Staff Report #3
November 25, 2020
To All Commissioners
Re: Contract Amendment – Lamar Transit Advertising
Recommendation
That the Commission APPROVE the one-time amendment to the contract with Lamar Transit Advertising, reducing the minimum annual guarantee payment for 2021 from $470,000 to $305,500 as the result of their inability to operate during the period of March 26, 2020 through August 25, 2020 due to Provincial COVID-19 restrictions on nonessential businesses.
Background
London Transit and Lamar Transit Advertising have enjoyed a more than 20 year relationship which has been mutually beneficial to the parties. The current contract with Lamar Transit Advertising was set to provide a minimum annual guarantee of $470,000 in return for the exclusive rights to place advertising on London Transit’s fleet of buses.
For the first time in the 20 plus year history of working together, Lamar Transit Advertising has requested relief from the minimum guarantee payment for 2021 given the COVID-19 pandemic impacts on their business. In response to Provincial orders for all nonessential businesses to close on March 26, 2020, Lamar was forced to suspend billing to annual customers, and also experienced major cancellations from both local and national advertisers. Provincial orders impacting Lamar’s ability to operate were lifted on August 25, 2020, allowing them to resume operations.
As the result of the mandatory business closure, Lamar Transit Advertising is requesting relief from the minimum annual guarantee payment for 2021 only, resulting in a 35% reduction taking the payment from $470,000 down to $305,500. Lamar has provided annual sales projections for 2021 as compared to both 2018 and 2019, and sales are down by approximately 38% in 2020 over 2019.
As set out in the report recommendation, Administration is recommending this relief be granted, consistent with the manner in which other contracts have been adjusted in response to the COVID-19 pandemic. Given experience of other transit systems across the country, this request was anticipated by administration, and was accounted for in the projected impacts of COVID-19 included in Staff Report #4 dated October 28, 2020.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager