6 COST PROPOSAL
21 CONFIDENTIAL INFORMATION
COST PROPOSAL
Plan for ongoing management of advertising sales:
BIG would implement a dedicated sales approach to deliver maximum value to the Santa Monica Parking Structure Advertising platform. The wealth of experience BIG Outdoor brings to this network will ensure high-quality advertisers and content to be displayed on the network. Using our key agency relationships and current experience in media sales in Santa Monica, BIG is confident in the value of this program. It would not only bring value to advertisers and the City of Santa Monica, but also positively impact local businesses in the downtown SM area.
BIG OUTDOOR’S FINANCIAL OFFER:
• Approach 1: Guaranteed Fixed Revenue
• Provide cost based on 44 locations and detail how price changes with the addition of subtraction of locations.
BIG Outdoor to offer the City of Santa Monica a minimum annual guarantee in the amount of $120,000 in Year 1 of the program assuming 44 static signage locations. With additional locations added, BIG Outdoor will provide the city with an updated revenue projection based on approved set of locations and proportionally increase guaranteed rent.
• Approach 2: Revenue Share with Minimum Guarantee, whichever is greater.
• Revenue share to Parking Administration shall be at least 65% of revenue.
BIG Outdoor to offer the City of Santa Monica the greater of 65% of gross advertising revenue and a minimum annual guarantee (MAG) rent in the amount of $90,000 in Year 1 of the program. MAG rent to escalate by 2% every year. During recoupment of BIG Outdoor’s initial capital investment, the city to receive 20% of gross revenue until full recoupment.
23 Projected Advertising Sales Rate & Revenue Projections:
BIG Outdoor projects gross annual revenue projections in year 1 @ $450,000 w/ 2% growth each year over the life of the term. Based on these projections and proposal Approach 2, the city’s share of gross revenue shares in year 1 at 65% share would be $292,500 (before recoupment of initial capital investment made by BIG Outdoor).
Capital Expenditures to build-out and maintain the static displays The capital expenditures associated with building out new structural systems for the larger static displays (i.e. 10 x 22 & 10 x 40) in the parking garages are estimated at a total of $90,000. We have also allotted additional capital for engineering, permitting and other requirements we may encounter. Capital Expenses incurred by BIG Outdoor to be recouped by taking a larger revenue share of 80% until recouped (As detailed in Approach 2).
For maintenance costs related to the displays, we estimate on average each of the displays will require approximately $750 per year in general maintenance. BIG Outdoor to assume all maintenance costs during life of agreement term and will NOT be taken out of city’s revenue share (Only initial capital expenses to be recouped).
BIG Outdoor acknowledges that the City is a public entity subject to the provisions of the Public Records Act and respectfully requests that, except as required by law, the City will not disclose the information marked confidential as trade secrets or proprietary financial information received from BIG Outdoor. 6 COST PROPOSAL
21 P&L and DCF
Santa Monica Parking Garages - Static Displays (INCLUDING P7 & P8) Revenue Growth Rate: 3.5% BIG 80% BIG 35%
Marginal Expense Growth Rate: 3.0% OWNER 20% OWNER 65% Estimated Development Costs 150,000.0 Promotional LED Signage Platform 750,000.0
Minimum Annual Guarantee Rent: 150,000.0 Total Development Cost 150,000.0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 TOTALS SM Parking Garages - Static Displays
Growth % 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
Media Revenue 750,000.0 776,250.0 803,418.8 831,538.4 860,642.3 890,764.7 921,941.5 954,209.4 987,606.8 1,022,173.0 Total Gross Revenue $ 750,000.0 $ 776,250.0 $ 803,418.8 $ 831,538.4 $ 860,642.3 $ 890,764.7 $ 921,941.5 $ 954,209.4 $ 987,606.8 $ 1,022,173.0 $ 8,798,544.9 Net Media Revenue $ 750,000.0 $ 776,250.0 $ 803,418.8 $ 831,538.4 $ 860,642.3 $ 890,764.7 $ 921,941.5 $ 954,209.4 $ 987,606.8 $ 1,022,173.0 $ 8,798,544.9 Revenue Shares Pre-Recoup
Revenue Share (CITY OF SM) $ 37,500.0 $ - $ - $ - $ - $ - $ - $ - $ - $ - Revenue Shares Post-Recoup
Revenue Share (CITY OF SM) $ 365,625.0 $ 504,562.5 $ 522,222.2 $ 540,500.0 $ 559,417.5 $ 578,997.1 $ 599,262.0 $ 620,236.1 $ 641,944.4 $ 664,412.5 Post-Recoup Minimum Annual Guarantee (MAG) $ 150,000.0 $ 153,000.0 $ 156,060.0 $ 159,181.2 $ 162,364.8 $ 165,612.1 $ 168,924.4 $ 172,302.9 $ 175,748.9 $ 179,263.9 $ 1,642,458.1 MAG Escalation % 2% 2% 2% 2% 2% 2% 2% 2% 2%
Total Annual Revenue Shares
CITY OF SANTA MONICA $ 403,125.0 $ 504,562.5 $ 522,222.2 $ 540,500.0 $ 559,417.5 $ 578,997.1 $ 599,262.0 $ 620,236.1 $ 641,944.4 $ 664,412.5 $ 5,634,679.2 Economic Assumptions Pre-Recoup Share Post-Recoup Share Big Outdoor's Projected Capital Expenditures PRO FORMA / INCLUDING P7 & P8
6 COST PROPOSAL
21 P&L and DCF
Santa Monica Parking Garages - Static Displays (EXCLUDING P7 & P8) Revenue Growth Rate: 3.5% BIG 80% BIG 35%
Marginal Expense Growth Rate: 3.0% OWNER 20% OWNER 65% Estimated Development Costs 90,000.0 Promotional LED Signage Platform 450,000.0
Minimum Annual Guarantee Rent: 90,000.0 Total Development Cost 90,000.0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 TOTALS SM Parking Garages - Static Displays
Growth % 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
Media Revenue 450,000.0 465,750.0 482,051.3 498,923.0 516,385.4 534,458.8 553,164.9 572,525.7 592,564.1 613,303.8 Total Gross Revenue $ 450,000.0 $ 465,750.0 $ 482,051.3 $ 498,923.0 $ 516,385.4 $ 534,458.8 $ 553,164.9 $ 572,525.7 $ 592,564.1 $ 613,303.8 $ 5,279,126.9 Net Media Revenue $ 450,000.0 $ 465,750.0 $ 482,051.3 $ 498,923.0 $ 516,385.4 $ 534,458.8 $ 553,164.9 $ 572,525.7 $ 592,564.1 $ 613,303.8 $ 5,279,126.9 Revenue Shares Pre-Recoup
Revenue Share (CITY OF SM) $ 22,500.0 $ - $ - $ - $ - $ - $ - $ - $ - $ - Revenue Shares Post-Recoup
Revenue Share (CITY OF SM) $ 219,375.0 $ 302,737.5 $ 313,333.3 $ 324,300.0 $ 335,650.5 $ 347,398.2 $ 359,557.2 $ 372,141.7 $ 385,166.6 $ 398,647.5 Post-Recoup Minimum Annual Guarantee (MAG) $ 90,000.0 $ 91,800.0 $ 93,636.0 $ 95,508.7 $ 97,418.9 $ 99,367.3 $ 101,354.6 $ 103,381.7 $ 105,449.3 $ 107,558.3 $ 985,474.9 MAG Escalation % 2% 2% 2% 2% 2% 2% 2% 2% 2%
Total Annual Revenue Shares
CITY OF SANTA MONICA $ 241,875.0 $ 302,737.5 $ 313,333.3 $ 324,300.0 $ 335,650.5 $ 347,398.2 $ 359,557.2 $ 372,141.7 $ 385,166.6 $ 398,647.5 $ 3,380,807.5 Economic Assumptions Pre-Recoup Share Post-Recoup Share Big Outdoor's Projected Capital Expenditures PRO FORMA / EXCLUDING P7 & P8