Friday, December 15, 2023

Montgomery County's JBG Smith biggest winner in D.C.'s potential loss of Capitals, Wizards

The Montgomery County Council and Maryland Gov. Wes Moore may have been asleep at the switch during the tug-of-war over the future home of the Washington Wizards and Washington Capitals, but a company in their jurisdiction may pull off the biggest win in the teams' potential move to Virginia. Bethesda's JBG Smith is the landowner of the proposed Potomac Yard arena and mixed-use development sites in Alexandria. If the teams relocate as envisioned by Virginia Gov. Glenn Youngkin and team owner Ted Leonsis, the real estate development firm will stand to be ultimate victor from a business standpoint. Those potential big profits might still benefit the county and state revenue coffers in Maryland, even if the gaudy bragging rights to the actual teams will accrue to Virginia. 

Successful relocation of the teams to Potomac Yard, and the related development, dovetail perfectly with JBG Smith's existing plans and vision for the National Landing area. The firm will be able to sell the proposed sites to a Virginia sports development authority, and would be the developer of the corporate Monumental Sports Entertainment headquarters, arena, media studio, performing arts venue, and e-sports facility proposed as part of the overall plan. And the sports-related growth at Potomac Yards would boost the earning potential for JBG Smith's other National Landing properties, of which Amazon's HQ2 is the crown jewel.

Of course, HQ2's ultimate benefit to Northern Virginia remains to be seen, as Amazon has not been exempt from the work-from-home revolution and other stresses on its businesses. How many jobs and how many square feet of office space Amazon will eventually need at National Landing is up in the air at this point. How much Virginia taxpayers will shell out for a billionaire to move his sports teams is also not set in stone today. But the additional development opportunities the move would provide could not have come at a better time for JBG Smith.

Washington D.C. Mayor Muriel Bowser is in the unenviable position of not only possibly losing two of the city's professional sports teams at once, but of having had to make a desperate bid of $500,000,000 at the 11th hour that doesn't appear to have persuaded Leonsis to stay. Such a two-team exit is a potential nightmare for Moore in Maryland, as he tries to keep the Washington Commanders and Baltimore Orioles in the state. His cringeworthy pitch to the Commanders in a VIP suite in "Raljon," as recounted by The Washington Post, did not reflect the bargaining prowess his Wall Street resume would lead us to believe he would have. Moore's inabililty to find immediate success in attracting major companies to Maryland over the past 11 months, despite a Rolodex filled with celebrity and Fortune 500 friends, has raised eyebrows among those closely watching Maryland's economic development efforts.

The fact that Moore was not in the conversation regarding the Wizards and Capitals, when the firm at the center of the intrigue is in his own state, is unlikely to reduce those whispered doubts in the business community. But the silver lining in this case is that JBG Smith - and Montgomery County and Maryland, if they actually get their share of the firm's increased revenue - will likely gain financially, even if Virginia ends up overpaying for the teams, as the company will still profit regardless. Virginia's elected officials could look like suckers a decade from now, but the real winner would still be at 4747 Bethesda Avenue.

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