Mayor Bowser's negotiations draw scrutiny as D.C. could lose Capitals, Wizards
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Hours after the owner of the Washington Capitals and Wizards announced tentative plans to move the teams out of downtown D.C. to Northern Virginia, D.C. Mayor Muriel E. Bowser (D) pledged that the fight to retain them was not over.
If the move goes through, it will mark a stunning upset for a mayor who just five months earlier had branded the city the nation's "sports capital" and announced an entire staff dedicated to keeping and recruiting sports franchises. Bowser made a $500 million offer to billionaire Ted Leonsis ahead of Wednesday's announcement in an 11th-hour bid to keep the teams at Capital One Arena in the heart of downtown D.C. - an offer she said Wednesday remains on the table.
But it appears to have been too little, too late. By the time she and D.C. Council Chairman Phil Mendelson (D) had rolled out formal legislation for the investment late Tuesday night, celebratory tents had gone up near the Potomac Yard Metro station in anticipation of a joint appearance between Leonsis and Virginia Gov. Glenn Youngkin (R).
While Bowser said she had been negotiating with Leonsis in good faith for months, the seemingly last-minute nature of the "best and final" offer caused critics to privately question whether she had moved with enough urgency as Virginia's efforts to woo Leonsis ramped up.
She said at a news conference Wednesday that she had.
"We believe that we put all of the money that we could on the table when we could," Bowser said, noting that D.C. was running up against its borrowing cap earlier this year, hamstringing negotiations. A shifting financial picture allowed D.C. to refinance some of its debt this fall, she said, creating an avenue to make Leonsis's company, Monumental Sports & Entertainment, a more attractive cash offer. "We were aggressive about it."
The teams' departure would deal a huge economic blow to the District and to the Gallery Place-Chinatown neighborhood surrounding Capital One Arena. It also complicates a banner goal of Bowser's third term: to revitalize downtown, as the forecast for the commercial building vacancy rate is only expected to worsen. She announced the city would have a plan for a vibrant downtown in the spring by this fall. But instead the mayor's agenda was hobbled by vexing spikes in violent crime and turnover in critical top roles in her administration - chief among them, until recently, a leader overseeing economic development.
Council member Charles Allen (D-Ward 6), who was perhaps the most vocal lawmaker in favor of focusing on Capital One Arena, said he had worried over the summer that the city was taking the Wizards and Capitals for granted. But in this case, "the urgency wasn't there," he said.
"I think it's easy to get distracted by the newest shiny ball, but we knew we had a lease coming up," Allen said, seeming to reference Bowser's focus on luring the Washington Commanders to RFK Stadium as Leonsis was weighing moving. "We knew Virginia was courting the teams in Monumental Sports. So all the more reason we needed to make sure that we viewed a vibrant Cap One as part of our overall downtown strategy. And I just don't think that the city is acting as urgently and strategically on our downtown recovery as we need to. This was not inevitable."
Bowser on Wednesday said her administration would forge ahead with a task force to rethink economic development in the area around Capital One Arena.
"We know that D.C. fans, that D.C. residents are loyal and that they are disappointed today, and they are disappointed with Monumental's decisions - or, what appears to be their decisions, as am I," she said, before turning to what she sought to frame as an optimistic future. "But already people have been contacting me, volunteering to be a part of what's next. A senior just told me at our annual senior holiday event, 'Remember if a door closes, many others open.'"
Leonsis has long complained of the city's lack of investment in Capital One Arena - which was built in 1997 and is one of the older arenas in the NHL and NBA - and also about an increase in crime around the area recently.
But as Monumental Sports sought to secure financial investment and beefed-up security from the city, Bowser was also working to lure the Commanders - something the mayor has set up as a legacy ambition. At the same time, the Washington Nationals were seeking city investment in major upgrades to their ballpark as well.
Aiming to cater to all of the teams' needs, Bowser announced the "sports team" within her department of economic development in July, at one point reflecting on the transformational impact of moving the Wizards downtown in the 1990s - "where they belong," she pointedly added.
But even though Bowser said that effort remains on track and on time, over the past five months things have appeared to move slowly: Consultants weren't hired to launch a "sports study" about the economic impact of professional sports teams until October - a study that was expected to include examining the impact of Capital One Arena on downtown.
Bowser and Mendelson appeared to ramp up their efforts as Wednesday's announcement neared, privately laying out a $500 million public financing offer on Sunday, money that would be borrowed over three years as part of the capital projects budget.
It was the day before Virginia lawmakers voted to advance its tentative agreement in a closed-door meeting.
In a 34-page slide presentation the two leaders shared with Leonsis, the pitch imagined the Gallery Place-Chinatown neighborhood as an "entertainment epicenter," talking up the museums and restaurants and potential for outdoor festivals in the buzzy downtown area. It also pledged to ramp up security around the arena, responding to Leonsis's and the community's concerns, and floated a task force focused on improving safety and reducing crime, loitering and busking.
"We have the chance to once again embark on a once-in-a-generation transformation of our downtown," Bowser and Mendelson wrote in a letter addressed to Leonsis at the start of the presentation. "We can set a new bar for urban arenas and build an unparalleled fan experience, while also seamlessly connecting Capital One to the community and firmly establishing the arena as the epicenter of entertainment in our nation's capital."
On Tuesday morning, Bowser and Mendelson met with Leonsis at Monumental's offices and discussed the pitch in person, Mendelson said in an interview.
While Mendelson described Leonsis as "impressed" by the presentation, the D.C. leaders learned of the Virginians' planned Wednesday morning announcement, causing them to leave the meeting in agreement to accelerate drafting the legislation they released Tuesday night.
"The value of the arena functioning the way it is and renovated so it brings in even more activity is a tremendous impact, a tremendous benefit to downtown. With what Virginia is seeking, we would lose most of that," Mendelson said.
Critics have privately worried that Bowser and her team did not take seriously enough the threat that Leonsis would follow through with a deal to build a whole new stadium in Virginia, according to two people familiar with the talks, who spoke on the condition of anonymity to discuss sensitive negotiations.
Bowser rejected that suggestion Wednesday, saying she and officials did take it seriously - but that there was little she could do for Leonsis in D.C. if his ultimate desire was to build an arena from scratch in a suburban, campus setting. Mendelson added that the chief financial officer only refinanced debt in mid-November - not for the purpose of helping Monumental - and he and Bowser first discussed using the increased borrowing capacity on a Monumental offer this weekend.
Still, broadly, from residents to council members to critics, the sense emerged Wednesday that it didn't have to be this way, as they wondered what went wrong.
Like Allen, council member Kenyan R. McDuffie (I-At Large), who chairs the economic development committee, said that he did not even learn of the offer or any legislation until Tuesday and felt frustrated with how negotiations had been handled.
"First and foremost, I'm extremely disappointed - upset even - at where things are," he said. "I don't think we had to get to this place, where Monumental has made the decision to leave the District of Columbia. I think that given the urgency of our needs to address downtown and really contribute some renewed investments in downtown's recovery, I would've expected a more swift and stronger offer from the executive. And I would've expected a more collaborative approach to negotiating a deal in earnest."
Gerren Price, president and CEO of the DowntownDC Business Improvement District, said losing the Wizards and Capitals would "sting a little bit" especially because the presence of those teams helps bring in $341 million worth of sales revenue.
"Having people teeming in and out of that arena brings about an energy and vibrancy that people are attracted to, and it brings other businesses - it's what people use to justify opening new businesses," Price said. "I think a lot of people feel tension and unease this morning, just questioning: 'What is the future going to look like?'"
Price said his job now is to work with the newly created task force on a new vision for Gallery Place - with or without the Wizards and Capitals. "We have been saying for years that we need to reinvest and reinvigorate our Gallery Place-Chinatown neighborhood."
Derek Hyra, a professor in public administration at American University, said that despite Bowser's vision to make D.C. a sports capital, "the economy of Washington does not revolve around sports." He said that the city could rebound with a new mixed-use vision for the area surrounding Capital One.
Still, "this is a blow to Muriel E. Bowser and Washington, D.C., and it's a big political win for Youngkin," he said. "There's no doubt."
Monumental Sports would not be entirely abandoning Capital One Arena if the Virginia plan materializes. Monica Dixon, president of Monumental's external affairs, said the plan would be to expand live events at the arena and potentially move the Washington Mystics - who, in 2019, started playing at the new Entertainment and Sports Arena in Congress Heights - to Capital One.
Bowser did not immediately address questions about what, then, would be the plan for the ESA if the Mystics relocate to Capital One.
Dixon declined to discuss why Monumental did not accept D.C.'s offer or where the city lost Monumental on a deal, saying the company hoped to continue a partnership with the city.
Bowser and Mendelson appeared to be clinging to hope that they are still "in the game," as Bowser said. There was the time in 1992, after all, when the then-Washington Redskins appeared with Virginia Gov. L. Douglas Wilder (D) to announce a deal to move from RFK Stadium to Potomac Yard. That never happened - history that the two leaders are banking on repeating itself.
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Barry Svrluga, Teo Armus and Sam Fortier contributed to this report.
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