In December 2023, Virginia Governor Glenn Youngkin and Ted Leonsis reached an agreement that would move the NBA’s Washington Wizards and the NHL’s Washington Capitals out of Washington DC to Alexandria, Virginia. Under the agreement, Leonsis— the owner of the Capitals and Wizards—and Virginia planned to make a 9-million-square-foot entertainment district that would generate nearly $12 billion and 30,000 new jobs in Northern Virginia. [1] But this agreement fell through.
On March 27, 2024, Ted Leonsis and District of Columbia Mayor Muriel Bowser announced that they reached an agreement that will allow both sports teams to remain in the District. The announcement came after a series of political and legal setbacks that left Virginia without much bargaining power. Governor Youngkin and those in favor of moving the Washington sports teams encountered their first setback in early March when the Virginia Legislature refused to allocate funds for the entertainment district in Alexandria. [2] The Virginia Legislature justified its rejection of the project by saying that taxpayer dollars should not be used to fund “the project[s] of a billionaire.” [3]
The second setback occurred more recently as the attorney general for the District of Columbia argued that the Wizards and the Capitals were legally obligated to stay at their current arena for another twenty years. Attorney General Brian Schwalb found that a 2007 bond agreement for renovations at DC’s Capital One Arena extended the teams’ leases for twenty more years through 2047. [4] Initially, Leonsis indicated that he planned to exercise a clause in the 2007 Capital One Arena lease extension that allowed the teams to opt out of the lease in 2027. In this scenario, Leonsis’s teams would be able to leave Washington DC for Alexandria, Virginia if he repaid $50 million in District backed bonds that he received as part of the agreement for renovations to the arena. [5] Attorney General Schwalb, however, indicated that the opt-out clause was part of “subsequent agreements” executed after the initial 2007 lease, and was therefore not part of the original lease extension that was approved by the DC Council. [6] Because Leonsis relied on an unenforceable lease provision, Washington DC argued that Leonsis was obligated under the terms of the valid 2007 lease agreement to keep the Wizards and the Capitals at Capital One Arena until 2047.
Attorney General Schwalb also said that Leonsis’s negotiations and subsequent agreement with Virginia violated the terms of the 2017 agreement with the District for improvements to the Arena and the surrounding neighborhood. If he intended to relocate his teams, Washington DC said that Leonsis was required to notify the District of his intent, and negotiate exclusively and in good faith with the District for a period of six months and refrain from negotiating with anyone else during that exclusive negotiating period. [7] If Leonsis entered into an agreement with a third party—like Virginia—Attorney General Schwalb argued that he was also required to give the city written notice of the material terms of the agreement and give the District ninety days to make a competing offer. [8] Although these legal claims existed, Attorney General Schwalb expressed that the city preferred not to litigate these issues, but rather wanted to maintain and subsequently grow its partnership with Leonsis and his teams.
Just a week after Attorney General Schwalb asserted these arguments, Leonsis and Mayor Muriel Bowser reached an agreement that will keep the Wizards and the Capitals in the District through 2050. The agreement allocates $515 million of public funds to expand the arena complex, create an entertainment district, and upgrade the safety and transportation infrastructure around the arena. [9]
The Council of the District of Columbia is expected to approve the agreement in early April.
[1] https://ny1.com/nyc/all-boroughs/news/2023/12/13/virginia-wizards-capitals-washington-dc
[2] https://apnews.com/article/virginia-general-assembly-youngkin-27555e3db0954d7344868f17d6c27cb4
[3] See id.
[5] See id.
[6] See id.
[7] See id.
[8] See id.
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