Johnston: How the Coyotes-Salt Lake relocation plan came together — and what issues remain

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Johnston: How the Coyotes-Salt Lake relocation plan came together — and what issues remain

About a month ago, NHL commissioner Gary Bettman and his deputy Bill Daly paid a visit to Arizona Coyotes owner Alex Meruelo to broach the subject of relocation.

The initial reception wasn’t warm, according to a league source.

Meruelo, who has owned the franchise since 2019, was focused on winning a land auction in north Phoenix to solve its long-standing arena problem and set it up for the kind of success that has proven elusive during a checkered 28-year history in the desert.

But as part of that conversation with the NHL commissioner and deputy commissioner, Meruelo was asked a question that ultimately set the wheels in motion on a deal that is expected to see the Coyotes players and hockey operations staff moved to Salt Lake City by the end of this week: Can you say with any certainty when a permanent arena will be completed to replace the temporary facilities at Mullett Arena?

Meruelo couldn’t.

Not with the myriad potential issues and hurdles that come with a project of that size — from securing the land to developing the land to garnering the necessary political support to having the construction completed in a timely manner.

The past couple of seasons have taken a toll on the Coyotes’ players and staff. Matt Dumba, traded from Arizona to Tampa Bay on March 8, recently told The Athletic that it felt like “mental warfare” playing out of a 4,600-seat college facility amid constant uncertainty about the team’s future.

Recognizing the situation was becoming untenable, not to mention unfair with no clear remedy in sight, Meruelo and the NHL began working on a complex deal that will see him retain the Coyotes brand, logos and marks if completed, per league sources. The franchise would effectively be declared out of service. Meruelo is also expected to be granted the rights to bring an NHL expansion team back to Arizona should he get a suitable arena built within five years, while keeping his ownership stake in the American Hockey League’s Tucson Roadrunners, which would become Utah’s AHL affiliate and could end up playing out of Mullett Arena in Tempe, pending negotiations with building owner Oak View Group.

Under the terms of the deal being discussed, the NHL would pay Meruelo $1 billion for the organization’s hockey operations assets — the same expansion fee he’d be required to fork over to bring a team back to the Phoenix area — and would then flip them to Salt Lake City owners Ryan and Ashley Smith of Smith Entertainment Group for $1.2 billion, with the extra $200 million distributed among existing NHL owners, per league sources.

Meruelo and the Smiths haven’t been in direct contact during negotiations. The NHL is brokering the entire deal.

Nothing’s done until it’s done, but there is an understanding among the parties that it’s preferable to try to wrap the sale up before Saturday’s start to the Stanley Cup playoffs so as not to overshadow the most important part of the NHL calendar, but obstacles remain coming out of the weekend, per sources.

Among them was the precise language around what conditions Meruelo would have to satisfy and on what timeline to be granted the contractual rights to a future expansion franchise in Arizona. What is known is that he won’t be able to sell or transfer those rights. They will be his to exercise alone.

Should the deal get across the finish line, it will allow the NHL to sever ties with a complicated and difficult Coyotes chapter that included a battle in bankruptcy court, multiple different ownership groups and several failed arena projects.

Bettman has been a fierce proponent of maintaining a franchise in the fifth-largest metropolitan U.S. market, and with good reason. The minor hockey scene is thriving there — bringing Auston Matthews, Matthew Knies and Josh Doan, the son of Coyotes legend Shane Doan, to the NHL — and there’s reason to believe the team could become a significant revenue generator under the right circumstances.

However, there was only so long the league could wait for those circumstances to materialize, especially after Tempe residents voted against a proposed entertainment and arena development put forth by the Coyotes in a referendum last May.

That left Meruelo back at square one in his pursuit of an NHL-quality setup. It also pushed back the clock for how long the Coyotes would need to play out of Mullett Arena as a secondary tenant.

The sale and relocation deal currently in the works represents the cleanest potential exit. While the NHL constitution includes language that allows the league to pursue “involuntary termination” of a franchise, that would be a litigious road to go down. Instead, they’re endeavoring to have Meruelo willingly part with the organization’s assets by paying him a price that far exceeds his entrance point (roughly $300 million, according to Forbes) while leaving the door open for him to return to the club if he succeeds in getting an arena built.

One source with intricate knowledge of NHL franchise matters views it as an unsatisfactory outcome for the NHL after years of backing the Coyotes. “This solves the potential litigation battle, but they’re basically rewarding (Meruelo) for being an ineffective owner.”

There are certainly risks associated with a move to Salt Lake City, a significantly smaller market than the one they’d be leaving. The team would be moving to a 33-year-old building in the Delta Center, at least on an interim basis, and the home of the NBA’s Utah Jazz features less-than-ideal sightlines for hockey and a capacity of roughly 11,000.

However, Smith has expressed confidence that he’ll get a new facility built with Salt Lake City considered the front-runner for the 2032 Winter Olympic Games.

Presumably he’ll also be prepared to invest in building a competitive roster to a degree Meruelo never did. Under the terms of the deal being discussed, Smith would acquire the Coyotes players, coaches, trainers and hockey operations staff (with the business staff left behind). He’d also get the organization’s impressive haul of draft capital — Arizona owns 20 total picks in the first three rounds of the 2024, 2025 and 2026 drafts — and a clean cap sheet that is free of bloated or inefficient contracts.

A move would at least represent a clear step forward after years of wheel spinning in Arizona. That produced underlying tensions that boiled over in early February when NHLPA executive director Marty Walsh publicly hammered the Coyotes for failing to take tangible steps toward getting an arena built.

“The next deadline for me is tomorrow. It’s now. It’s right now,” Walsh said. “The last conversation I had with the commissioner was that the owner was looking at a piece of land in the Arizona area. I’m not sure where that stands. I have my personal concerns about that ever happening. There was a piece of land in Mesa. There was a piece of land in Phoenix. There were three ballot questions in Tempe. None of that came to fruition.”

The Coyotes’ players will be compensated for the inconvenience of a move and are expected to receive payments to cover expenses, housing transition and a flat relocation fee if the Salt Lake City deal goes through, per league sources.

In the meantime, all indications are that Meruelo will go ahead with his plans to win a June 27 auction being conducted by the Arizona State Land Department Board of Appeals. Bidding on the parcel of land starts at $68.5 million.

Bettman has said that he is “reasonably confident” Meruelo can see the plan through.

However, after years of stops and starts, the NHL’s leadership has reached a point where it couldn’t keep waiting for a solution to its Arizona problem to emerge organically.

“We would have preferred to be in a new arena by now,” Bettman said last month. “But there are certain things that couldn’t be controlled. We would have preferred the referendum in Tempe went the other way, but it didn’t. So we deal with what we can deal with. Having said that, we believe that Arizona, particularly the greater Phoenix area, is a good NHL market.”

With the final guaranteed Coyotes game scheduled for Wednesday night against the Edmonton Oilers at Mullett Arena, it is anyone’s guess how long it’ll be before the NHL gets another chance to test that belief.

(Photo: Christian Petersen / Getty Images)