One year ago today, City Council’s Executive Committee approved [PDF] the awarding of the street furniture contract—for the purposes of designing, building, owning, and maintaining bus shelters, garbage bins, ad pillars, and more for a period of twenty years in exchange for advertising rights—to Astral Media Outdoor, despite the fact that the company had absolutely no experience with “street furniture” and maintains dozens of illegal billboards in defiance of City Council.
Here’s what the public portion of the staff report [PDF] said: “It is noted that [Astral’s] proposal scored highest in all four evaluation categories. For the information of Committee and Council, the scores ranged from 47.75 to 85.54. In accordance with Council approved policy, proponents’ scores, financial comparison and staff analysis of the evaluation results can be provided to Councillors in an in-camera presentation if requested by Committee members.”
The Toronto Public Space Committee filed an Access to Information request for the scoring and, after an appeal to the Information and Privacy Commissioner of Ontario, just this week obtained the above document, being published in its full version for the first time. (The heavily-redacted, pre-appeal version previously appeared in mid-January on IllegalSigns.ca [PDF].)
Most interesting is the evaluation of the Financial Element, based entirely on the “Net Present Value of the Financial Proposal to the City.” Astral offered an NPV of $252.2 million (meaning that’s how much the money is worth in terms of 2007 dollars), earning itself a perfect 30 out of 30. CBS Outdoor, the incumbent for the bus shelters (which provide the bulk of the ad revenue) scored a paltry 3.50 out of 30.
This confirms what had been whispered around the outdoor advertising industry and what had been implied by Clear Channel Outdoor’s deputation to the Executive: Astral won the contract, in large part, by wildly outbidding its competitors. Perhaps because they’d never done this before and overestimated how much the contract would be worth, they seem to have outbid CBS (experienced in the Toronto shelter market) by a factor of almost ten.
Some will certainly argue that this means the City got a great deal, and that may be true to a point: that point being the assumption that Astral will actually be able to pay what it’s promised. There is a good chance that sometime within the first ten years of the contract, Astral will attempt to renegotiate for more advertising or less money; it’s unlikely that the financial model with which they obtained the contract is a sustainable one.
That’s exactly what happened with the OMG/Eucan/EcoMedia garbage bin contract. When Eucan found they couldn’t pay the City what they owed, they tried to foist on us the MegaBins—seven-and-a-half-foot tall illuminated street-level billboards with trash receptacles on the sides. When Council eventually rejected those, the company was forced to admit that they couldn’t pay the $2 million they were supposed to have given the City each year from 1999–2009. According to John Spears in the Star, the total amount paid to the City from 1999–2006 was $3.218 million, or about a half a million a year.
The City had no choice but to agree to the renegotiated amount; it had absolutely no leverage in the deal. From that same Star article:
“We’re being held over a garbage bin,” [Councillor Minnan-Wong] said. Because the city no longer owns its street bins, it couldn’t afford to have EcoMedia walk away with them.
The street furniture deal’s winning bidder will have to provide more than $100 million worth of items, but that means financial risk to the city, he said.
“Companies can make all sorts of promises, and if they fall short of those promises the city can lose millions of dollars.”
Jonathan Goldsbie is a campaigner with the Toronto Public Space Committee. Photo courtesy of Astral Media Outdoor.