Loose Lips can remember rolling his eyes so hard he nearly popped a blood vessel when the preliminary terms of the District’s deal to keep the Capitals and Wizards in the city became public in early April.
Monumental Sports owner Ted Leonsis asked to not pay taxes that benefit other pro sports teams in D.C., in a very funny bit of sniping at his colleagues with the Nats and Commanders, and he had a whole host of demands about how the city would reshape the Chinatown neighborhood to his liking to keep him at Capital One Arena. No detail was too small in the billionaire sports owner’s wish list—even one specific restaurant’s streetery was targeted for removal simply because Leonsis didn’t like it.
So LL was relieved, if largely unsurprised, that the city has refused (or convinced Leonsis to abandon) many of his most outlandish requests in the final version of the deal, which Mayor Muriel Bowser officially submitted to the Council for approval on Friday. The full details are still trickling out, but the proposal at least appears to be more advantageous to the District than the one initially advanced in the spring. The city is forking over $515 million to overhaul an arena that is hardly falling down, after all, so this is perhaps the least Leonsis could do.
“There has to be compromise,” Leonsis told reporters Monday morning. “The leagues have to compromise. The city has to compromise. We have to compromise. The only people so far who don’t compromise are the agents. And we can get through it.”
It’s not like Monumental won’t get anything out of this deal. The fact that they were able to win so much city money in the first place, even though Bowser was essentially negotiating against herself after Leonsis’ Virginia plans collapsed, is a testament to how deferentially the District still treats its sports teams and associated rich guys. And the city is doing Leonsis and his partners a solid by ensuring he gets the full $515 million that D.C. promised by agreeing to some shuffling of the arena’s ownership—the city will pay $87.5 million to buy Capital One from Monumental and lease it back to the teams, ensuring that the company avoids paying any federal or local taxes on the city’s contribution to improvements. That means the firm won’t have to hand an estimated hundreds of millions in tax payments right back to the city after getting the public money for the renovation, according to District and Monumental officials, who requested anonymity to speak frankly to reporters about the deal’s contents.
“All the money is going into the building, as opposed to paying taxes,” Leonsis said, noting that Monumental plans to invest the money from the sale of the arena into its improvements. “Isn’t that, strategically, the right thing to do?”
Leonsis has, as ever, misjudged how this part of the deal will appear to the public when readers see headlines that the city is helping a billionaire avoid a huge tax bill. “We shouldn’t have to defend it,” Leonsis said, a bit defensively, when pressed on the subject. But the die was cast when the city agreed to the $515 million in spending—it would be a bit silly for the city to commit to this investment only to take back some of the money via its own taxes (or let the feds get a piece). If anything, the city’s ownership of the arena is probably a win for the District, should Monumental change its mind about staying in the city a few decades from now and the government is once again confronted by the prospect of how to redevelop an empty arena in the heart of its downtown.
“This is the deal that was always contemplated,” said Nina Albert, Bowser’s deputy mayor for planning and economic development. “This is the best structure to effectuate that.”
Officials told reporters that they also decided not to move forward with the exemption from taxes benefitting other sports teams after further negotiations, so, as much as it may pain Leonsis, he’ll still be on the hook for money flowing to improvements at Nats Park or a theoretical RFK Stadium deal. Interestingly, the city’s initial term sheet with Monumental called for the consideration of the RFK site for a potential new Wizards practice facility if the city couldn’t find a spot elsewhere and that offer remains on the table, should D.C. ever succeed in gaining control of the land.
Monumental officials say they considered but ultimately abandoned plans to build the facility in the Gallery Place development adjacent to Capital One. (But the company will still expand some of its offices and meal prep functions into the development and lease about 200,000 square feet of space there, which is very good news for its owners: the politically connected MRP Realty, which bought the building for a song earlier this year as its old owners grappled with a bunch of retail vacancies.)
So that means Monumental is still searching for a way to move the basketball team out of the facility housed in the Entertainment and Sports Arena in Ward 8. The city already paid to build that one, too, and now it’s anyone’s guess where and when Leonsis may ask for more public money to replace the facility that’s less than a decade old.
“We said, rather than try to cram it here, let’s catch our breath, let’s work with the city,” Leonsis said. “Let’s finally ensure there’s another place within the city that we can be able to find and build a world class practice facility, which is very important for the overall health of the franchise, because it’s where the players spend most of their time.”
Mercifully, it seems the District was able to convince Leonsis to drop his desire to move the popular bus stop near the arena at 7th Street NW and H Street NW. Monumental claimed that the stop presented a safety issue as people congregating nearby made things difficult for people arriving for the game. But critics noted that this would inconvenience anyone traveling to the arena by bus and ruin its connectivity with the nearby Metro station.
“Finding a new place to move it to is not that easy, so, right now, there’s no plans to move it,” a District official told reporters. Perhaps Leonsis also realized that the optics of a rich White guy forcing a bunch of mostly non-White bus riders to move away from his shiny, newly renovated building were less than ideal.
Similarly, he’s backed off from his request that the city move the streetery located on 6th Street NW after agreeing to a compromise with its owners, the Japanese restaurants Daikaya and Tonari. “It’s just going to be pushed down the block a little bit,” said Monica Dixon, Monumental’s chief administrative officer, noting the company’s continued concerns about how the small collection of outdoor tables interferes with the arena’s loading dock. Again, it was not exactly the best look for the city to wipe out some of a small business’ profits (without even consulting with the business first) just to appease Leonsis.
The deal is also silent on another Leonsis bugaboo: The buskers playing loud, amplified music on 7th Street outside Monumental’s offices. Company officials said they’re still having conversations about how to address the matter, however, and the Council is currently advancing a bill regarding amplified sound in public spaces that could meet some of his demands.
That legislation, just like the broader Capital One deal, will need to pass before the year is out or else face major delays. The Council’s two-year legislative calendar resets at the end of the year, and anything still pending before lawmakers must be re-filed.
Council Chair Phil Mendelson wrote in a statement Monday that he plans to hold a hearing on the Capital One bill and ensure “that the public gets to fully see the transaction,” but that he expects to meet the year-end deadline. After the way the Council eagerly waved through the city’s $515 million initial offer, LL is not holding his breath for any drama during that process.