Staff Report #1
October 27, 2022
To All Commissioners
Re: Contract Extension – Lamar Transit Advertising
That the Commission APPROVE exercising the 5-year extension as set out in the current contract with Lamar Transit Advertising for bus advertising, covering the period January 1, 2024 through December 31, 2028 noting London Transit will receive guaranteed revenue over the extension period of $2,450,000.
London Transit and Lamar Transit Advertising have enjoyed a more than 20-year relationship which has been mutually beneficial to the parties. The past two years of pandemic related restrictions have significantly impacted the bus advertising business, and as the result, the Commission agreed to reductions in the annual revenue guarantees associated with the contract with Lamar Transit Advertising. In November 2020, the Commission approved a contract amendment reducing the minimum guarantee payment from $470,000 to $305,000, and in September 2021, the Commission approved an amendment reducing the minimum guarantee payment from $480,000 to $384,000. Both of these amendments were approved in consideration of the long-standing working relationship between London Transit and Lamar Transit Advertising.
In mid-October, Lamar representatives reached out to administration to share the news that transit advertising in London had rebounded and appears to be trending upward into 2023. In light of this positive news, coupled with the current contract expiry date of December 31, 2023, Lamar has proposed exercising the five-year renewal terms within the current contract, extending the contract to cover the period 2024 through 2028. As part of the extension, Lamar agrees to return to the original contracted revenue guarantee for 2023 of $490,000. The annual revenue guarantee will remain at $490,000 for the contract extension period; however, the revenue share portion will be increased from 40% to 50% which will allow London Transit to benefit from additional advertising sales should the market continue to grow. All other terms and conditions of the contract shall remain the same.
Administration is recommending approval of this contract extension noting the annual guaranteed revenue helps provide stability to the operating budget. Further, having this contract extension in place will allow for the inclusion of this guaranteed revenue in the next multi-year budget.
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager