Ted Leonsis and Monumental Sports have said they plan to exercise a clause in their lease allowing them to repay outstanding bond debt and leave DC in 2027, but apparently, not so fast?
Washington D.C. Attorney General Brian Schwalb sent Monumental a letter on Friday saying the city does not agree with that provision, and they must stay until their lease is up in 2047.
So who’s in the right? That’s what Grant & Danny tried to figure out on Friday with WUSA investigative reporter Eric Flack, who isn’t quite sure himself.
“It depends on who you ask if it’s gospel or not,” Flack said. “The Mayor had hinted in February that they had a legal strategy to prevent Ted Leonsis from executing this provision in the 2007 agreement, which gave him $50 million in DC-backed bonds to renovate the arena, to get out of that extension in 2027. They had a legal strategy to stop him from doing that, but she wouldn't at the time say what that strategy was, so this is the first time we are learning what the legal strategy is.”
And, Flack has concluded, that strategy is basically ‘you can’t do that.’
“The strategy, it appears, is acknowledging that there is a clause somewhere that says you can do this, but saying that it is unenforceable,” Flack said. “Basically, the AG says those provisions illegally exceeded what the 2007 legislation authorized, so they are unenforceable – so my understanding is he’s saying that somebody in city government back then negotiated some sort of like provision to this agreement, which did in fact say this, that you can do this, but they didn't have the right to do that, so you can’t actually act upon it, and that's where we are right now.”
So how has it all come to this weird point, where Leonsis planned to leave, the city offered a half-billion dollars to renovate Cap One, Alexandria fell apart for now…and we’re finding out none of it should have happened?
“When I was reading this letter, we don't get to the part that I said until the bottom of page two of a three-part letter,” Flack said. “The first part is like an argument why Virginia is not a good idea, and it was very bizarre in that – I guess on some level it was to try and keep it all cool while at the same time doing the ‘Bronx Tale’ thing where you can't do this. That's the only explanation I have, because he’s talking about renegotiating to keep them there to 2047 but at the same time saying they can't leave. It’s a weird balance he was trying to strike with this letter.”
Okay, so then who would, or should, win the argument?
“If Monumental said at the time that the mayor said this – when you reach out to them today, they just kind of direct you back to what they said when they met with us back in February – we would not have gotten this far down the road if we didn't have good lawyers who told us we could do this and we're pretty comfortable we have good lawyers,” Flack said. “That’s in a nutshell what they're saying: we're not so dumb that we didn't get a little bit of legal counsel on this, and we feel pretty good about it, so let's move on.”
But…
“The one thing I did hear, from some people who are close to the situation but have no dog in the fight, is that Monumental would probably win in court on this issue, but DC and the Attorney General have enough there that it wouldn't immediately get thrown out of court, and they could completely gum up this process if they choose to with this legal text,” Flack said. “It's almost like they could delay it as a way to try and kill it, even though they ultimately wouldn't win on this, but it certainly can make life very, very difficult if they pursue this.”
Take a listen to Flack’s entire segment above, which also touches on the Virginia side of things as they stand, and how everything is just very, very weird with everyone.
