Sears Centre officials in talks with Hoffman Estates
By KURT BEGALKA - kbegalka@nwherald.com
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| Sears Centre officials and the village of Hoffman Estates are talking about ways to keep the arena's future sustainable. (Northwest Herald file photo) |
HOFFMAN ESTATES – Sears Centre officials confirmed Tuesday that they were talking with Hoffman Estates about strategies to help boost the arena’s bottom line in this economic downturn, including a possible transfer of the privately owned arena into public hands.
“The village of Hoffman Estates is evaluating long-term strategies for revenue growth as well as ownership and operational structure of the Sears Centre Arena,” the village said in a written statement. “Discussions with existing facility owners involve how to cut costs, increase revenues, and improve the arena’s overall financial status. The likely transfer of ownership of the Sears Centre to the village or another public entity is under consideration.”
Village Manager Jim Norris declined to elaborate. Village President William McLeod was unavailable to comment.
“We are considering a more sustainable option by pursuing an operating structure that combines public ownership and national private management,” McLeod said in a statement. “This combination will help the arena realize its potential.”
Discussions with the village are an attempt to be proactive, Sears Centre President Jeff Bowen said.
“There have been no foreclosure actions. We’re not bankrupt. We’re not in default. We continue to guarantee the loan and pay the vendors. It’s still business as usual,” Bowen said. “This is just a matter of seeing what we can do.”
The 11,800-seat, multipurpose facility, which opened in 2006, is experiencing the same attendance declines affecting similar venues, but with one crucial difference – the Sears Centre has private owners. Ryan Companies US, a Minneapolis-based real estate development firm, owns 75 percent of the $60 million facility, Norris said. Sears Holdings Corp. of Hoffman Estates owns the other 25 percent and is on the hook for $1 million annually – part of a decade-long naming deal. The companies own the facility through a joint partnership – MadKatStep LLC.
“It is just in an exploratory stage. Both sides are looking at what is the best thing to do, what is the best thing to move forward,” Bowen said of talks.
Bowen said Sears Centre has taken a “harder hit,” in part, because of a “very substantial tax bill that really kicks butt and hurts.”
The property tax bill, which he said was “well over $1.5 million,” is part of about $6 million in set obligations each year. That includes payments on loans and refinancing, including a $50 million construction loan to Ryan Companies backed by Hoffman Estates. The original 2005 agreement allows the village to assume control of the arena should Ryan default on the loan.
Jeff Smith, president of Ryan’s Midwest division, was unavailable for comment Tuesday, but Bowen said he had seen no signs of that happening.
The village said it was working with three of the “nation’s larger arena management companies” to address the arena’s “operational issues” and its “programming potential.”
A Sears Centre Reserve Fund, established to retire debt using half of the village’s Entertainment Tax revenue, is projecting about $12,000 less in revenue this year than in in 2007. The village hopes attracting top-tier talent and high-profile family shows will reverse that trend. But Bowen cautioned people to temper expectations.
“This business is a lot more difficult because you are crystal-balling constantly,” he said. “You can’t just say we did 100 events last year so were going to be doing 100 events this year.”
