Expert: Peter Gabany - 9/10/2010

Question
"The present billboard company wants to renew their lease for three years at an
annual rent of $4000.00.They claim that this is a fair rental based on their
gross revenue of $9000.00 per year.I feel that they are not being honest about
that figure, as the rental rate for 0ne side is $1155.00 per month. Their
billboard has two sides. I have been told that I should be receiving between 30
to 55% of their gross revenue. How can I find out the exact gross revenue they
are generating?"  

Answer
I haven't been doing that side of the business for a long time but I have some perspective on it. I know of a company that would pay their land owners $1,200/annum for what they billed out at $120,000/annum. In that case the building owners were pleased to have the additional revenue while the renter took on all of the responsibility, including upkeep and insurance.

I would take what you can get in this economy as they are taking both the risk and the chance that they cannot sell through. If you want to negotiate then go ahead, ask another media company if they were interested and see what they would offer, but I believe that the way people are abandoning traditional media, you should be pleased with what you can get and if I had my way I would get them to sign a 3 year lease.

I hope that this gives you some perspective.

Pete