In Business News: Billboard Mgmt To Increase Revenue

Las Vegas Sun
County plans to turn billboards over to one company
By Richard N. Velotta (contact), In Business reporter
Fri, Sep 25, 2009 (3 a.m.)

The billboards near McCarran International Airport are one of the first clues to tourists that they aren’t in Kansas anymore.

The Strip’s biggest stars are larger than life and vie for attention from their massive steel pedestals. Blue Man Group. Bette Midler. Cher. Criss Angel. They are all up there with their invitations to come and see them.

On the back of the billboards are signs directed at departing tourists – airlines encouraging people to try them on their next trip to Las Vegas, or other cities wanting visitors to try them for their next vacation.

McCarran gets a percentage of the revenue generated by leasing 43 billboards on airport land – in recent years, about $6 million annually in billboard advertising.

But Clark County is looking at a new way to manage airport billboards to generate even more money.

County officials have begun evaluating proposed contracts that would put oversight of the 43 billboards in the hands of one company. The airport will continue to own the billboards, but one company will manage lease agreements. It’s a strategy similar to McCarran’s contract for indoor advertising that simplifies accounting and oversight.

The company selected to manage the billboards would oversee all leases and split the revenue generated with the airport.

Clark County Aviation Director Randall Walker said McCarran has had success in developing the valuable ad space within the airport – some of the wall space in the terminals and the impossible-to-miss video boards in the baggage claim area – by awarding a management contract to a single company.

But the billboard space is a little different.

Because the 43 billboards have been under individual contracts with different terms, the county will have to wait for the last lease to end before it’s able to turn every billboard over.

The last lease doesn’t expire until July 20, 2014, but all but five leases will have expired by December 2010.

To ensure a smooth transition to a single vendor, the Clark County Commission sought proposals in July, putting a mid-September deadline on submissions. A list of companies submitting proposals won’t be disclosed until the commission begins evaluating them in late October or early November.

Walker explained that the solicitation is not a formal bid process and that each proposal would be evaluated to determine the most lucrative to the airport.

At the request of the commission, companies that have local small-business partners will get a higher ranking in the evaluation of their proposals.

Walker said the objective of the change is to maximize revenue to the airport. Simplifying the oversight isn’t the only way that will be achieved.

In the most recent leases, McCarran included language requiring bidding companies to turn over the infrastructure – the poles, signboards, lighting the electronics – to the airport.

“This was drawn into the contract,” Walker said, “so companies took that into account when they made their bids.”

In most leases, individual companies would bid for the land and then build their infrastructure. That led to occasional problems and lost revenue for the county.

“We’ve had situations when a billboard would change hands and rather than a smooth transition from one company to the next … the first company would decide not to sell anything they had on the site to the new company,” Walker said. “In one case we had a company take down all the steel and all the electrical and it took awhile for the new company to go in and build all over again. It resulted in a loss of three or four months of revenue for us.”

There are several prospective companies with the expertise to manage the airport’s billboards, but most don’t want to go on record about the proposal because they don’t want to be accused later of attempting to influence county commissioners when they make their decision.

In past business contracts, commissioners have been accused of being influenced by companies using well-connected, high-profile lawyers to lobby for their clients.

Some of the major players in outdoor advertising in Southern Nevada are Connell Outdoor Advertising Co., CBS Outdoor, Clear Channel Outdoor and Viacom Outdoor.

Representatives said they recognize that McCarran is attempting to generate additional revenue and that the plan to place the leases under one company is getting more commonplace.