Frank,
I have a landowner with a billboard on freeway frontage land who is having trouble selling advertising. I approached him about buying the board, but he does not wish to sell. I suggested allowing me to manage the billboard for him. I would sell the ad space for him and pay him a %. Have you ever done that? What are the risks? What sort of agreement should I use?
John Gale
Gale Outdoor Media
Yes, I’ve done that before. Here’s the important item: make sure that you get a percentage of the revenue received, but in no way guarantee the revenue from the advertiser. For example, let’s say that you rent the billboard from him for $1,000 per month, and then re-rent it for $2,000 per month. Good deal, right? Wrong. What if the advertiser defaults and you have to pay him the $1,000 per month even if you have no revenue. Instead, make it a management agreement under which you get a % of revenue (typically 15% to 30%), and have no responsibility for the revenue if the advertiser defaults.
Thanks Frank. What time is your Wednesday Call for me out here in CA?
John
Frank,
What if he wants me to take over the billboard and manage it, not just selling ads but upkeep & maintenance as well? We even talked about swapping out the smaller sign he has now with a a 14’ x 48’. Higher % obviously but what else do I need to look out for?
John Gale
Gale Outdoor Media
Upkeep and maintenance on a billboard is almost nonexistent, so that doesn’t really matter. That would be included in your management fee.
Make sure that you have the legal right to increase the size of the billboard. Most billboards are grandfathered and, if you change the size, you negate the entire billboard permit and would have to tear it down.