New Concert/Sports Arena in Hoffman Estates
By Benjy Lipsman in News on Nov 10, 2004 6:40PM
Looks like the Chicago area will be getting a new arena to host concerts and sporting events. The city of Hoffman Estates, former home to Poplar Creek until 1994, will partner with retailer Sears and developer Ryan Cos. U.S. Inc. to build the $60 million, 11,000 seat arena.
To finance the project,
The development agreement would have Hoffman Estates issuing $50 million in general obligation bonds and taking a first mortgage position in the project. Sears would contribute the 36-acre site, and that plus cash from the retailer and Ryan would account for the remaining $10 million of the project's value.
Additionally, Sears would have a 25 percent stake in the venture and would negotiate a 10-year naming rights agreement for the facility.
While the arena -- expected to open in the fall of 2006 -- has no signed tenants, Hoffman Estates expects the arena to be profitable from the start. Some experts question the feasibility of such statements and question whether the city is exposing itself to financial risk by issuing the debt to cover the construction cost. Ryan will pay off the mortgage to the city and ultimately own 75% of the arena.
A plan submitted by the developers expect a $2 million profit in the first year, assuming 132 events.
But how do they expect to attract so many events to the new venue? No sports team has agreed to use the facility as its home. New minor pro sports seem to be popping up all the time -- indoor soccer, arena football, etc. -- but these leagues seem to lack the financial security to be depended upon for a long-term financing project. And how many monster truck events can Chicago handle? Aren't they only held on SUNDAY! SUNDAY! SUNDAY!?
Concerts also play into the plans for the new arena, but Poplar Creek closed in part due to losing its battle for outdoor concerts with the Tweeter Center in Tinley Park. And the new arena will have to compete with AllState Arena in Rosemont.