Capitals and Wizards Arena in Alexandria Is Officially Dead

The proposed new Capitals and Wizards arena in Potomac Yard is dead, the City of Alexandria announced Wednesday. A plan to keep the professional sports teams in Washington, D.C., on the other hand, is suddenly very much alive.

The $2 billion plan to relocate the two Monumental Sports & Entertainment-owned teams from Washington, D.C., to Virginia caused an uproar when it was announced in December, but stalled in the Virginia legislature earlier this month.  

The deal between Virginia Gov. Glenn Youngkin, Monumental Sports and the City of Alexandria would have cost $1.5 billion in taxpayer funds and created a massive mixed-use entertainment district anchored by the arena in Potomac Yard. After opposition from some Democrats, the state General Assembly passed a budget without the required funding when the session closed in mid-March, leaving few avenues for negotiation. 

Now the City of Alexandria has officially pulled out of the negotiations. “We are disappointed this proposal was not able to be thoughtfully considered on its merits by legislators, stakeholders and ultimately now by our community,” Alexandria Mayor Justin Wilson said in a video statement. “It got caught up in partisan warfare in Richmond. As a result, the City of Alexandria will no longer be considering the current proposal.”

Meanwhile, D.C. Mayor Bowser has come to an agreement with Monumental Sports owner Ted Leonsis to keep both teams in the District, the Washington Post first reported. The deal would keep the teams at the Capital One Arena through 2050, and includes $515 million to renovate the stadium. Monumental Sports confirmed the deal in an email, though it still needs to be approved by the D.C. Council.

“[We are] the most important city in the world, and we are the current home and the future home of the Washington Capitals and Washington Wizards,” the mayor said during a press event Wednesday where she announced the agreement.

Gov. Youngkin expressed his disappointment, blaming the General Assembly for killing the deal.

“Virginians deserve better,” he said in a statement. “Personal and political agendas drove away a deal with no upfront general fund money and no tax increases, that created tens of thousands of new jobs and billions in revenue for Virginia.” The deal would have generated $12 billion in economic investment, the governor said.

Local mega-developer JBG Smith (JBGS), which owned the site of the planned district, went even further. “To say we are disappointed is an understatement; we are disgusted with the backroom dealing and opaque scheming that took place as this played out,” CEO Matt Kelly wrote to shareholders Wednesday, putting the blame “on the Virginia Senate.”

Earlier this week the developer had promised to double the amount of affordable housing in the planned development if the deal was approved. “With this chapter now closed, we will continue to pursue alternate uses and amenities to further develop our sites adjacent to the Virginia Tech Innovation Campus,” Kelly wrote.

While Youngkin and JBG Smith pinned the blame on Virginia lawmakers, others have highlighted the governor’s own failure to work with Democrats as a reason why the deal fell through. Throughout the legislative session, the Republican governor vetoed more than 80 bills passed by the Virginia House and Senate, both of which are controlled by Democrats, and refused to negotiate on a recreational cannabis bill that the Democrats attempted to use as leverage in the arena dealings. 

Sen. L. Louise Lucas, a Democrat from Portsmouth who was the key player blocking the deal during budget negotiations, celebrated the news. “We are celebrating in Virginia that we avoided the Monumental Disaster! Thank you to everyone who stood with us in this fight!” she posted on X.

Chava Gourarie can be reached at cgourarie@commercialobserver.com.