Having started his career at Institute, McClean moved to Derry in 2008 and spent three years at the club before joining Sunderland in 2011.
He then went on to have spells at Wigan, West Brom, Stoke and Wrexham, before rejoining Derry in January.
It is a move that has quickly turned sour and Coyle is disappointed that the contract dispute has been played out so publicly.
"I don't know the ins and outs of it but I think the club have been steadfast in what they've done," he continued.
"Maybe James, in the future, he'll let people know what the grievances were. Me, personally, I'm not privy to what went on.
"Both parties at the time should have sat down when it happened and thrashed it out then rather than it get to this stage.
"James has acknowledged that and the club have acknowledged they could have handled it better too, but when it gets to a stage of having an affect on everyone around the club, it was only going to come to one conclusion."
Coyle added that it is a sad end to what was meant to be a welcome homecoming for McClean, who won 103 caps for Republic of Ireland.
"It's a situation no one wanted to see. When James came back there was a lot of hype about it.
"It's unfortunate for James, he's an icon in these parts and the Derry people love him for what he's done in his career, but unfortunately football is a fast moving game and doesn't stop for anyone and you have to accept that at times.
"It's sad he'll not get to play, especially in a cup final."
