WASHINGTON, D.C., USA — The D.C. Attorney General has sent a letter to Monumental Sports and Entertainment owner Ted Leonsis claiming he doesn’t have the legal right to break his lease at Capital One Arena in 2027 to facilitate his proposed move of the Washington Capitals and Wizards to a new arena in Alexandria’s Potomac Yard.
In the letter, dated March 18, D.C. AG Brian Schwalb wrote to Abby Blomstrom, Executive Vice President and General Counsel Monumental Sports & Entertainment (MSE) stating, “I am advising you that the District does not agree with your legal conclusion that MSE’s proposed arena move to Virginia does not violate or breach its legal obligations to the District.”
Schwalb said he was responding to a letter sent to Mayor Bowser on February 15 indicating “it is in MSE’s best interests to pursue relocation to the Potomac Yard site in Virginia” and that Monumental believes the “proposed arena move to Virginia does not violate or breach the provisions of the various agreements connected to the matter.”
Monumental has indicated it plans to exercise a clause in a lease extension at Capital One Arena, signed in 2007, which allows it to opt out of the lease in 2027 if Monumental repays $50 million in District backed bonds it received as part of the agreement for renovations to the arena.
But in his letter, Schwalb indicated that the opt-out clause was part of “subsequent agreements executed in December 2007” and not part of the original lease extension, which was approved by the DC Council.
“Because those provisions illegally exceeded what the 2007 legislation authorized, they are...unenforceable,” Schwalb wrote. “Under the valid and enforceable terms of the 2007 legislation and agreements, MSE is obligated to keep the Wizards and Capitals at the Arena through 2047.”
Schwalb also accused Monumental of breaking other promises to the District in his letter, claiming Monumental’s 2017 agreement with the District for the Entertainment and Sports Arena (ESA) in Congress Heights provides that if Leonsis intends to relocate the Wizards or Capitals from Capital One Arena, he was required to notify the District of its intent and negotiate exclusively and in good faith with the District for a period of six months, refrain from negotiating with anyone else during that exclusive negotiation period. Following the exclusive negotiation period, if Leonsis intended to enter into any agreement with a third party, like Virginia, to move the teams outside the District, Schwalb said Leonsis was required to give the District written notice of the material terms of the agreement and give the District 90 days to make a competing offer.
“MSE's negotiations with Virginia violated these contractual provisions,” Schwalb wrote.
WUSA9 reached out to Monumental for comment and received a statement from a spokesperson:
"We fundamentally disagree with the Attorney General’s opinions, which are contradicted by the DC General Counsel as recently as 2019 when the city ratified the Ground Lease."
In February, after DC Mayor Muriel Bowser indicated the District would take legal action to prevent Leonsis from breaking his lease at Capital One, Monumental Sports and Entertainment President of External Affairs Monica Dixon said Leonsis never would have moved forward with the proposed move to Northern Virginia if he wasn’t confident they could legally exit the agreement early.
“We would not have started negotiations with the city or Virginia over the last two years without sound legal counsel,” Dixon said on February 12. “And we feel confident in it.”
Schwalb’s letter comes as Monumental’s proposed arena plans face major opposition in the Virginia legislature, where Senate Finance Chair Senator Louise Lucas (D-Portsmouth) blocked its inclusion in the state’s budget. Governor Glenn Youngkin, who announced the proposed Alexandria arena at a ceremony with Leonsis in December, said he hopes to convince the legislature to reconsider before the budget is finalized. Youngkin has not indicated how he will do that, although including the arena plan as a budget amendment or calling a special session are both options.
In his letter, Schwalb continually encouraged Leonsis to reconsider the move. While warning of potential legal action if he didn’t.
“To be clear, the District very much prefers not to pursue any potential claims against MSE,” Schwalb wrote. “It remains committed to maintaining and growing its partnership with MSE and to keeping the Wizards and Capitals at the Arena until the end of the existing lease term in 2047, if not beyond. It is in that spirit that the District urges MSE to re-engage with District officials around a mutually beneficial arrangement that advances the long-term interests of both the District and MSE.”
Schwalb requested Leonsis meet in person with himself, Mayor Bowser and DC Council Chair Phil Mendelson.
Mendelson also released a statement regarding the letter Friday evening:
“We continue to watch the debate in the Virginia legislature, and it appears a deal to move to the Commonwealth is uncertain. That is just one of many steps Monumental will need to succeed if it is to accomplish its move. Given these circumstances, further discussion of the District’s potential legal options is unnecessary.”