Youngkin’s arena deal has life, needs much more to come to fruition



(The Center Square) – Virginia Gov. Glenn Youngkin breathed a sigh of relief Tuesday afternoon.

After some drama surrounding his prized proposal to create a $2 billion Alexandria entertainment district anchored by the NHL’s Capitals and NBA’s Wizards, the House of Delegates passed legislation supporting the deal 59-40.

A Senate version died in committee due to a lack of a hearing. The deal is not dead, but isn’t full of life. One published report, by the Washington Post, said a study has the taxpayers’ cost at $1.35 billion – a record subsidy for an arena.

“I’m encouraged by the continued bipartisan support for the one-of-a-kind economic development opportunity in Virginia that represents 30,000 jobs and $12 billion in new economic activity for the commonwealth,” the Republican governor said in a statement about the Democrat-sponsored bill. “The more decision-makers learn about this project, the more they realize the positive impact reaches all corners of the commonwealth.”

A day earlier, the upper chamber dealt a fiery blow to legislation that supports the teams’ move. Sen. Louise Lucas, D-Portsmouth, chairwoman of the Senate Finance and Appropriations Committee, announced the committee would not consider the bill.

“I have used the chair’s prerogative to not docket the governor’s arena legislation,” Lucas said at the start of the meeting. “I am here to tell the governor that this Democrat is not conceding to a half-baked ‘Glenn Dome’ that compromises the commonwealth’s financial position for his billionaire friend.”

Ted Leonsis owns both teams, which call Capital One Arena home in the District of Columbia’s Penn Quarter. Alexandria’s Potomac Yard is eyed by Youngkin and Leonsis.

Lucas, on Monday, said the bill would “allow the governor to endanger the commonwealth’s stellar bond rating” and enable a billionaire to “build his company’s wealth on the taxpayer’s dime.”

Skeptics might interpret Lucas’ public criticism of the bill merely as a political power play getting the governor back for remarks he made against Democrats on Saturday. Lucas called him out in her speech and said he “refuses to negotiate.”

Regardless, her speech reflected principles shared by those who have studied stadium economics. Though Youngkin repeatedly cites statistics indicating enormous projected economic growth from the development, those statistics are unreliable, according to Brad Humphreys, an economics professor and subject matter expert at West Virginia University.

Humphreys has testified before Congress, the Massachusetts Legislature and the Washington, D.C., City Council on “the economic impact of professional sports teams and facilities.”

“Other politicians in other jurisdictions who want these subsidies provided routinely make the same sort of statements,” Humphreys said.

Often, those politicians are quoting economic impact studies, like the one commissioned by the Alexandria Economic Development Partnership, from which the “30,000 jobs” figure comes.

“These economic impact studies,” Humphreys says, “they’re always … done by consultants, and people who are involved with the process always treat them as credible. It’s the way the game is played. There’s a script, and every one of these deals everywhere follows that script, and that’s part of it.

“Everyone knows that the tools they use are not appropriate for the task, but yet they do it anyway. The sort of input-output model they use – you could not publish those sort of results in a peer-reviewed academic journal because it doesn’t pass muster. The scholarly research on this topic concludes that there will be no net new economic impact in the local economy from a new arena.”

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