A huge amount of money could be given to the Capitals and Wizards building in Virginia.
Patrick Hedger of the Taxpayers Protection Alliance says that the deal to build a sports center in Alexandria, Virginia, for the Washington Wizards as well as Capitals could cost taxpayers a lot of money.
Hedger said that the news of the possible facility being built within the Potomac Yard neighborhood worries taxpayers because it shows how a company can use different government agencies to try to get as much public money as possible.
Today, Virginia Gov. Glenn Youngkin and Ted Leonsis, owner of Monumental Sports & Entertainment, said they were going to build a building for the sports teams in Northern Virginia.
The deal isn’t official yet because it still needs to be approved by the Virginia General Assembly as well as the Alexandria City Council.
Hedger told WTOP that franchises make big claims about how they will help the economy and how long that they will stay in these areas.
“They often keep holding cities and towns hostage for more money before their contracts expire, forcing taxpayers to pay more or risk losing the team.”
According to the framework deal between Monumental and Virginia, the company will put $403 million into the $2 billion project.
Alexandria has agreed to pay $106 million to help build the performing arts center and underground parking.
The remaining amount, about $1.5 billion, would be paid for by bonds issued by a brand-new stadium body.
Over time, the teams’ rent payments, fees for parking and naming rights, and the new tax money that the building would bring in would pay off the bonds.
Hedger said that the possible deal was like the one that brought the Rams to St. Louis before they moved to Los Angeles. In St. Louis, the company broke its lease.
Louis early “then left St. Louis taxpayers in jeopardy with an arena that didn’t have a tenant and hence no way to make money to pay back the bonds.” Hedger said, “I’m very worried that will happen here.”
The worry comes from the thought that D.C. might try to get the teams to come back to downtown if they decide to move to Northern Virginia within a while. Hedger said that large amounts of risk are usually present in stadium deals that involve public money.
Professional sports teams often say they want to stay in one place for decades, but Hedger said, “either they need upgrades as well as renovations to that venue and threaten to leave, or they’ll need a whole new stadium.”
Hedger said, “It seems crazy to me that this will be a 30- to 40-year collaboration with the state of Virginia.” Millions of dollars are expected to be spent on affordable housing, services that help people find housing, transportation, and schools.
Hedger says it’s pretty scary that the facility could be built in Alexandria because “if this deal goes south, you face a much smaller tax base which ends up bearing the brunt of it.”
Some people in charge in Alexandria, like Mayor Justin Wilson, think that the investment will help the region’s economy grow and have a $12 billion effect over the next few decades.
“It’s hard to see what the economic benefit would be to somebody living in Virginia Beach or Blacksburg for a stadium that exists in Northern Virginia,” Hedger said. He thinks the funding plan is unfair to Virginia taxpayers within other parts of the state.
“We’ll be looking at how and when in Virginia state and local governments ask for new tax increases to pay for schools and other basic things the government should be doing after giving a lot of money to a sports team a few years ago,” Hedger said.
A 37-page study for the state by investment bank JPMorgan was obtained by The Washington Post.
It says that to build the $2.2 billion project, Virginia would need to set up a sports and entertainment power that issues two bond offerings as well as contributes an extra $300 million from existing city and state funds.
If the plan goes through, a sports arena in Northern Virginia would get the biggest public grant for a project of its kind ever: about $1.35 billion in state and local funds.
This would move the Washington Capitals as well as Wizards out of downtown Washington, D.C.