If true, then I'd venture a guess that it may be due to waning attendance at Red Claws games. The Red Claws were selling out every game when this whole development was first proposed. They've been in decline ever since now that the "newness" factor has dissipated.
This is the average attendance per season:
2009-2010 = 3,047
2010-2011 = 2,918
2011-2012 = 2,969
2012-2013 = 2,663
2013-2014 = 2,517
Could a new arena turn that around? Maybe, but probably only for a year or two. If this trend continues into this season or even remains flat at around 2,500 per game, then I just don't see a new arena being economically viable for the long-term, even as a part-time convention center. There would be more financially prudent uses of that space.
I'd rather see a cluster of high-rise towers over there than an arena anyway, especially an arena that looks like the one shown in some of the last renderings that were released.