https://www.washingtonpost.com/sports/2023/06/23/monumental-nationals-dc-bowser/
In the next few weeks, the NFL is expected to approve Josh Harris’s purchase of the Washington Commanders, which will rev up a competition for a new stadium between D.C., Maryland and Virginia. And while D.C. Mayor Muriel E. Bowser (D) has championed the Commanders’ return to their former home at the site of RFK Stadium, friction has been building between the District and several of the professional sports teams that already play there.
In recent months, representatives from Monumental Sports & Entertainment — which owns the Washington Capitals, Wizards and Mystics — and the Washington Nationals have spoken separately with city government officials about the funding of improvements they deem necessary to their facilities. MSE executives have also talked to Virginia government officials about relocating the Capitals and Wizards from downtown D.C. to Northern Virginia, near Amazon’s new HQ2, according to three people with knowledge of the situation, who were not authorized to speak publicly about negotiations.
Two people familiar with the talks, including a Monumental official, described them as preliminary and exploratory.
Ted Leonsis, Monumental’s founder and CEO, and Monica Dixon, its president of external affairs and chief administrative officer, met with D.C. Council chair Phil Mendelson (D) on June 15 to discuss concerns about Capital One Arena — particularly, costly improvements they hope the city will help pay for as an investment in a major economic driver in the struggling downtown. The arena, which Leonsis owns, opened in 1997 and is one of the older venues in the NHL and NBA.
The city is not obligated to pay for upgrades, though in 2007, it invested $50 million of public funding into capital improvements to the arena.
Mendelson characterized the June meeting as “positive” and said the conversation focused largely on upgrades, not potential relocation. He said they did not discuss how much money the District would or could provide.
“The issue is that Monumental Sports wants to stay, but, like the Nationals, there’s a lot of deferred maintenance in the arena — and it’s a cost,” Mendelson said. “The city has been a partner in the past; from their perspective, their question was, ‘Are you willing to be a partner?’ My answer is yes.”
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The Nationals, meanwhile, have gone back and forth with Events DC, the city’s operator of Nationals Park, about who should fund a number of capital improvements, among them a new scoreboard/big screen and energy-efficient stadium lights, according to two people familiar with those discussions.
So as Bowser lobbies for D.C. to gain control of RFK, which would make the site a realistic possibility for the Commanders, she and other city leaders must consider requests from top officials at MSE and the Nationals when evaluating a finite budget.
The mayor’s office declined a request for an interview.
“We are in constant discussions with our sports partners about how we can work together to support their success,” a spokesperson wrote as part of a lengthy statement.
Since Leonsis bought the Capitals in 1999, he has regularly expanded his empire. For years, he’s grumbled about having to pay a mortgage on Capital One Arena, which costs him an estimated $36 million annually. In 2016, Leonsis said he had “the worst building deal in professional sports” and suggested that, when he paid off the mortgage, he could leave the city.
“My inclination right now would be — it’s pretty awesome where we are,” Leonsis said in 2016. “And I love what’s happened to [downtown] D.C. But I don’t know what’s going to happen five, six, seven years from now. … I will be a free agent. I mean, that hasn’t been lost on me.”
The arena also has a ground lease — meaning Monumental owns the building, and the city owns the land below it. In 2007, in exchange for the city’s $50 million investment, then-arena owner Abe Pollin exercised two 10-year options to extend the lease from its original end date, 2027, to 2047, according to a copy of the lease obtained by The Washington Post.
But the lease won’t necessarily keep Monumental in the city. If the bond on the lease is paid in full — and Monumental is allowed to pay the remaining $35 million in principal in a lump sum — the lease extensions would be nullified, meaning the end date would revert to 2027.
In 2019, Monumental completed a $70 million, privately funded renovation project on Capital One. Improvements included the installation of a new scoreboard and upgraded suites and seats, but according to one official, the building still needs structural work. The HVAC systems and mechanisms that keep the ice cold need attention, and upgrades to the ceiling would allow the arena to host bigger concerts and events.
In the years since those renovations, as the pandemic and remote work have strained downtowns across the nation, Leonsis has complained about the area surrounding the arena and the city’s lack of investment in the building.
In May, Mendelson said he’d met with Bowser and discussed Monumental. Mendelson said the mayor was “quite clear” she wanted to work with Leonsis even though, according to two people, the relationship between Leonsis and Bowser is strained.
At the June 15 meeting, Mendelson said, his discussion with Leonsis and Dixon focused, in broad terms, on “how they could stay at the arena and deal with the deferred maintenance.” Mendelson said he expects more granular details, including specific upgrades and costs, to be laid out in future meetings. He noted that the arena brings about 3 million people downtown each year, calling the facility “important if we want downtown to recover.”
“We didn’t talk about public safety as much as I expected, but I do believe it’s a concern,” Mendelson said. “If we’re going to recover downtown from the pandemic, we’ve got to deal with the perception of public safety. There will be a discussion between them, the mayor and me.”
District leaders have struggled to curtail crimes in the city; homicides are up 12 percent over last year, according to the latest police data available, and violent crime is up 23 percent. Within a quarter-mile radius of Capital One Arena, there were 67 more crimes reported in the past two years compared to the two years prior, according to police data.
Community members and business owners near Chinatown have raised concerns about crime on the heavily-populated sidewalks near Gallery Place, including suspected drug dealing minor infractions that they said can lead to more serious violence.
In the past, the city provided 27 police officers to patrol the arena’s perimeter during games. But in recent years, as MPD has struggled with staffing, that number has shrunk to three, according to one Monumental official. Monumental has made up the difference by paying off-duty officers.
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If Monumental were to leave for Virginia, it would follow Amazon into a neighborhood boosters have renamed “National Landing,” which has already started experiencing rapid transformation. (Amazon founder Jeff Bezos owns The Washington Post, and Amazon board member Patty Stonesifer is The Post’s interim CEO.) The move would be a major economic development win for both Arlington County and Gov. Glenn Youngkin (R), who has been mulling a 2024 presidential bid.
In a lengthy statement, a spokesperson for Monumental emphasized that the company has invested $125 million into the arena since 2010, and it plans to invest more than $80 million this year by “building out new office space, creating and equipping new state-of-the-art broadcast studios for our network and upgrading the arena’s infrastructure.”
“MSE has had great engagement with Mayor Bowser to ensure we maintain the greatest fan experience in and around Capital One Arena,” the spokesperson wrote. “We strongly support the Mayor’s Downtown Action Plan. We are celebrating the 25th anniversary of the arena this year and will continue to invest to build a best-in-class operation for the next 25 years.”
In 2005, D.C. created a special pot of money, the Ballpark Revenue Fund, to pay certain costs of the development, construction and renovation of a stadium. Now, the city uses the BRF to pay down the municipal bonds that funded the construction of Nationals Park.
The money in the BRF comes from four main sources, according to a spokesperson for the city’s Chief Financial Officer. The largest by far is the ballpark tax ($41.9 million in the 2022 fiscal year, according to a February 2023 report). The other three are taxes on sales at Nationals Park ($12.4 million in 2022), public utilities ($7.1 million) and telecommunication companies ($2.3 million).
When discussing capital improvements with Events DC, the Nationals have pointed to language in the statute that created the BRF, according to a person familiar with the team’s approach. According to the statute, the city should use the BRF to “to directly pay or finance all or any of the costs of any future renovations, improvements, maintenance or upgrades” to the ballpark, among other purposes. And though conversations about a new scoreboard are active and happening frequently, according to that person, the team and Events DC have not had specific discussions about how major upgrades would be funded, should the city greenlight them.
But as the city nears full repayment of its baseball bonds — which could happen as early as 2028, according to the CFO’s spokesperson — the Nationals may have to fight others interested in BRF funds. Once the bonds are fully paid off, the ballpark tax will “sunset and no longer be in effect,” the spokesperson wrote in an email to The Post. But the other taxes will remain in effect, and the city could decide to “to repurpose these funds for other initiatives, including funding other sports arenas.”
Events DC declined to comment.
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Mendelson said the BRF came up in the conversation with Monumental in the June 15 meeting, but he declined to elaborate, other than to note the city has a tax structure related to the baseball stadium and the arena.
“The city already is a partner with the Nationals, and my view is that the city ought to continue to be supportive of Monumental,” he said.
“The Nationals look forward to continuing discussions with Events DC to ensure that the City’s ballpark remains modern, competitive, and sustainable,” a Nationals spokesperson wrote in a statement. “We feel that the revenues generated at the ballpark are the logical source for guaranteeing the ballpark’s future.”
This week, Leonsis strengthened his formidable empire. On Wednesday, he rebranded NBC Sports Washington, the regional sports network he acquired last fall, as “Monumental Sports Network,” and on Thursday, reports emerged about MSE’s prospective deal with Qatar’s sovereign wealth fund.
And Leonsis could make MSE stronger still. On Tuesday, following a decade of litigation, the regional sports network MASN agreed to pay the Nationals nearly $100 million to settle their fight with the Baltimore Orioles over the value of the Nationals’ local television rights from 2012 through 2016. The deal could revitalize the sale of the Nationals, which has been in a holding pattern for months. Leonsis, who made an offer to buy the Nationals last year, remains interested in acquiring the team.
The flurry of moves came on the heels of an interview Leonsis gave last week to Bloomberg in which he mulled taking MSE public. He said MSE already feels like a public company because “the scrutiny you’re under in running a sports team is, I think, much higher than a public company CEO has to live with.”
“We’d be prepared to do it,” he said. “The market would have to be right. We’d have to emotionally be ready to do something like that. But I think Monumental will be one of the three, four, five best-in-class organizations that, if that time was there, sure, we could go public.”
