As Arizona Coyotes begin Tempe era, where things stand with their proposed new arena

The Arizona Coyotes are coming home —  finally — after a six-game road trip to begin the regular season and an exhibition tour that included stops at minor league rinks in Tucson, Wichita, Tulsa and Boise.

Each of those venues were larger than Mullett Arena, the Coyotes’ new 5,000-seat temporary home at Arizona State in Tempe where the NHL franchise will open a four-game homestand on Friday against the Winnipeg Jets.

Coyotes president and CEO Xavier Gutierrez has promised an intimate, unique, first-class experience, but reiterated the arrangement is a stopgap measure after Glendale, the team’s former home of nearly two decades, terminated its lease at the newly renamed Desert Diamond Arena.

“We’re very excited about this opportunity,” Gutierrez said about playing at ASU, “but it is a temporary solution, and everybody should understand that. We’re not making any misrepresentations. We have a bigger goal in mind. That bigger goal in mind is about a mile down the street from where we’ll be playing for the next several years, and we’re excited about that as the permanent solution.”

Coyotes team owner Alex Meruelo plans to build a $2.1 billion hockey arena and adjoining entertainment and residential complex on 46 acres of city-owned land at Rio Salado Parkway and Priest Drive, just west of Tempe Town Lake, on a site long used as a landfill. The area is prized for its central location in the Valley, close to major highways and many of the franchise’s season ticket holders, and because it is the last significant tract of undeveloped land in Tempe.

It also sits directly under a major flight path, less than two miles east of Sky Harbor International Airport.

Tempe Mayor Corey Woods said earlier this month the deal could be decided soon, perhaps by the end of the year. But Phoenix and airport officials have balked at the plan from the start and have threatened litigation to stop the project. They cite a desire to protect area residents from excessive aircraft noise that could lead to complaints that limit airport operations and growth.

Supporters have called this a specious argument. Phoenix not only owns Sky Harbor, but Footprint Center, the 30-year-old downtown home of the NBA’s Phoenix Suns and WNBA’s Phoenix Mercury, which stands to lose business from hosting concerts and other events to a new arena in Tempe.

Airport officials have denied an ulterior motive.

The Coyotes hope to open the new arena in 2025.

Heading into Friday's home opener for the Coyotes, here is a review of some of the key issues with the proposal. Information includes comprehensive ongoing reporting by The Republic's Sam Kmack, who covers local government in the cities of Scottsdale and Tempe.

Negotiations in progress

The Coyotes’ proposed entertainment district includes a 16,000-seat hockey arena, a team practice facility open to the public, restaurants, shops, two hotels, a 3,500-person theater for smaller shows, a private medical office campus and more than 1,600 residential units.

The residential component, according to the Coyotes, is integral to the project’s financial success.

The proposal includes a 30-year non-relocation agreement and NHL Commissioner Gary Bettman has guaranteed the arena would host an All-Star game and draft.

In June, the Tempe city council voted 5-2 in favor of negotiating with the Coyotes.

The developer is another Meruelo-owned company, Bluebird Development, LLC.

Public vs. private funding

The Coyotes describe the entire project as privately funded, although the financing plan relies on $215 million in new taxes generated on-site to reimburse Meruelo for land clean-up — which requires removing 1.5 million tons of trash — and to cover public infrastructure costs.

Another $215 million in projected new tax revenue would be retained by Tempe, according to the proposal.

The Coyotes have said the entertainment district will have a $13 billion economic impact over 30 years, create nearly 7,000 permanent jobs and that Meruelo will invest $40 million of his own money to begin work on the site as soon as development is approved.

What about tax breaks?

The Coyotes are asking Tempe for a 30-year property tax exemption on the arena, practice facility and theater, comparing them to other regional professional athletic venues like State Farm Stadium, Footprint Center and Chase Field, which are permanently tax exempt because they’re owned by government entities.

The Coyotes also seek an eight-year property tax exemption on the hotels, retail, office and residential space, which is in line with exemptions Tempe has granted for other projects.

Arizona Rep. Athena Salman, a Democrat who represents Tempe and is critical of the plan, has said these requests amount to $649 million in tax abatements.

Meruelo's business practices

Meruelo, a Cuban-American billionaire, began his career working in his father’s tuxedo shop and turned around a failing pizza chain before expanding into several other industries, including real estate development and construction. He also owns two casinos, the Sahara Las Vegas and the Grand Sierra Resort in Reno, Nevada, as well as a sports gambling company, Meruelo Gaming.

Meruelo became the Coyotes’ majority owner in July 2019 and was hailed as a potential savior for the franchise, but his financial wherewithal and business practices have come under scrutiny.

An investigation by The Athletic published in February 2021 detailed significant upheaval within the Coyotes’ organization and numerous financial disputes between the team and its employees, contractors and vendors, including unpaid rent at its former arena in Glendale.

Late last year, the Coyotes were penalized for being late on a $1.3 million sales tax payment to the state, which the team attributed to human error.

The Coyotes promised to share all financial information with Tempe officials during negotiations.

Pushback from Phoenix, Sky Harbor

Phoenix has threatened litigation to stop the Coyotes’ project based on its interpretation of an often-overlooked pact it reached with Tempe in 1994.

The intergovernmental agreement (IGA) dictates flight paths and, Phoenix argues, bars residential construction in designated high-noise areas nearby. But that isn’t clearly spelled out in the policies, which appear to make an exception for soundproofed apartments like those the Coyotes plan to build.

Public records obtained by The Arizona Republic, including a letter showing Phoenix previously supported a housing development in a high-noise area in Tempe, appear to undermine the argument, as do 21 residential projects with 4,800 apartments developed around Tempe Town Lake and west of the airport within the same noise level zone as the Coyotes project since 1999, according to attorney Nick Wood.

The concerns are similar to those Phoenix raised 20 years ago when the Arizona Cardinals proposed a football stadium in Tempe on a site just north of where the Coyotes plan to build their arena. The Cardinals’ proposal was later dropped in favor of building in Glendale.

This month, Sky Harbor mailed 100,000 fliers to residents in Phoenix, Tempe and Scottsdale warning the Coyotes’ proposed apartments could lead the airport to abandon its current flight paths in favor of more efficient routes, which could shift excessive aircraft noise to existing neighborhoods.

Woods, Tempe's mayor, denounced the mailings as an “alarmist tactic” and disputes the Coyotes’ project violates the agreement with Phoenix. The Coyotes have said they will seek no exemptions from the Federal Aviation Administration, which opposes the project but has stopped short of claiming it violates any rules.

Jason Wolf is a sports enterprise and investigative reporter for The Arizona Republic. Reach him at jason.wolf@gannett.com and follow him on Twitter at @JasonWolf.

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