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Sleeping Dogs —Bite Billboard Companies When They Wake

Lamar —A New What Were They Thinking? Again

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Just like the copy says. “Truth Reason Honesty Fact”

 

Letting Sleeping Dogs Lie
—Often
Bite When They Wake

The Old OOH Lease Strategy —Letting Sleeping Dogs Lie

 

As most of us in the billboard business know, leasing the ground space for a billboard can still be very much a wild west show.  Strategies are abundant when it comes to negotiating and writing lease agreements. One of the strategies to leasing, more common place than anyone will ever admit, is ‘letting sleeping dogs lie’.  Few insiders know it and many who claim to be insiders do not really know or will not be transparent discussing or writing about it. ‘Transparency’ (One of the reasons why you read OOH Today). The strategy is actually, a do nothing strategy. 

‘Let Sleeping Dogs Lie’. The proverb restated: avoid interfering in a situation that is currently causing no problems but might do so as a result of such interference. 

Enter a recent story by the Johnson City Press.

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Lamar Advertising owns a billboard, sized 10′ 7″ x 26′  at a very appealing intersection near downtown Johnson City according to Lamar inventory data. As is most cases, Lamar does not own the land. The land was owned by East Tennessee State University, who, according to the Johnson City Press, has been receiving $50 per YEAR for the last 45 years or so from Lamar for the right to have the structure on the property.

That is $50 per year!  But wait, that is not the issue. Nope, that is what some may call a good lease agreement for the lessee, Lamar in this case.  The issue is, The City, Johnson City, bought the property from the University in 1978!

So the city of Johnson City, has been the owner of the property where the two sided billboard is located, for about 40 years or so.

According to Johnson City staff attorney Sunny Sandos, there has been no contractual agreement between the City and Lamar.

 

 

Rather than share the uninteresting details about city zoning preventing new agreements, Lamar claims of grandfathered rights and exercising eminent domain, you can read those details in the link below. Let’s get to the interesting part of the lease strategy of sleeping dogs. 

If it is to be believed the lease and management team for Lamar were unaware of the land purchase by the City (and that is a tough one to swallow—this is a small town) then why, when Lamar ‘found out’ who the rightful owner was (in 2017 per Sandos) would Lamar go to the city and offer a paltry lease agreement paying $250 per month?

Should they have continued to let the sleeping dog lie and not say anything to the city about the property and lease?

Lamar went to the City about entering into a contract, according to Johnson City Press, and that is supposedly when the city officials realized the billboard was on city property and asked that it be removed by September 1.

Oops! 

City officials stated the city’s zoning ordinance, which doesn’t allow billboards, prevent it from entering into an agreement with the company.

City leaders; most of them are pretty smart people. According to City attorney Sandos, at $3,000 a year, the Lamar agreement offer would be significantly less than comparable billboard lease agreements, particularly for that location.  Double oops! 

Examining the Lamar listed rates for the 2 sided location, our calculations for a lease could translate to a figure between $9,240 and $27,300 per year. Big range we know, but Lamar knows what they are getting for the space and who can trust an advertiser (Pal’s Sudden Service in this case) not to give the number up? FYI, I used a 30% lease payout. Oh and at 13 periods.(that damn transparency thing keeps rearing its ugly head doesn’t it?) Yes, its high but better than losing the structure and maybe rebuilding some credibility with the city from their first offer.

In March, the city asked Lamar to remove the billboard by June 1, which they extended to July 15 after the company requested more time.

We love the intestinal fortitude (translation– balls) Lamar has on them with this deal. It keeps getting better. Allegedly, Lamar attorneys told the city, the billboard should be grandfathered in and that Johnson City would be exercising eminent domain if it removed the structure, which the Lamar attorney claimed would cost the city $281,000.  And the spheres get bigger! Does Lamar really wants to enter into a lease? But if you don’t ask, you will never get.

Hummm.  Seems to me, table stakes have been now established, if I were the city, setting the buy in is now at $281,000. And then negotiate a lease agreement. Forget the fact the City arguably has never had a contract with the company for the billboard. 

This is boiling down to a wait for the deadline of  September 1 to see how Lamar Advertising responds.  

According to Sandos, “We remain very hopeful that the billboard will be properly removed.” Do you think they mean removing the concrete foundation making it a clean site removal?

Remember, cities are getting smarter about OOH. 

What is your take Mr or Ms OOH Owner?  Let the sleeping dog lie?  How would you have handled this? Based on the one sided story provided by the city via the local paper, could anything have been done to salvage this location thereby retaining the billboard?

Scroll down this page and ‘Leave A Reply’. And as always, you are not requited to leave your real name but please keep it presentable or we will not approve. 

Read the story from Johnson City Press here ⇒Johnson City wants billboard removed by Sept. 1; owner claims that’s eminent domain

 

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10 Comments
  1. Robert Neighbors says

    Very simple, If the original lease called for an automatic renewal or rollover and the lease permit is valid with both city and state, then Lamar is in the drivers seat. This is because if the sign comes down and property is non-conforming it can’t be rebuilt, unless a special exception can be obtained from the city which in this case is the property owner. Also, the state has a say if it is on a Federally funded road. All in all its a mess, but could be worked out if all parties can agree. Contact me for more details

  2. John says

    Lamar strikes again! As I said before and will say again, don’t believe a word they say, look at their actions

  3. No Fear No Favor says

    Strong points Robert Neighbors. Thank you. It is a mess. Seems to us it could have been handled better to the point where they would not be in this predicament.

  4. No Fear No Favor says

    John Doe, it seems you maybe a bit harsh on your judgement with Lamar here. Their actions in this case, could be a result pointing more to poor judgement rather than dishonesty.

  5. Tom Carroll says

    Lamar should count their blessings, remove the billboard prior to September 1st, and move on. East Tennessee State should reimburse Johnson City $2,100 ($50 x 42 years) plus interest for collecting rent on a property that they didn’t own. But I doubt if any of that will happen. Lamar will file suit asking that the board be “grandfathered.” Court proceedings will be dragged out with depositions and more filings while Lamar’s legal bills will be more than paid by the money that this billboard generates during the process. Eventually, Lamar will be forced to remove the billboard and everybody loses: Lamar, local business who need the advertising, and Johnson City which should be spending their time on issues that actually benefit their citizens.

    Thanks for sharing.

    Tom Carroll

    PS And I don’t blame Lamar at all for sending the annual rent and letting the sleeping dog lie. And is it just a coincidence that Ms. Sandos is an East Tennessee State grad, worked for East Tennessee State, and now is the City attorney? I think I know who woke up the sleeping dog! Ha!

  6. Robert Neighbors says

    Being a capitalist there is a better way.

  7. Jean-Paul S Gedeon says

    Sometimes you let don’t bother the dog. But eventually it will wake up.

  8. No Fear No Favor says

    Jean-Paul Gedeon your are absolutely correct! And they will likely be grumpy. Have irresistible treats in hand for the moment.

  9. No Fear No Favor says

    Agreed Robert Neighbors. Which begs the question, How did it happen? Surely this must be a top down policy?

  10. No Fear No Favor says

    Someone with great experience no doubt. Keen observations. Thank you Tom Carroll. We agree,’everybody loses’