3148453031_edcfc3c0b1.jpgTake note right now of your multicolored hologrammed FastPass. Before long, it could be festooned with corporate advertisements, placed there by a company who can’t seem to make payments to transit agencies on time.

The ads would be placed under an ad agreement the MTA has signed with ad giant Titan Outdoorwho is behind in payments under similar agreements to transit agencies in cities including Boston, New York City, and Minnesota.

Under the agreement — in which Titan Outdoor outbid one other company, CBS Outdoor, whose bid details the MTA has kept secret but assured us were lower than Titan’s — essentially everything in the MTA’s possession could in some way sport an ad, in return for at least $4 million of promised income (more on that later).

There are limitations — only 20 percent of transit vehicles can be “wrapped” in ads, historic streetcars and cable cars can not be wrapped in ads, and digital displays on the sides of vehicles can be co-opted by the MTA to display emergency messages. But aside from that, it would appear that anything goes: FastPasses, transfers, and even, in theory, naming rights — but whether the naming rights would be limited to vehicles or be extended to stations (“Pfizer Castro Station”, “Westwood One Portal Station”?) remained unclear.

Titan Outdoor is “making very good progress with the transit authorities [we owe],” but there’s just not quite enough liquid assets to pay everyone out right now.Also remaining unclear was Titan Outdoors’s payments. As previously reported in the New York Times, the ad agency fell close to $2 million behind in payments to BART, $7.5 million behind to New York City’s MTA, and a couple hundred total to Boston and Minneapolis-St. Paul.

That’s OK, Titan Outdoor executives told the Board of Supervisors this morning: we’ve signed a check to the SFMTA, and it’s in their bank account right now. All is good? Well, not exactly — what Titan Outdoor has promised the MTA is a letter of credit, which is different than a prepayment. As executives from CBS Outdoor (perhaps miffed that their bid, whatever it was, wasn’t accepted) told the Board, a letter of credit can be seized by a company’s creditors if a company falls into bankruptcy, meaning if Titan Outdoor collapses, Titan Outdoor’s creditors could take the $4 million back from the SFMTA without so much as a “eating, drinking and freeloading are prohibited on all transit vehicles.”

Titan Outdoor is good for it, executive VP Scott Goldsmith assured the Board, but there’s just not quite enough liquid assets to pay everyone out right now. If Titan did that, “we’d be in financial trouble. But we are making very good progress with the transit authorities [we owe].”

The record also shows that Titan Outdoor had first bid on the ad contract for $8.2 million annually, but withdrew that bid for the $4 million annual bid when the economy tanked.
That $4 million figure is a minimum; if ad sales go extremely well the contract could provide more cash above and beyond that figure.

The debate’s not over. Board Budget Analyst Harvey Rose wants stronger language in the agreement that would make the $4 million minimum annual payments guaranteed, and Board President David Chiu wants Board oversight over naming rights.

The MTA could make the changes to the agreement before this item hits the full Board agenda next week.

Photo: Jameth

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  • Greg Dewar

    interesting article and again, why I like the appeal – this whole “reporting of actual news” thing is kinda nice. this is especially important because the MTA will likely get screwed by these guys and we, the public get hosed.

    may I make one very small, very tiny , in-no-way-meant-to-be-mean-or-holier-than-thou?

    you don’t need to use “more on that later” when you write a story. just let the story flow and the points that come up later will be fine. that’s usually something you might use in public speaking, but not in print.

    again, not trying to be a jerk, hell my writing has mistakes too (ask my bosses at my day job when I submit copy), but it’s something that’s really unnecessary, esp. when , as in this case, you’ve laid out the facts in such a away that the reader keeps on reading because it is that good!

  • Greg Dewar

    interesting article and again, why I like the appeal – this whole “reporting of actual news” thing is kinda nice. this is especially important because the MTA will likely get screwed by these guys and we, the public get hosed.

    may I make one very small, very tiny , in-no-way-meant-to-be-mean-or-holier-than-thou?

    you don’t need to use “more on that later” when you write a story. just let the story flow and the points that come up later will be fine. that’s usually something you might use in public speaking, but not in print.

    again, not trying to be a jerk, hell my writing has mistakes too (ask my bosses at my day job when I submit copy), but it’s something that’s really unnecessary, esp. when , as in this case, you’ve laid out the facts in such a away that the reader keeps on reading because it is that good!

  • Akit

    Ad on my fastpass? I think not! Especially when Translink Muni e-passes are ad free!

  • Akit

    Ad on my fastpass? I think not! Especially when Translink Muni e-passes are ad free!