumental plans to relocate the teams in 2028.

The move is seen as a potential catalyst for transforming the Potomac Yard area into a bustling entertainment district.

While local officials and developers anticipate job creation and economic impact, concerns have been raised by some residents about potential traffic impacts. 

The proposal, approved by a group of Virginia lawmakers in a closed-door session, requires further approval from the state, with detailed vetting expected in 2024.

Reaction to the project has been mixed, with some Republican legislators urging caution. “I’m always skeptical of giving tax breaks to billionaires,” State Sen. Mark J. Peake told the Washington Post. “I would much prefer a reduction in the corporate tax rate, which would benefit people across the commonwealth, corporations who have been here for decades, than a single billionaire and maybe a couple of his billionaire friends.”

The proposal includes around $200 million for transportation improvements to support the new arena, and discussions are ongoing about expanding capacity at the Potomac Yard Metro station.

Youngkin has reportedly pitched the project to Democratic lawmakers, signaling the need for bipartisan support to pass legislation that would create a sports authority to determine project financing. Prominent Democratic lawmakers have yet to formally express support, with some emphasizing the importance of ensuring that the deal benefits the community and does not impact state finances.

— Ted Glanzer