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DC wants to buy Capital One Arena, upgrades coming
New details on plans to upgrade Capital One Arena and keep the Wizards and Capitals in the district. FOX 5’s David Kaplan reports from outside the arena.
WASHINGTON - Washington, D.C. Mayor Muriel Bowser has proposed legislation to purchase Capital One Arena for $87.5 million.
This move is part of a larger $515 million plan to renovate the arena over the next three years, as agreed upon by the city council and Monumental CEO Ted Leonsis earlier this year.
Earlier this year, council unanimously passed a bill that allocates $515 million towards renovations to Capital One Arena.
The renovation plan was devised after Leonsis threatened to relocate the Washington Wizards and Washington Capitals to Potomac Yard in Virginia, a negotiation that concluded in March.
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DC Mayor Bowser proposes buying Capital One Arena for $87.5m
Washington, D.C. Is taking another step in its effort to keep the Capitals and Wizards in the city for years to come. Mayor Bowser is now proposing buying Capital One Arena.
D.C. already owns the land under Capital One Arena. Under Bowser’s proposed bill, the city would acquire the arena and lease it back to Monumental Sports. The structure of this deal, referred to as a "Sale/Leaseback" is becoming more common in commercial real estate transactions.
FOX 5 reached out to D.C. Council Chair Phil Mendelson. Mendelson says he’s happy this deal between the mayor's office and Monumental Sports and Entertainment has been reached, and that the agreement will get a public debate in council, and he hopes to have it done by the end of the calendar year.
"The delivery of a brand-new arena marks the next significant investment Monumental Sports is making in the revitalization of Downtown D.C., and we will build a best-in-class experience for fans, a world-class destination facility for athletes and continue to serve as a downtown anchor for economic vitality," Leonsis released in a statement Monday. "Our vision for a wholly re-imagined sports and entertainment destination will be ambitious, reflective of our community, and designed to ‘wow’ our most ardent supporters as well as casual fans. We want to capture the magic that comes from providing the most entertaining experience – which every guest deserves."
READ MORE: Caps, Wizards not moving to Potomac Yard, staying in DC
The plan is for an $800 million renovation to be finished by the fall of 2027. $515 million will come from the district, with Monumental paying $285 million more. Leonsis says he could see Monumental spending more than that.
"It’s going to be messy. It’s going to be long and hard three years of deconstruction and then construction, but we’re up for that task," Leonsis said, "When we won the Stanley Cup, one of the themes was that it’s worth the wait, and that’s how I feel will happen with this investment."
Because of the proposed terms, Monumental Sports would see some tax relief on the $515 million District investment. But a district official calls this a good deal for the District since the money will go towards upgrading the arena.
According to a source involved in the deal, Capital One Arena contributes roughly $75 million annually to the district’s tax base. Over at least a 25-year lease, district officials view this as a good investment.
Lisa Delpy Neirotti is a George Washington University Sports Management Professor who thinks it’s a good deal for all parties because of what Capital One means to the district’s economic engine.
"The incremental taxes from restaurants, and parking, and from everywhere else around the arena, does contribute quite a bit to the tax coffers. So I would say it’s definitely going to pay back," Neirotti said.
"We’re keeping Washington’s teams where they belong – here in the Sports Capital, and we’re doubling down on having a world-class destination and entertainment district in the center of DC," Mayor Bowser added in Monday's statement. "We know that when our Downtown does well, our city does well. This catalytic investment is an investment in our residents and businesses in all eight wards."
Safety has been a concern near the arena for years, but Monday, Ted Leonsis told Fox 5 that he’s noticed the security situation around the arena has improved. That change, to him, was an improvement that showed the district is serious about keeping the teams here.
"I would say that’s probably the feeling of we’re in it together that made me feel most comfortable with let’s go. Let’s keep pushing to get this done," Leonsis said.