Relationship between Hoffman, arena owners deteriorates

Sears Centre operators say they're doing everything they can to assure a smooth transition to public ownership.

But neither they nor Hoffman Estates village officials can say with certainty that the arena won't have to close temporarily during that transition, and the village has warned at least one event organizer to make a Plan B.

"We're not sure if it will close, and we're not sure if it does for how long," Mayor William McLeod said.

Meanwhile, relations between the Ryan Companies, the arena's majority owner, and the village, which is seeking to take over the Sears Centre, have deteriorated further.

Village officials assert Ryan has failed to turn over financial data the village needs to prepare for the takeover and are threatening a foreclosure lawsuit against arena officials.

A Ryan executive refutes the claim that owners have defaulted on their agreement with the village. He also denies it misled the village with inflated revenues projections when the deal was sealed to build the arena several years ago.

"We are continuing to operate the facility, shows are going on and we are fully operational," said Jeff Smith, Midwest president for the Ryan Companies. "We are not in any default of the agreements in place."

He said his staff would deliver the requested financials to Hoffman Estates by Sunday's deadline. Smith also stressed he was speaking solely for MadKatStep Entertainment, the entity that owns the arena and is made up of Ryan and Sears Holding Corp., which has naming rights.

But an official from the firm brought in to operate the arena on an interim basis after MadKatStep leaves says the Ryan Companies inflated the 11,000-seat venue's moneymaking potential when it convinced the village to give it a $55 million construction loan.

"I think they were caught up in the (potential) success of the arena," said Joseph Briglia, vice president for International Facilities Group.

But Smith noted the projections from 2005 were based on two reports, one commissioned by Ryan and the other by the village.

He acknowledged those studies "were wrong."

A feasibility called for the Sears Centre to book 140 dates per year. But it's averaged less than 100 annually.

Still, both sides say MadKatStep has been able to pay its property tax and village loan bills on time. But village officials fear that can't last much longer, and that owners have become more interested in their exit strategy than in keeping the arena filled.

Village officials said they were notified in late July that Ryan had targeted Sept. 1 to leave. That date was then changed to Oct. 1. Village Trustee Gary Pilafas said Ryan is trying to force the village to bail it out by taking over financial responsibility.

Village Attorney Art Janura said the lack of information on the arena's finances and owners' plans has made it more difficult to plan a smooth transition.

"What can we do if Ryan can't even give us in writing a date that they are leaving?" Janura said.

With all the uncertainty, village officials said the Shillelagh Hockey Tournament, scheduled for Jan. 2 and 3, could be in danger. They've told University of Notre Dame officials to have another plan ready. Should any events be canceled, village officials and said ticketholders would be refunded.

McLeod maintains the village has been proactive by hiring IFG and forming an arena transition committee. The village will soon request bids from four national arena management groups to take over operations. Officials are targeting Jan. 1 for when that group could be in place.

"We have had a game plan in place since Day 1," he said.

Despite the strained relations, Smith and Briglia both assert it'll all work out.

"This community is going to have its day with this building," he said, "It's coming."