When last we left off with the Arizona Coyotes, the old Arizona Coyotes had moved to Salt Lake City, while old Arizona Coyotes owner Alex Meruelo was still set on winning a June 27 auction for public land in Phoenix so he could get an NHL expansion team and build an arena there with the help of a tax surcharge from a “theme park district” that the Phoenix mayor opposes. And if all that sounds awfully nebulous, things got much, much worse for Meruelo on Friday, when the state of Arizona abruptly canceled the auction on the grounds that Meruelo needs a zoning variance before he can do anything with the land:
“After much consideration, the Arizona State Land Department (ASLD) has determined that it is in the best interest of the Trust to cancel the auction and reorder the steps,” the ASLD said in a release. “ASLD recently confirmed that the proposed arena use will require a Special Use Permit, and as a result we are requesting that the applicant file for and receive a Special Use Permit prior to the auction. This affords the applicant and ASLD certainty that the applicant can build what it intends to build for its anchor tenant. It is not uncommon for ASLD to require applicants to secure zoning/use permits prior to auction.
“We understand the delay in an auction is a disappointment for our applicant and members of the public, but the change in timing is the prudent decision for the Trust. ASLD remains open to working with our applicant to bring the land forward to auction in the future if a special use permit is received.”
That’s all perfectly reasonable, though it does raise the question of why the state land department waited until six days before the auction to go “You know what, maybe let’s not.” Sure, back in March when the land was posted, Meruelo still had an actual NHL team instead of just some logos and the promise of one, but the Coyotes have been Utah-bound for a couple of months now, did it take this long for anyone to realize the state could just call the whole thing off?
Anyway, Meruelo is predictably steamed, releasing a team statement that “this unprecedented action by the State of Arizona seriously jeopardizes the future of NHL hockey returning to the desert” and “by cancelling the land auction, the state is forgoing millions, and potentially billions, of dollars that would have gone directly to K-12 education” [citation extremely needed].
Meruelo still has until 2029 to come up with an arena site, money to build an arena, and $1 billion to buy a expansion franchise so he can cash in the NHL-ownership IOU that he got from the league as part of the deal to move the Coyotes to Phoenix. All signs are that he is extremely unlikely to accomplish all of those things, but no harm for him in trying, right? If nothing else, it gives the few Coyotes employees Meruelo didn’t lay off something to tweet about for the first time in a month.
If he can’t come up with a Phoenix arena in 5 years, is the NHL out of the Meruelo business? Or can he try some other hairbrain scheme? Moving back to Glendale? Playing at Chase Field? Renovation one of Phoenix’s other old arenas? Selling his rights to someone else? It seems like Meruelo is holding a billion dollar asset he can’t cash in without putting up a second billion dollars.
Pretty much. As for what happens in five years if he doesn’t have an arena, I think it’s “get in line with all the other billionaires to buy an expansion franchise at whatever price we set then.”
As I understand it based on the reporting, Meruelo cannot just sell his shell franchise to another owner.
If he does not get this done in five years, then Phoenix just becomes another expansion-city candidate along with Houston, Atlanta, Greensboro, Halifax, Portland, Quebec City, Regina, Norfolk, Mexico City, Hamilton, Kelowna, Austin, North Haverbrook and Ogdenville.
In that case, Meruelo could keep trying to get an arena built and win an expansion team, but he might be in competition with other bidders and I can’t imagine the league would ever award it to him, even if there are no other viable options for putting a team back in Arizona.
And the “build an arena in five years” is not a very simplified overview of what he and the league agreed to. It can’t just be any arena. As I understand it, it has to be a new, fancy arena that will maximize revenue. So some half-ass measure like making a deal with Glendale (which would have to be extremely team-unfriendly to happen) or Chase Field, etc. would not meet the terms of the deal.
And, reportedly, there are milestones he has to hit along the way. So this might all be over sooner than 2029 if he falls behind, which now seems very likely.
I assume that if he fails, he can sell the rights to the Coyotes branding and so forth. Or perhaps that reverts to the league and they can sell it. Either way, I expect that anyone trying to put an NHL team in Arizona will call itself the Coyotes.
But that “someday” may be a long time from now because it is unclear who, if anyone, might step forward with a more viable plan to build an arena and get a team in Phoenix. A number of Coyotes fans imagine that somebody will, but it’s not clear who that could be.
I suppose the obvious answer would be Suns owner Mat Ishbia. He could, I suppose, agree to remodel his arena again. Might be cheaper than building another one. But there’s no evidence to show he wants to do that. I’m sure Gary or Jeremy Jacobs or somebody else from board of governors has asked him, but there’s no indication he wants to do that.
And, of course, if environmental catastrophe causes Phoenix to contract, they won’t get a team, but that’s hard to predict.
I meant “is a very simplified…” not “Not.”
I didn’t understand that part about the schools. I assumed he’d made some “community development” bribe like the Jaguars in Jacksonville. Was he saying that the taxes from this would be a windfall for the school district??? Bold strategy, Cotton….
The land auctioned by ASLD is land that was originally allocated to certain entities under various laws creating the territory and state of Arizona. The bulk of that land was allocated to K-12 education, so that’s where the proceeds of its sale go. (https://land.az.gov/our-agency-mission/beneficiaries)
I favor Kelowna, personally–the monorail really put them on the map.
That’s all well and good, but canceling the land auction isn’t “forgoing” the proceeds of the sale, unless they decide to just hold on to the land forever and never sell it at all.
Oh, I see. Thanks for that clarification.
Kelowna is one of many places I’ve seen mentioned at least once by somebody as a prospective expansion site.
But I have a friend in Kelowna who thought that was preposterous. The entire Okanagan region has fewer than 500,000 people. Kelowna itself is under 150k.
I think Arizona is like Utah and other Western states, where the proceeds from state land sales go towards the school fund. When you’ve got lots of open land to sell off to developers, resource extraction corporations, and rando rich people who want to build their secluded compounds, it becomes big business pretty quickly. Ensuring the money goes to schools is one way to compensate for a small property tax base with low population density (although that’s rapidly changing out West). It’s also a good political cover to blunt opposition to development.
Neil, You left out the best part(s) featuring! :
Local (former, I believe) politician saying, in no uncertain terms, “you can’t work with these idiots”
And the fetid corpse of what remains of the ‘Yotes FO going full WU-TANG IS FOR THE CHILDREN MODE & spewing out bogus tax rolls for “schools”
What a time to be alive
Reportedly, he has not hired a zoning lawyer. I have no experience in developing land and even I would know to do that. The site had once been zoned for a community rink that never happened. Apparently, he thought that would be good enough and he could bluff his way through.
My guess is that the state either assumed he knew he needed to get the zoning sorted out and just realized now that he had not done that yet OR he promised he would get it straightened out in time and is not making much progress on that so they pulled the plug on the auction.
I suspect it’s the latter.
I thought I read somewhere that other bidders could bid on the land without pre-registering. Maybe that’s wrong, but there are conflicting reports on whether or not there are any other interested parties. Of course, if this is how the state runs these auctions, then any other bidder would, presumably, have to have the requisite permits too.
Meruelo would presumably be the only potential bidder that would need a special use permit for an 18,000 seat hockey arena. Most developers would only be looking at condos, hotels and restaurants.
That’s true.
Well, it seems that nobody else is upset that the auction was cancelled.
Finally, we’ve reached the conclusion of this sordid tale which featured a cast of thousands. Take a bow Steve Ellman, Wayne, Gary, Jim B, Taylor Swift’s dad, Richard Rhodier, the frat boys, the Goldwater group, the cities of Glendale, Scottsdale, Phoenix, and Tempe, and of course the honorable Redfield T. Baum. The story that kept on giving has alas gave out. Right, Krux?
It’s not quite over yet.
He could still get a permit, reschedule the auction, win the auction, etc.
It appears to be unlikely that he will be able to that ever, let alone on the NHL’s timeline. But it is not much more unlikely today than it was a week ago. Even if he’d won the auction, there are a lot of other regulatory and political hurdles.
What about Meruelo and AZ?
It was interesting to watch Craig Morgan and several Phoenix sportscasters blast away at Alex Meruelo while Jerry Weiers, Lauren Kuby, Kate Gallego and other politicians weren’t even mentioned. Wake up politicians, it’s usually the greedy owner that takes the blame when a team leaves.
Jerry Weiers ran for mayor on a platform of letting the Coyotes walk and not giving them more money. He then proceeded to void their lease and got re-elected.
But you are right that voters haven’t usually held mayors responsible for teams leaving. Libby Schaff won in Oakland after losing the Raiders
Well, that escalated quickly.
It looks like he’s giving up already.
I expected this would drag on a bit longer.
https://gophnx.com/sources-alex-meruelo-walking-away-from-coyotes/
What options do the Coyotes have to return to Arizona now that Meruelo is out of the picture?
After this fiasco, Scottsdale and Phoenix are OUT. PERIOD. That eliminates the prime Northeast Valley locations, thank you, Mr. Meruelo. Trying Tempe might be possible as a long shot, the Salt River Reservation might also work, but no residential or sportsbook development could be involved. Mesa probably wouldn’t work either, the Alma School gravel pit would cost billions to develop. Other options would end up costing north of a billion and take years to get approved and built. Then there’s the issue of a third arena in a market that is already overbuilt at two arenas. $2.5 billion for an arena and franchise that has a 28 year history of losing millions every year doesn’t make any sense.
The Coyotes are no more.
Contrary to popular belief, the NHL doesn’t just put franchises in cities. For Arizona to get another team, they need an owner that the other owners trust and fancy arena. Both of those are going to be hard to find.
If that does happen, they might be called the Coyotes. I assume that IP reverts to the league or maybe they have to buy it from Meruelo, but I can’t see why he would hold onto it.
Craig Morgan has reported there are at least prospective owners looking into bringing a new franchise to Arizona, but he hasn’t said who they are or how they plan to get an arena built.
For historical comparison, the gap between the North Stars leaving and the Wild starting was seven years. The Jets leaving and returning to Winnipeg was 15 years.
But a better comp might be Atlanta. The gap between the Atlanta Flames and the Thrashers was 19 years and the gap between the Thrashers and the next Atlanta team is 13 years and counting.
Craig Morgan can talk about potential owners all he wants, but since the team went into bankruptcy its been a parade of charlatans. After the NHL bought the team they could have been had for $170 million. That was when it came with a free arena and a subsidy from the city. No one legit stepped forward.
Now the going rate for an expansion team is over $1 billion. Then you have over $1 billion in arena costs. And you aren’t going to get a subsidy from whatever city you put the arena in.
To top it all off, a new owner would be dropping a billion on what would be a third major arena in a metro area that ain’t nowhere near big enough to support all of them. There’s no way they could bank on concerts, conventions, trade shows, and monster truck rallies to recoup the development costs. Unless some developer could think up of a unique way to keep the place occupied the other couple hundred nights a year to stay in the black – maybe a partnership with Arizona State, or a future Thunderdome when Arizona is reduced to a Mad Max wasteland in 50 years – the math just doesn’t add up. As another commenter pointed out, maybe the Suns owner would want to make Footprint a multi-sport venue, or someone offers to buy the Glendale venue outright from the city and tries to make it work, but I wouldn’t hold my breath. I’d be shocked if the NHL ever came back to Phoenix, and at the earliest I’d peg 2040 if they did.
Someone not named Alex Meruelo could presumably play at Glendale right now if they were willing to pay real rent. But given the history of Phoenix as a hockey market, as well as the history of U.S. sports team owners preferring not to pay real anything, agreed that that seems unlikely.
Is the NHL okay with Glendale? Serious question, as I don’t know. Because if Glendale was considered viable, I’m kinda surprised Bettman wouldn’t have tried to pull something on Meruelo – either claiming he was in breach of his franchisee agreement with the Gila River eviction, or tried a similar swap of “cash for expansion rights” deal he just did with SEG – to get a different local owner who’d be better prepared to keep the Yotes in Arizona. Phoenix was his white whale and he expended so many league resources to keep them there. For a guy who wanted that market to work so bad, I’m kinda shocked he hitched his horse to Meruelo if he didn’t also conclude the arena location was a problem.
Regardless of whether the arena location was a problem, the arena lease was a problem. Both Bettman and Meruelo were clearly on the same page that they wanted an arena with some kind of sweetheart deal, whether in terms of operating subsidies or tax kickbacks.
Ah, that makes more sense then. So maybe Bettman believed that an NHL team wouldn’t be able to make it in Phoenix without a sweetheart deal, which makes sense as just about every financially viable Sun Belt hockey club has generous tax breaks and/or subsidies. It’d also explain why he was willing to roll the dice on SLC, because the Utah legislature and Governor were on board with handing a fat subsidy over to the owner and bankroll a bigger real estate deal to paper over operating losses.
I know we can say all sports is a real estate game now- even Mark Cuban said as much recently – but I wonder if anyone has ever tried to calculate how many NHL or MLS clubs would be financially viable without sweet stadium deals. I don’t know if I’d take more than half of them.
I would say more that Bettman thought that if he let one city get an NHL team without a sweetheart deal, every city would want one.
I do agree with you that probably 70-80% of stadium and arena deals would lose money without public subsidies. Though another way of putting that is that team owners don’t really want new arenas, since those are money pits; what they want are the public subsidies that you can’t get if you walk into City Hall and ask for a personal check, but as soon as it’s for an arena, that’s a different story.
The late great Ewing Kaufman said he was the last of the sportsman owners. How true.
Technically, Meruelo doesn’t need to have the arena completed within 5 years to retain the Zombie Yotes; his deal stipulates the venue be at least 50% completed by 2029. So, there’s still a sliver of a chance he could pull a rabbit out of his hat and get shovels in the ground in time to retain his franchise. Not likely, but to crib from Princess Bride, he’s not all dead.
It sounds like the way Arizona does their state land sales is similar to Utah’s: in order to prevent developers from dicking around and squatting on land after acquiring it, the state wants the buyers to have as much of their permitting and regulatory paperwork completed beforehand. These states have developer-friendly “use it or lose it” requirements to prevent folks from buying up land to backdoor block development, but forcing a buyer to return land and refund their purchase is a colossal PITA state land officials would rather avoid. It’s happened a couple times out here in the Wasatch Front after some truly hairbrained schemes fell through.
In an auction, sometimes the developer can get away with not having *everything* lined up before the purchase as there’s always the possibility they don’t win the bid. But with Arizona requiring bidders to pre-register, I’m guessing state officials realized the Meruelo group had done bupkus despite being the only known bidders for months. Given Meruelo’s reputation, I’m not surprised they realized it’d be easier to tell him to do his homework than potentially wrangle for years in court over undeveloped land that could have been used for condos or office buildings.
The Deseret News ran a horrible editorial about how it is so incredibly fantastic to shovel $900,000,000 from a .5% sales tax increase into Ryan Smith’s pocket over the next 30 years. (the Deseret News made a small mistake and wrote $900,000) Homelessness will dissapear from the streets of SLC because $5,000 a month apartments will be built around the sports and entertainment district!!! The average SLC family will reap unimaginable benefits, no, make that the entire Wasatch Front, never mind, the entire State of Utah. Gold plating the Delta Center skyboxes with NHL shields Will make SLC the crossroads of the world!!! That’s why the Deseret News editorial board enthusiastically supports the half cent sales tax increase.
The Deseret Morning News is owned by the LDS Church, so of course they’re in favor of “reimagining” downtown that makes their commercial holdings including City Creek more valuable. (But they didn’t pay for it with tithing, they promise.
No, they won’t open their books to prove that amd stop asking). Plus, owner Ryan Smith is a golden BYU Boi who’s been the subject of numerous soft-focus puff pieces from them in the past.
What’s more disappointing is the Trib’s coverage. They’re supposed to be the muckraking independent outlet, but their stance has been tepid to put it lightly. They had an editorial that we shouldn’t “rush” to a decision and…that’s it. Never mind that cherished Abravanel Hall and the Utah Museum of Contemporary Arts might get bulldozed for Ryan’s tacky sports empire, or the lack of affordable housing requirements, or pushing out the historic Japanese neighborhood, or even asking basic questions as to how the fuck retrofitting an arena that was renovated 7 years ago requires hundreds of millions of dollars.
Oh, and another fun development: the City Council was informed by the state legislature a week ago that they need to approve the sales tax increase by September and not December as originally thought. Meaning there will be even less time for the city to properly assess the impact and true cost of the tax before voting on it. Between Gateway, City Creek, and this bullshit development from SEG, literally all of downtown north of 200 South will be oke mall or another.
“everyone knows an Ant Can’t – move a rubber tree plant;
But he’s got HIGH hopes! He’s got HIGH Hopes!
He’s got high apple pie in the skyyyyyyyy!”
Never give up. No matter how much (other people’s) money you have sunk into a complete black hole. Don’t give up. Never.
Is this the whole chicken and the egg thing? Why would he need to get a variance before he owns the land? Could he get a variance while not owning the land? Once he owns it I assume they could deny him the variance?
When all is said and done. I have my doubts Meruelo wanted to win this land deal. It made little sense why he would not have taken his profit from selling the team and take off. Why go through the hassle of finding land somewhere. Now he is off hosing the fans in Tucson out of the Roadrunners.