The council has been thwarted in its plans to force the Croydon Gateway developers to sell its land.
Hazel Blears, Secretary of State for Communities and Local Government, has rejected Croydon Council’s request for a compulsory purchase order on the land next to East Croydon station.
It effectively spells the end of any hopes held by the council-backed developer Arrowcroft to build a 12,500 seat arena on the site.
Last week, Stanhope Schroder won the right to build 560 homes, office blocks and a new Warehouse theatre on the site after a 10 year legal battle.
Arrowcroft has six weeks to appeal Hazel Blears decision. But even in the unlikely event it wins, because of today’s decision, it has no power to force Stanhope to sell the land it owns.
The council said it was disappointed with the decision.
Cabinet member for regeneration Councillor Tim Pollard said: “We have to acknowledge that the decisions are very disappointing. At this stage we need time to examine and analyse fully both decision letters but we are determined to maintain our focus on our strategic ambitions for the regeneration of our town centre.”