Alex Meruelo calls it quits. Multiple sources told PHNX Sports that ownership reached out to Coyotes staff Monday, telling them they have no plans to pursue other arena options.
The move follows the Arizona State Land Department’s decision to cancel an auction Thursday. Meruelo had hoped to win that auction and purchase a 95-acre parcel of land (110 gross acres) and build an entertainment district and arena that would house his hockey team. With it delayed indefinitely and considerable political opposition in his way, he sees no viable option that would allow him to reactivate the franchise within the parameters laid out in the team’s $1.2 billion sale to Jazz owners Ryan and Ashley Smith.
Meruelo agreed to sell the team in late April (the sale was completed on June 13) after securing the exclusive contractual right to reactivate the franchise within five years of the deal date and trigger an expansion project if an arena was built. The reactivation would have required him to repay the $1 billion he received from the sale (the remaining $200 million was distributed to other owners as moving expenses).
In a press release announcing the auction’s cancellation, the Lands Department said it had “recently confirmed that the proposed use of the arena will require a special use permit and, therefore, we require the applicant to file and receive a special use permit. Permit before auction. This gives the applicant and ASLD confidence that the applicant can build what they intend to build for their anchor tenant. It is not uncommon for ASLD to require applicants to obtain zoning/use permits prior to the auction. We understand that the delay of an auction is a disappointment to our applicant and members of the public, but the change in timing is a prudent decision for the Trust. ASLD remains open to working with our applicant to offer the land for auction in the future if a special use permit is received.
When the Coyotes began seeking the state’s trust in northeast Phoenix, they were under the impression that, given its C-2 designation, the area was earmarked for an arena. The Legacy Sports project had the same zoning designation in place in front of an ill-fated multi-field youth hockey complex.
The Arizona Republic first noted in December that the land in question might not be zoned for an area of this scale and PHNX Sports confirmed this with Phoenix city officials.
“A sports arena is not specifically listed as a permitted use in the C-2 zoning district,” city spokeswoman Teleia Galaviz said. “A landowner could request a zoning interpretation so that a specific argument and evaluation can be completed by staff. Only a landowner can request site-specific interpretation and staff have told the Coyotes that we will process a request for interpretation, but there is no guarantee that an interpretation will allow access to the sports arena.
“Staff have verbally told the Coyotes that the most analogous use is a stadium-style facility for large public gatherings and which requires a special permit to be approved by the Mayor and City Council through a process of rezoning. The other option would be to rezone the site to an appropriate zoning district that would allow use of the arena as a special permit for the portion of the land that would include the sports arena. The Legacy Sports Project is a 3,000-seat facility for ice hockey and volleyball training facilities, much like soccer sports complexes and is very different from a 17-year-old sports and entertainment venue. 000 places.
Although the Coyotes had a different interpretation of the wording of the C-2 designations, they had known for some time that they would need a special use permit. What probably pushed the Meruelos to acquire this land despite the zoning issue was timing. Commissioner Gary Bettman has given the team until the end of the 2023-24 season to implement a credible solution. An attorney familiar with acquiring a special use permit said it can take eight to 10 months. Meruelo might therefore have chosen to take the risk of acquiring the land and then applying for the permit in order to be able to meet the deadline set by Bettman.
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But when the auction originally scheduled for the spring was postponed until late June, Bettman approached Meruelo about selling the team. Between the failed vote for an entertainment district in Tempe and the delay of construction projects elsewhere, Bettman had seen enough. He couldn’t justify the team playing in the 4,600-seat Mullett Arena indefinitely.
“It’s not fair to the Coyotes players,” Bettman said during a news conference to announce the sale at the Hyatt Regency Phoenix on April 19. “It’s not fair to players from other teams coming in. It’s not a major league facility and the prospect of playing playoff games there or a Stanley Cup Final, it just doesn’t didn’t work, so I decided we needed to look for a solution.
While Meruelo had a five-year exclusive rights window to bring NHL hockey back to Phoenix through the expansion process, the key benchmark was three and a half years, according to Deputy Commissioner Bill Daly.
“Notice of reactivation must be sent by December 31, 2027, and the arena must be 50% complete by then,” Daly wrote in an email, adding that Meruelo should “make a significant deposit on the purchase price by then… so basically this will have to happen in the next three years.
Multiple sources confirmed that Meruelo was exploring other options since learning of the zoning issue. The team had a letter of intent on a site northwest of Mesa and another undisclosed location, but neither site was zoned for an arena and would have required a public process to change the zoning — a process which could have included a referendum; the process that killed Meruelo’s hopes of building an arena in Tempe.
Sources said the Meruelos also explored a site on Salt River Pima-Maricopa Indian Community land, but the inability to own the land, the inability to build residences on tribal land and the inability to creating a sports betting site made the revenue model untenable.
It’s unclear when the NHL will officially announce the decision, but when asked previously what would happen to the market if Meruelo were to leave, Daly responded that “Arizona becomes like every other potential expansion city.” .
The NHL has repeatedly said it is not in expansion mode, but a group in Atlanta has already purchased land, designed an arena and officially asked the NHL to begin the expansion process.
PHNX knows of at least two groups interested in bringing an expansion team back to Arizona, but it will be difficult to gauge their level of interest and capabilities until they can officially enter the fray and the process begins.
Top photo of Coyotes owner Alex Meruelo via Getty Images
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