Look who’s coming crawling back to D.C.: The Capitals and Wizards will stick around in Capital One Arena after all, as Ted Leonsis has abandoned plans to move the teams to Potomac Yard.

Alexandria officials announced late Wednesday that the “proposal will not move forward.” The District followed up with its own announcement that it plans to fork over $515 million to make improvements to Capital One Arena over the next three years and keep the teams in the city through 2050. The city has also agreed to a variety of new improvements around the arena, and will work with Leonsis to build a new practice facility for the Wizards somewhere in D.C.

This outcome looked increasingly inevitable for the past few weeks as top Democrats in the Virginia General Assembly threw up one roadblock after another to block the plans advanced by Leonsis and Gov. Glenn Youngkin to build a $2 billion entertainment district anchored by a new Alexandria arena.

The news amounts to an embarrassing face-plant for Leonsis, who stood on stage with Youngkin in mid-December at a celebratory press conference and treated the move as inevitable. It’s an unexpected win for Mayor Muriel Bowser and the rest of the D.C. Council, who faced difficult questions about how they could let the teams slip away from their longtime Chinatown home.

“All of a sudden I really felt like we were in this together and that D.C. — it’s where I wanted to be,” Leonsis told the Washington Post in an amusing bit of spin. Rumors circulated just days ago that he’d also pursued a deal with Maryland Gov. Wes Moore, only to be rebuffed there, too.

Leonsis framed the relocation as a necessary one for his teams, arguing that they needed more space to grow and a bigger patch of land for his Monumental Sports and Entertainment to redevelop. But the plan was largely stymied by Virginia state Sen. L. Louise Lucas, a top Democrat who harbored persistent doubts about the state-backed bonds financing the project. Alexandria leaders came to increasingly turn against the project as well, raising substantial questions about how it would impact traffic in the area. 

“The city was adamant that any favorable consideration of the proposal included substantial and thoughtful improvements to the existing transportation system; included affordable housing; protect our stellar AAA bond rating; protect existing and future residents from financial risk; provided substantial future revenue for city and school services; protected existing neighborhoods; and provided quality jobs for our community,” Alexandria Mayor Justin Wilson wrote in a statement. “We are disappointed negotiations did not result in a proposal that protected our financial interests and respected these community values.”

Bowser previously convened a task force to reimagine the Chinatown and Gallery Place neighborhood in the wake of the Caps’ and Wizards’ planned departure, but nonetheless put up some efforts to appease Leonsis and lure him back to the city. Bowser and Council Chair Phil Mendelson cobbled together a $500 million offer to Monumental as word of the Potomac Yard move began to circulate, relying on increased debt capacity to take on improvements to the arena after previously balking at Leonsis’ demands for new spending. 

Bowser’s successful push for drug-free zones was also broadly seen as a move to address Monumental’s concerns about crime around the arena. Meanwhile, Attorney General Brian Schwalb also threatened Leonsis that he risked breaching the terms of his lease at Capital One if he sought to move the teams. 

“D.C. did everything right since December,” Leonsis said Wednesday.

The city still needs to hammer out the exact contours of the deal, but it has essentially agreed to do everything it can to satisfy Leonsis’ concerns about the Chinatown area. The District plans to expand the police presence around the arena and give Monumental new leeway to close off F Street NW to cars—it will even eliminate a streatery that particularly vexed Leonsis along 6th Street NW. Bowser has also agreed to explore potential sites for a new Wizards practice facility, including elsewhere in Gallery Place, at the RFK Stadium site, or even the soon-to-be-redeveloped Reeves Center on U Street NW.

“We are going to have a state-of-the-art urban arena,” Bowser pledged Wednesday.

Now the deal heads to the Council, which could take up legislation on the subject as soon as Tuesday. 

“I am confident that will go through the Council,” Mendelson told reporters at the press conference Wednesday. “It’s easier to do business in the District of Columbia than in some other jurisdictions.”

This story has been updated.