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Coyotes Making One Last Attempt to Build an Arena in Arizona

barry m. bloom
·7 min read
7

PHOENIX — For the Arizona Coyotes, this is their last stand.

There will be an auction on June 27 for the club to buy a 95-acre parcel of untreated Arizona state trust land in North Phoenix on which the Coyotes can build a state-of-the-art arena; the starting appraisal price for the site is $68.5 million.

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The Arizona State Land Department Board of Appeals approved the auction for the sale of the land, which, by established law, now has to be publicly noticed for 10-15 weeks before holding the actual online auction.

Any individual or entity can bid on the land, and if Coyotes owner Alex Meruelo is outbid, the club’s three-year, multi-site search to remain in Maricopa County would come to an end.

“If we are not the winning bidder, then we would more than likely have to entertain a relocation of the franchise,” Xavier Gutierrez, the club’s president, said in a recent telephone interview. “This would be our only option.”

There are willing takers for the franchise. NBA’s Utah Jazz owner Ryan Smith, for one, asked the NHL to initiate an expansion process earlier this year in a quest to bring a team to Salt Lake City.

Whether Meruelo would retain ownership of the team if it moves is still in question. The Coyotes are worth $675 million, according to Sportico’s own valuations, by far the lowest of the NHL’s current 32 teams.

“We haven’t gotten that far,” Gutierrez added. “This is the only option for us to build a home. There is no other place for us to go.”

The NHL and commissioner Gary Bettman are intent on waiting for the auction to play out before making any hard decisions.

“At this point there’s no call to make yet on Arizona,” NHL deputy commissioner Bill Daly said in late March following general managers meetings in Florida. “We’re satisfied with where we are, and certainly it’s [Meruelo]’s intention to go forward with the auction.”

The land in question is centrally located in North Phoenix bordering North Scottsdale, Ariz., off the 101 freeway. It is a huge rural parcel of undeveloped land in an area not far from shopping centers and residences; it’s within easy driving distance from the TPC Scottsdale golf course, where the Waste Management Phoenix Open is staged every February.

The Coyotes have a multi-use plan to include homes, stores, plus an arena, training center and theater, which could ultimately cost $3 billion and be constructed over a number of years. The 17,000-seat arena and training facility is projected to be built in three years at the cost of about $1 billion and be ready for the 2027-28 season.

That means the team would have to play another three seasons in 4,600-seat Mullett Arena on the campus of Arizona State University in Tempe, Ariz., some 23 miles away in a high-traffic corridor. They have a lease to play there next season, and options for the following two. It’s likely the team will play the 2024-25 season in Tempe, regardless of what happens with the auction, Daly said, adding, “It’s getting late” to have a contingency plan, and he said the Coyotes likely couldn’t be moved prior to next season.

The team is losing “a substantial” amount of money playing each season in the Mullet, Gutierrez said. He declined to place a solid figure on it, although Sportico has been told those losses are in the mid- to high eight-figure range.

The franchise, which has been in and out of bankruptcy, has lost money every single season since it moved from Winnipeg in 1996. The Coyotes played their first seven seasons in what is now called Footprint Center in downtown Phoenix before moving to an arena in Glendale where they played until 2022. They left that building because of a lease dispute.

The new parcel is zoned for an arena, and there’s no legal conflict with the City of Phoenix building a competing building to Footprint, home of the NBA Suns and WNBA Mercury, Gutierrez said.

In Tempe, the players—using makeshift locker rooms outside the main building that cost the Coyotes $30 million to build, and practicing at a nearby facility in Scottsdale called the Ice Den—are not happy with the subpar conditions at the Mullett.

The NHL Players Association declined to comment about the latest developments, although recently union president Marty Walsh said publicly he’s not happy with the situation.

“There’s lots of questions,” Walsh said. “So, you can talk about buying land in Arizona, and it can be 10 years before a shovel goes in the ground. As far as I’m concerned, that’s unacceptable on behalf of the players on that team, and it should be unacceptable for the league.”

The Coyotes had hoped to remain in Tempe.

Last year, they engaged with the City of Tempe on a plot of land to build a similar concept development. The $2.1 billion project had to go to a series of referendums after approval by the City Council. But this past May, Tempe voters rejected those three referendums by about 3,500 votes each, after the campaign cost the club millions of dollars.

In that case, the Coyotes would’ve had to mitigate the land, which is a federal superfund site, raising that money through a public bond issue repaid by user fees on tickets, concessions and purchases anywhere in the complex. The Coyotes were to receive the land in exchange.

That process would have taken at least six months. Almost a year past that election, the land is still sitting fallow as it had for decades. Right now, Tempe residents are voting on an overall city development plan.

In this case, there would be no public vote, and the Coyotes aren’t seeking any public funds. But winning the auction is just the first of what could be many exhaustive steps.

The Coyotes have to buy what Gutierrez called the “raw land,” obtain the permits and fit it with infrastructure such as roads, a cement foundation, water and electricity at their own cost of $100 million to make it ready for construction of the arena complex.

“But guess what? It brings up the value of all the land around it,” he said.

Then there’s the funding. They are already going to a number of banks to seek investors in what will be an equity-debt relationship to build the project.

What that mix will be is up to the lender, Gutierrez said.

“Alex and I have already had conversations with eight of his banks, and they’re all very interested,” he said.

Add the three years to build it and three more seasons of massive losses at the Mullett, and it’s not a pretty picture.

But Meruelo paid $420 million in 2019 to buy the franchise and has spent many millions of dollars above that keeping the team afloat and trying to build an arena. He is obviously committed to keeping the Coyotes in Phoenix, Gutierrez said.

“Alex has demonstrated a significant financial commitment,” Gutierrez said. “We are on the hook.”

Bettman said at the GM meetings the NHL still is also committed to the Phoenix area for the long term.

“We would’ve preferred to be in a new arena by now, but there’s certain things that couldn’t be controlled,” Bettman said. “We believe Arizona, particularly the greater Phoenix area, is a good NHL market. It’s a place we want to be.”

Up next: The Coyotes have to win the auction. If not, the NHL’s 27-season run in the Valley ultimately will be over.

Sportico’s Kurt Badenhausen contributed to this story.

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