They claim that the new front-runner is the land currently occupied by the Austin-American Statesman.
I think this is a sub-optimal location for the basketball arena. Riverside Drive and Congress Avenue cannot handle the traffic, and there is no parking on the south side of the river. The Erwin Center is able to get away with having no parking because the University works out arrangements with nearby parking garages owned by the state government.
However, I think the other locations they mention would be even worse. There is no way the residents of Tarrytown will let them put it on the Lion's site, and that would be an even worse traffic nightmare. I hate the Mueller location for reasons I have detailed in some other comment threads. Deloss is even quoted in the article as suggesting a site far east near Highway 130 (WTF???).
It seems the University has committed to working with the city on sharing the facility with other events and they have promised the residents of East Austin to not put it next to Disch-Falk. So it seems they have put themselves in a pretty tight box already. With those constraints, South Congress might be the least-bad option.