Youngkin heralds bid to bring Wizards, Capitals, $2 billion project to Virginia

Youngkin came to a brand new portion of this historic port city Wednesday to announce what already was an open secret — a proposed $2 billion economic development that would bring not just the first major league sports franchise to Virginia in nearly 50 years, but two of them. He was joined by Ted Leonsis, owner of both franchises and CEO of Monumental Sports & Entertainment, based across the Potomac River in Washington, D.C., but possibly not for long.

The deal, which would require approvals by the General Assembly and Alexandria City Council next year, would move the Washington Capitals National Hockey League franchise and the Washington Wizards National Basketball Association team from the District of Columbia to a new arena at Potomac Yard next to the Potomac River. The project would include a practice facility for the Wizards, but the Capitals would continue to practice in Arlington County with the option of eventually moving here or renovating its training facility in Arlington’s Ballston neighborhood.

Calling it a “transformational opportunity,” Youngkin said in Alexandria, “With the opening of this new sports and entertainment district we will christen the next chapter of groundbreaking innovation in the commonwealth.”

In a statement heralding the project, the governor said, “The commonwealth will now be home to two professional sports teams, a new corporate headquarters and over 30,000 new jobs — this is monumental.”

Plan calls for 20,000-seat arena

The project, a partnership between Virginia, Alexandria, Monumental and real estate developer JBG Smith Properties, would bring an estimated 200 events a year to the new 20,000-seat arena and, on the other side of a pedestrian plaza, a performing arts venue that would seat about 6,000. The partners expect the 9-million-square-foot project to bring new retail businesses, residences, restaurants, hotels, conference meeting and community gathering spaces.

Monumental Sports & Entertainment, which intends to invest $403 million in the project, would continue to own and operate the Capital One Arena in downtown Washington, where the Georgetown University Hoyas men’s basketball team plays and which hosts big-ticket musical acts. It had sought $600 million from the District of Columbia government to renovate the downtown arena but says now it would pay for any improvements needed there.

Leonsis also owns the Washington Mystics Women’s National Basketball Association team, which would continue to play at a Washington venue. He promised Wednesday to maintain his commitment to the Capital One Arena and remain “a big, big part of the entire (D.C., Maryland, Virginia region).”

But Monumental plans to move its corporate headquarters, sports network studio and 650 jobs to the new, 70-acre site, which adjoins both the new Potomac Yard Metro station and the $1 billion Innovation Campus that Virginia Tech is building for graduate programs in technology disciplines as part of the $1.85 billion incentive package that Virginia used to win Amazon’s East Coast headquarters in 2018 in nearby Crystal City in Arlington.

The Monumental Sports Network reaches from Richmond into Delaware, Leonsis said. “Our brand really starts in Richmond and goes past Baltimore.”

“Right here in the DMV we have the opportunity to be one of the 10 most important communities on the planet,” Leonsis said, asserting that keys to a “super community” include an international airport, access to public transportation, technical infrastructure and great research universities.

“Our commitment will be to build really iconic, fan-centric businesses and we want to unite this community,” Leonsis said. “What we are about is putting unity in a community and really helping this region” reach “its total promise.”

The partners propose to break ground for the project in 2025 and open it in 2028. Youngkin estimates the long-term payoff after full buildout is an estimated $12 billion economic impact for the state and city, which he said “will create future revenue streams for education and transportation across Virginia.”

For the governor, the project represents a political triumph about a month after he failed to win Republican majorities in the General Assembly for the final two years of his term. It also comes as a federal inspector general looks into how the General Services Administration chose a Maryland site over Springfield, Virginia for the new FBI headquarters.

“Virginia is undoubtedly the best place to live, work, raise a family and now watch basketball or hockey,” Youngkin said, in a variation on his governing theme.

Youngkin, who was a high school basketball star at Norfolk Academy, received a basketball scholarship to Rice University. Basketballs have been prominent props during his governorship, whether he is tossing them to campaign supporters or contributing them to a holiday toy drive.

General Assembly to scrutinize proposal

All of the projects would anchor what Amazon and JBG Smith Properties, the Maryland-based real estate giant that owns much of the land, rebranded as National Landing, including Pentagon City in Arlington. Youngkin said the proposed sports and entertainment district “will be at the heart of the most vibrant innovative corridor in the world,” including the Virginia Tech campus, with its first building under construction.

Unlike the Amazon deal, the proposed sports and entertainment district won’t cost the state any current tax revenues, but will be financed through a proposed Virginia Sports and Entertainment Authority, which the General Assembly will be asked to approve in January. The authority would buy the land for the district from JBG and develop its portion of the project.

The authority would pay off the bonds with rent from Monumental under a 35-year lease, arena parking revenues, naming rights and incremental future tax revenues. In contrast, Virginia offered Amazon $550 million in cash incentives for 25,000 new, high-paying jobs after they are created, as well as a commitment to a $1.1 billion investment in higher education that included the Virginia Tech campus and an expanded George Mason University technology campus in Arlington to develop a skilled technology workforce over 20 years.

The project will face plenty of scrutiny when it goes to the General Assembly, to ensure that the state doesn’t give too much future tax revenue away to pay for building the arena and other parts of the project, including a performing arts venue and large underground parking garage. In early 2020, similar concerns sank the Navy Hill development project proposed in downtown Richmond around a new civic arena.

Virginia previously considered proposals for a new Washington Commanders football stadium in Northern Virginia, but the project stalled in the state legislature amid financial questions and controversies surrounding then-owner Dan Snyder.

The Youngkin administration expressed confidence that in the new proposed deal with Monumental, the numbers work to protect the state’s financial interests.

So did U.S. Sen. Mark Warner, D-Va., a longtime Alexandria resident and former telecommunications executive, who said the project’s financing will depend on the AAA bond rating that both Virginia and Alexandria have worked hard to protect.

“We’re going to rely on that long-term fiscal stability, and this will not affect the fiscal rating of either the city or the commonwealth,” Warner said at the launch Wednesday.

MEI Chairman Barry Knight, R-Virginia Beach, would not confirm any details about the project or name those involved, but he said Tuesday night, “I’ve been working with the governor on this at least since June.”

In remarks to news media after the event, Youngkin said that the MEI vote “sets the stage for a very productive General Assembly session.”

The governor also acknowledged incoming House Majority Leader Charniele Herring, D-Alexandria, who told the audience that “this opportunity will be among our state’s priorities” when the assembly convenes on Jan. 10.

Critics raise concerns about project

The last time Virginia tried to land a major professional sports franchise at Potomac Yard, a former railroad complex, then-Gov. Doug Wilder made an agreement in the early 1990s with Jack Kent Cooke, owner of what was then the Washington Redskins National Football League franchise. The deal for a proposed football stadium was shrouded in secrecy and fell apart in the face of intense public opposition in Alexandria.

This time, Alexandria officials have been deeply involved in planning for the project. Mayor Justin Wilson spoke exuberantly about the project at the announcement, with members of the Alexandria City Council, who face re-election next year, sitting on the stage. The city would contribute $56 million toward construction of the performing arts venue in partnership with Monumental, and $50 million for construction of the underground parking facility.

However, public opposition was evident at the project’s announcement, as a handful of protests waved handmade signs that said “No Taxpayer $$ for Billionaires” and “Housing Not Hockey.” Their chants could be heard dimly during the ceremony, but one woman shouted, as Youngkin spoke to reporters outside, “Boo! We don’t want it.”

Traffic is sure to be an issue in perpetually-congested Northern Virginia, but the bonds sold for the project would pay for $110 million in site development and infrastructure, including improvements to roadways, traffic signals and intersections. Warner, who said he had met with JBG CEO Matt Kelly at the site “seven to eight months ago ... to start kicking the tires on this project,” acknowledged that much work remains to analyze and address the transportation issues it would raise for the community.

“At the end of the day, the quality of life will absolutely be improved by this investment,” the senator said.