Helsinki loses millions in advertising billboard revenue

An outdoor advertising contract extending to 2023 has been a huge disappointment

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In the past few years, the City of Helsinki has lost up to EUR 5 million because of outdoor advertising revenues which it has not received.
      The Finnish capital signed a lease contract on outdoor advertising in 2008, but so far the city has never received a full payment for the advertising places in question.
      The monthly amount of advertising revenues that the capital city fails to receive amounts to EUR 160,000. On an annual basis, the lost sum amounts to almost EUR 2 million.
     
The situation is a result of the lease agreement on outdoor advertising signed by the media company Clear Channel Finland and the Premises Center at the City of Helsinki’s Real Estate Department, which will extend to 2023.
      The contract covers the erecting of a total of 1,835 billboards and other advertising structures in various parts of the city.
      Almost half of the agreed outdoor advertising structures have not yet been erected. Needless to say, revenues from them have been received by neither the city nor the media company.
      Clear Channel Finland is a part of the international Clear Channel Communications group.
     
At present, Helsinki and Clear Channel are negotiating on how to resolve the problem.
      According to information gathered by Helsingin Sanomat, Clear Channel has proposed that the number of advertising places mentioned in the agreement would be reduced in order that it would better correspond to the current situation.
      According to Timo Tammi, Managing Director of Clear Channel Finland, the present situation is partly attributable to the city itself.
      ”The city is a major conglomerate, which includes a large number of independent units. There were so many parties giving statements and opinions in the matter that eventually all of the advertising places we had offered were just not available”, Tammi argues.
      According to Tammi, the company was in a serious situation.
      ”We were in trouble as there was nothing to sell but we had a maximum number of advertising hoardings in our warehouse, which suddenly could not be used. We had to turn to the Mayor himself in order to start getting permits”, Tammi continues.
      On behalf of the City, the Real Estate Department is now clearing up the mess, as the responsibility for outdoor advertising was transferred to this unit a year ago.
     
”The negotiations have not yet been completed. However, we have proposed that from the beginning of next year, we will start charging the full lease as stipulated by the agreement”, Pekka Henttonen from the Real Estate Department said on Monday.
      According to Henttonen, the Real Estate Department does not plan to terminate the contract with Clear Channel.
     
The events started in the summer of 2008, when Clear Channel won the competitive bidding on the lease rights to Helsinki’s outdoor advertising.
      The company offered to pay an annual charge of more than EUR 4 million for the advertising places.
      ”At that point, the Real Estate Department may have had an overoptimistic picture of how the contract could be implemented”, Managing Directo Tammi says.
     
In the contract, Helsinki has been divided into three zones.
      When it comes to the implementation of the contract, Zone 1 has been the best one, covering the centre of the city.
      Two-quarters of the most profitable advertising places in Zone 1 have been built.
     
Instead, only less than half of the advertising places in Zone 2, covering the area surrounding the city centre, have been built so far. In Zone 3, covering the suburbs, slightly more than half of the places have been erected.
      Those Helsinki civil servants who signed the contract in 2008 have already retired.
      On Monday, Helsingin Sanomat did not manage to reach any representatives of the Premises Center at the Real Estate Department.


See also:
  Helsinki may have to abandon its plan to introduce modern city-bikes next summer (21.12.2011)

Links:
  Clear Channel Finland
  Helsinki Real Estate Department

Helsingin Sanomat