The future of the Arizona Coyotes is in jeopardy after the canceled arena land auction

The Arizona State Land Commission may have put the kibosh on what’s left of the Arizona Coyotes on Friday, canceling an upcoming auction for land where the former team’s owners planned to build a $3 billion arena and entertainment complex in anticipation of a reborn franchise.

The auction for 95 acres of land in north Phoenix, on the border of northern Scottsdale, was scheduled for Thursday at a starting price of $68.5 million. The commission said it has determined that owner Alex Meruelo must now apply for a special use permit to build an arena on that property, which is already zoned for such a purpose.

“This unprecedented action seriously jeopardizes the future of NHL hockey returning to the desert,” the Coyotes, who were surprised by the decision, said in a statement.

That’s an understatement. The hockey operations and players were sold to Utah Jazz owner Ryan Smith for $1.2 billion per day after the end of the 2023-24 season and moved to Salt Lake City in a deal that closed on June 13. The team has since been renamed Utah Hockey. Club, for now, and will play at the Delta Center in October.

Meruelo was paid $1 billion but kept the trademarks, team name and rights to an expansion franchise if he could build a new arena that would be completed within five years. In that case, he would pay back the $1 billion to the NHL and start all over again.

In the statement, the Coyotes threatened to “explore all of our legal options in light of this short-sighted decision by the state.”

But in fact, Meruelo’s capabilities are very limited. He can’t sell his option to anyone else, NHL commissioner Gary Bettman said at a local news conference in April, the day after the Coyotes played their final home game in Arizona. And if a string of dates passes without the arena being built, Meruelo would lose those rights, and Arizona would be just another city in line for an expansion team.

In the meantime, since everything happened, Phoenix Mayor Kate Gallego told Meruelo she was not in favor of giving him tax cuts to build a new facility. In particular, she isn’t interested in another arena that competes with the city’s Footprint Center in downtown Phoenix, where the Suns and Mercury basketball players play.

An insider with knowledge of the situation said he is now unsure what Meruelo and the NHL will do.

But the reality is this: the decision will cause another significant delay that could completely nullify the deal.

“We understand that the delay in an auction is a disappointment to our applicant and the public, but the change in timing is a prudent decision,” the committee said in its decision.