Apr 1, 2024 - News

Scoop: Capital One Arena deal terms include tax abatement, expedited permits

Muriel Bowser and Ted Leonsis shake hands smiling after signing a deal

Monumental Sports CEO Ted Leonsis with Mayor Muriel Bowser after signing an agreement on the court before a Washington Wizards game last week at Capital One Arena. Photo: Jess Rapfogel/Getty Images

The Washington Capitals and Wizards owner would be exempt from future taxes benefitting another professional sports franchise under one of the many perks in last week's Capital One Arena agreement, according to a copy obtained by Axios.

Why it matters: While not final, the agreement — which hasn't been released publicly nor shared with lawmakers since last Wednesday's announcement — shows what Mayor Muriel Bowser was willing to concede to keep the teams in town.

Driving the news: The D.C. Council is set to vote on Tuesday on Bowser's $515 million deal with Monumental Sports and Entertainment founder Ted Leonsis.

  • The deal keeps the Wizards and Capitals in D.C. through at least 2050.

The intrigue: The tax provision would benefit Monumental if — theoretically — the city were to impose a new tax that would help fund, for example, a new Commanders football stadium.

Plus: Monumental will determine within 30 days of the agreement whether it is "economically and operationally viable" to build a new Wizards practice facility at the neighboring Gallery Place center.

  • But if that doesn't materialize, D.C. will identify another city-owned location, "including the site commonly known as the RFK Stadium," according to the document.

Between the lines: D.C. also agrees to appoint a senior government official called an "MSE Ambassador" to work with Monumental to "ensure seamless project approvals, reviews, issue resolutions, and other assistance."

  • The agreement calls for D.C. to make staff available to "expedite all approvals" for design work and permits.
  • D.C. would pressure wash sidewalks and maintain landscaping surrounding the arena on a monthly basis.
  • The city would deploy 17 Metropolitan Police Department officers for each event. A public safety plan would be implemented two hours before and after each event, in addition to establishing a drug-free zone around the arena.

The fine print: There are several labor provisions, including commitments from Monumental to "maintain its strong relationship" with local unions.

  • Monumental agrees to "use its best efforts" to hire 51% of its construction workers from D.C. residents and fulfill at least 50% of construction contracts from certified local companies.

Reality check: The term sheet says it is "not intended to create a legally binding commitment."

  • If lawmakers approve the $515 million investment on Tuesday, the District has about 70 days to still negotiate terms with Monumental, according to the mayor's office.

What they're saying: Monumental referred questions to the mayor's office, which did not comment on the terms.

  • "It's not fully executed," a District official said about the document.

Council Chair Phil Mendelson said on Monday he did not have a copy of the "nonbinding" term sheet and didn't express interest in receiving one. He stressed final lease agreements would come before the council at a later date.

  • When asked if he supported the tax abatement provision, which was first reported by NBC4, Mendelson said he would need to see the language. "This is the first I'm hearing this."
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