Can a Sign’ Location Make it Worth $1.8 Million?

In Cincinnati, OH, a building was ideally situated on Pete Rose Way, proximate to the confluence of I-71 and I-75. In 1997, the building housed Caddy’s, a 50s style entertainment complex. The Cincinnati Bengals NFL football team was about to build its $400 million Paul Brown Stadium, and the land and building were being taken by Hamilton County under eminent domain. The county offered $1.3 million in just compensation for the taking.

However, the five-story standalone building, which had three sides readily visible from the interstate, included five exterior signs. Three of the signs were murals that spanned approximately 2,500 sq. ft. each.

Outdoor advertising is different than on-premise signs in that it is sold as advertising; rates are based on “reach” — the traffic count for the nearby road. Traffic counts are well established for thoroughfares, and this particular stretch of road was traveled daily by an average of 170,000 to 190,000 vehicles. The standard multiplier is 1.6 people per car, so the signage received approximately six million “exposures” monthly.

Given these statistics, the standard rate for the signs would have been $3,000 each ($180,000 annually) if they were sold as outdoor advertising. Total advertising value was subsequently based on a multiplier of 10. (Because the signs branded the building on which they were located, they were not considered outdoor advertising. However, the value of the space was calculated based on the fact that it could be sold as outdoor advertising.)

For the prior decade, Caddy’s had averaged $2.5 million in annual sales, with a net annual income of $840,000. Caddy’s owners originally asked for $5.5 million in compensation. The jury awarded Caddy’s owners $3.1 million. So the $1.8 million the owners received exactly matched the $1.8 million that was deemed to be the value of the advertising space.

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