A joint venture with builders Alfred McAlpine for a pounds 50m development by the M55 at Whyndyke in Peel is on hold after a last-minute decision by Oyston to renegotiate the deal.
Oyston conducted negotiations for the purchase from Wymott Prison, Lancashire. He claims he never agreed the first terms for the purchase, saying that he bid for 75 acres, not the 50 acres originally earmarked. He is believed to have signed an agreement with the owners of Whyndyke Farm in February 1996.
Michael Joyce, a director of Blackpool FC and managing director of the Colosseum project, as the club has called the new ground, said that Oyston remained committed to the move. "Mr Oyston would say that we signed a legally binding agreement in February 1996 with Martin Perry of McAlpine, and as far as we are concerned we want him to honour it."
Oyston has maintained a high profile with his business interests, despite running his media-to-property empire from behind bars. Last month, he snapped up a second radio station in Northern Ireland, 1521AM, based in Armagh. A third franchise in the province was added with the purchase of Town Radio in Tyrone.
Negotiations on the Whyndyke site were conducted from the visitors' room at Wymott, while his wife, Vicky, has also been closely involved in managing the project, along with his other media interests and the day-to-day affairs of Blackpool.
The new stadium for the club would be one of the largest developments in the North-east this year, with hotels and a multiplex cinema adjoining the ground. When it was first announced in February 1996, work was expected to begin this year. The 20,000-seat ground would replace Bloomfield Road, Blackpool's home of 91 years.
However, the project has been dogged by delays. Fylde Borough Council says it expects a formal planning application from the developers any day now, although the timetable for submitting an application has been extended several times.
The scheme could also be delayed by a public inquiry, as the application will also have to be cleared by the Environment Secretary. Work on site may not start for at least another six months.
Alfred McAlpine has been involved in similar projects, such as a new stadium for Huddersfield Town FC.
A McAlpine spokesman said that the managers working on the project were on holiday and unavailable for comment.