Alex Brandon/AP Photo
Ted Leonsis, left, owner of the Washington Wizards NBA basketball team and Washington Capitals NHL hockey team, shakes hands with Virginia Gov. Glenn Youngkin as they announce plans for a new sports stadium for the teams, December 13, 2023, in Alexandria, Virginia.
Washington is more than Instagram-worthy Smithsonian museums and monuments, but downtown D.C., only blocks from the fabulous National Mall, can’t quite compete. Unlike eds-and-meds powered places like Pittsburgh or Philadelphia, or the ultimate everything bagel that’s New York, Washington is a one-industry town. The federal government and its worker bees are the beating heart of the downtown economy. Right now, however, only a third of federal employees trek into their offices; most work a combo of remote and hybrid schedules. More federal employees will be returning to their offices in the new year. But until they do, downtown D.C. needs a pacemaker.
As winter blows in and the tourist hordes scatter, some of the few attractions regularly bringing in the pre-pan type crowds to the restaurants, bars, and retail shops that survived COVID-19 are the NBA’s Washington Wizards and NHL’s Washington Capitals, the beloved but fair-to-middling basketball and hockey teams that play at the Capital One Arena. On game nights, crowds fill up the downtown’s remaining bars and eating places near the arena and the nearby federal buildings. The December holiday market brings in more people for the annual seasonal makers’ showcase. But take away all that, and what one sees is empty storefronts, flash mob robberies (Chanel got hit last week, complete with shots fired), loiterers, and drug sales outside entrances to one of the city’s busiest subway stations.
With Washington residents already thundering for Mayor Muriel Bowser to step up and do something, it was the perfect time for the next best-worst development, the announcement that Wizards/Capitals owner Ted Leonsis, a billionaire nearly three times over, had scored a deal with Republican Virginia Gov. Glenn Youngkin to move the teams across the Potomac River to Alexandria, a Northern Virginia suburb.
According to Sen. Mark Warner (D-VA), Virginia politicos had been cooking up the deal for the better part of the past year. When Bowser finally got wind that the teams were slipping away, she could only come up with a $500 million counteroffer for the renovations that Leonsis wanted (his price was $600 million). By then, though, it was too late. Fingers got pointed pretty quickly at the mayor. Often viewed as a creature of the D.C. developer class, she apparently didn’t see this power play coming before it had gone through.
The howls of criticism that erupted from D.C., Virginia, and Maryland, known collectively by the regional moniker “DMV” (more about Marylanders in a moment), point up how extortionate “economic development” dreams of sports moguls get foisted onto taxpayers. But it’s also true that sports teams have the cultural cachet that generates big bucks. The quandary for DMV residents is that they know full well that they are being taken for a ride. The Virginia move would save D.C. the dollars it would spend on arena renovation, but it would be an incalculable hit to the downtown’s vibrancy which those savings can in no way offset.
Leonsis and Youngkin are two friends who apparently go way back. The very sweet deal would set the teams in Potomac Yard, a new development near fellow billionaire Jeff Bezos’s Amazon HQ2. By the terms of the deal, Leonsis would score an “industry-leading arena,” a state-of-the art media studio, a Wizards practice facility, an expanded e-sports facility, and a performing arts venue, for starters. Estimated cost, $2 billion. Taxpayer payout, $1.35 billion.
Leonsis has said that the WNBA’s Washington Mystics, another team that he also owns, would move to the existing downtown arena from another city neighborhood. Maybe the Georgetown Hoyas would play there. Maybe there would be more concerts, and maybe there would be other events. Maybe there are more questions that need more definitive answers.
Gigabytes of research shows that when it comes to subsidizing sports palaces, which owners and professional sports leagues could pay for on their own dimes, the prospects for long-term economic gains are at best mixed for the cities and host communities. Often, arenas and stadiums post cost overruns that taxpayers shoulder. (See entries under the Buffalo Bills.) Or they fail to live up to their often overly optimistic forecasts. They also deliver all sorts of negatives to surrounding residential areas, including traffic, parking headaches, noise, disruptive fans, and trash.
Gigabytes of research shows that when it comes to subsidizing sports palaces, the prospects for long-term economic gains are at best mixed for the cities and host communities.
Corporate headquarters also come complete with some of the same dusty-rose colored forecasts. A Washington Post analysis found that though the Amazon HQ2 incentives deal was set up to absorb potential economic shocks (that the pandemic actually brought on), it did not bring in the expected hotel revenues that Arlington County had counted on. Work-from-home has also left the area with hundreds of thousands of square feet of empty real estate and attendant fiscal shocks.
As Victor Matheson, a College of the Holy Cross professor of economics and accounting, observed, “stadiums are a perfect example of the classic special-interest problem.” Fans care deeply, but many more people are indifferent. Moreover, he found that “teams have also gotten smart about minimizing transparency [about how much taxpayers are on the hook for and how much the projected economic benefits fall short], which is bad for public policy but good for team owners.”
Youngkin could provide a master class in minimizing transparency. He appears to have gone above and beyond obscuring details to simply sliding in this awesome development right under the nose of the mayor of the nation’s capital. Alexandria residents also appeared shell-shocked to learn they are now the most fortunate recipients of a new arena they never knew they wanted—much like their fellow residents in Southwest Virginia who recently found out that small modular nuclear reactors may one day grace their hills and valleys.
Secrecy isn’t Youngkin’s only mode, just his preferred one. The governor has also been openly busy trying to vacuum up all sorts of new assets for Virginia. He is involved in a tug-of-war with Maryland’s Gov. Wes Moore over the siting of a new FBI headquarters, as well as going after the NFL’s Washington Commanders, who now play at FedExField in Landover, Maryland.
Now in her third term (no serious rivals bothered to take her on in 2022), Bowser is between a rock and a hard place. She’s presiding over an uptick in crime that, for some, rivals the grim old days of the early 1990s prior to the downtown’s renaissance. Over the past year, the city has had one of the sharpest increases in violent crimes and has not seen the declines evident in most other cities. She’s brought in a new police chief and stepped up patrols downtown. But there is a palpable tension between her and neighborhood leaders who feel that she is not interested in or receptive to their views about revisiting the community policing strategies that the city once exported to other metro areas. The city’s real needs—creating missing-middle housing and apartments, working with deeply disaffected young people, and providing more basic assets like supermarkets in the city’s large food deserts in predominantly Black neighborhoods—have gotten lost in energies spent on basketball, hockey—and football. The mayor has committed to doing whatever it takes to get the Washington Commanders back into the city from the Maryland suburbs and is trying to placate residents suspicious of that possible deal.
The abruptly unveiled move also delivered a hit to the Washington Metropolitan Area Transit Authority. The Virginia deal-makers have been using the Potomac Yard Metro station as a key talking point to bolster their case for a cross-river move: There’s already a Metro stop right there. But the agency did not design the station, which just opened this past spring, with sports crowds in mind—probably because they didn’t know about the plans dancing around in Glenn and Ted’s heads. Expanding it would be a costly do-over for an agency that is already looking at a $750 million budget gap for fiscal 2025—and the station, which is underutilized by riders, also might just be one of the ones that the agency has to close if it can’t bridge that gap. (WMATA does not benefit from any dedicated regional tax streams as some other transit systems do; it is at the mercy of lump-sum allocations from Virginia and Maryland, which contribute to the system’s funding along with D.C. and the federal government.)
What about fans and residents? For the most part, they aren’t on board either. Northern Virginia residents worry about a Metro station not designed to handle crowds and local roads not built to handle more traffic. They’d probably be happier with a new Target rather than a sports arena anyway. And Marylanders pretty much have nixed the idea of having to drive in the region’s apocalyptic early-evening traffic jams or having to take public transportation all the way over there to Northern Virginia.
Despite the screaming headlines, however, the deal is not yet done. The city of Alexandria has to weigh in. Though its mayor and seven-member city council showed up to back up Leonsis-Youngkin when they announced the deal last week, none of them have actually quite articulated where they stand. That could be because they are all on the ballot (except current Alexandria mayor Justin Wilson, who does not plan to run for re-election) in 2024, which could well turn into a de facto referendum on the project. The recent thumbs-down that Richmond voters gave a resort casino in their backyard could provide a blueprint for local residents bent on fighting deep-pocked team owners and tone-deaf politicians.
The other wild card is the Virginia legislature, which must vote on the deal, too. One longtime Democratic state senator, Adam Ebbin of Alexandria, told WUSA9, “I don’t think there is universal support among the General Assembly,” adding, “I’ll be weighing the community’s concerns against the potential economic benefits of this proposed deal.” A Republican state senator, Mark Peake of Lynchburg, used the words “caution” and “tax breaks to billionaires” in a Washington Post interview.
But it is clear, as Yesim Sayin, the D.C. Policy Center executive director, has concluded, that downtown Washington would be looking at a “30- or 40-year recovery” if the teams move to Virginia when their arena lease is up in 2028. That cities like Washington feel compelled to shell out dollars to wealthy sports teams, using funds better spent on education, housing, health, and crime prevention, is one of the grimmer facts of life in urban America today.
