The mayor of Washington, D.C., is proposing the District buy Capital One Arena from the owner of the city sports teams it hosts and lease it back to them, a move meant to keep the franchises in the nation’s capital while renovating the arena and transforming the area around the downtown sports complex into an economic hub.
Under Mayor Muriel Bowser's proposed purchase of the arena for $87.5 million, the District would lease the property at 601 F St. NW back to Monumental Sports and Entertainment through June 2050 with up to five renewal options of four years each after that, according to an Oct. 18 letter.
The proposal needs the DC Council’s approval. It would aim to revitalize an area that has experienced a period of commercial difficulty following the pandemic in order to boost foot traffic to the neighborhood.
“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,” Bowser said in a statement Monday. “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.”
Monumental owns the Washington Wizards basketball team and the Washington Capitals hockey team and considered moving the teams to Virginia last year but the deal fell through. Under terms of the proposed deal that Monumental has agreed to, the company would be limited from soliciting bids to move from the current arena until 2045.
Direct public and private investment in constructing the new project is $800 million, and of that total, the District is providing $515 million, including the purchase price for the building, according to a release from Monumental. The sports giant committed to a minimum of $285 million, plus the $87.5 million arena sale proceeds as well as responsibility for any cost overruns, the statement said.
Several pro sports franchises and cities around the nation are forming private-public partnerships to build new athletic facilities or renovate existing ones that include more commercial spaces as a way to generate revenue in addition to ticket sales by attracting fans to their complexes year-round.
Following an initial agreement between Bowser and Monumental, the council voted to approve the fiscal year 2025 budget that appropriated the $515 million investment over three years, according to Bowser’s statement.
Rent on the roughly 20,000-seat sports and entertainment arena, after a pro-rated initial payment, would involve installments between $1.5 million and $2.3 million a year over the term of the lease. Then there would be a higher yearly amount during the optional renewal periods that would reach $3.3 million a year in the final renewal term.
The agreement includes leasing a lot comprising an alley that abuts the arena with frontage on 6th Street NW. The proposed legislation provides for real estate and interest tax exemptions for the existing arena parcel and the added parcel. It also specifies that transactions under the purchase and sale agreement and lease are exempt from deed recording and transfer taxes.
An economic impact study estimates the total economic activity of the project will be over $1 billion, Bowser said in her letter.
“The project is expected to result in 4,900 construction jobs and $21 million in new tax revenue over the three-year construction period,” Bowser said.
The District has also suffered after the pandemic as a result of some federal staffers working remotely all or part of the time, reducing the number of commuters into the city who frequented businesses before the health crisis.
The renovated arena concepts is expected to include expanding the main entrance at F Street, wider concourses and more elevators and escalators. There are also plans for 65% more concession space, according to the Monumental release.
New design
The athlete spaces will grow more than 60%, according to Monumental. They’ll include on-site training rooms, a new lounge and dining space as well as a family lounge for the players’ extended families. The Caps will have a new film room in their locker room space, and the Wizards will have a redesigned, on-site training facility.
Also, a 200,000-square-feet expansion into nearby Gallery Place would give Monumental’s hospitality staff and back-of-the-house operation the ability to expand their workspace, according to Monumental.
The new arena is expected to be completed for the teams by the 2027-2028 seasons.
The legislation proposed by the mayor is scheduled to be referred to the council’s Committee of the Whole on Oct. 29. If it passes before the end of the calendar year, Monumental will begin design this winter and construction in early summer 2025, Bowser said.
Meanwhile, on Nov. 7, Clark Construction, Monumental and the District plan to hold an outreach event to recruit trade and construction partners for the project, according to the statement.
“This arena transformation marks the next significant investment Monumental Sports is making in the revitalization of Downtown DC, 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,” Monumental CEO Ted Leonsis said in a release.
This was updated Oct. 22 to correct the spelling of Capital One in some portions of the story.