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Monetizing Rail Assets for Naming Rights BY PAUL JABLONSKI, Chief Executive Officer, San Diego Metropolitan Transit System

When it comes to revenues, the good times never last long in the public transit industry. Less than a decade ago, we all struggled through the great recession. Now, following several years of revenue increases, we’re battling one of the most dramatic declines in ridership we’ve ever experienced. Filling budget holes, for most of us, is a never-ending challenge.

Naming rights has proven to be a great new source of non-fare revenue for the San Diego Metropolitan Transit System (MTS). We initiated an aggressive naming rights marketing effort beginning in 2010 and are now realizing the benefits.

Largely relying on our light rail assets, MTS recently inked two major naming rights partnerships that will bring us more than $60 million over the next 30 years—we now have partners for the 16-mile UC San Diego Blue Line and the 25-mile Sycuan Green Line.

Every public transit agency in the country has valuable assets for which they are not realizing any additional benefit. We all have fleets of vehicles. Many of us have dedicated fleets serving single lines. We print thousands of brochures and timetables. We have signage at all our stations. We have websites and active social media channels. All these can be monetized; all these assets can be used to advance the brand of a potential partner.

Impressions are the name of the game. And impressions open the eyes of potential partners.

At MTS, we hired the Superlative Group based in Cleveland to handle our naming rights program. Its first task was to conduct an asset valuation of our rail lines. They looked at how many impressions our railcars would create on motorists on nearby freeways and major thoroughfares. Everything from uniforms to printed schedules to tweets earned a value.

That was the easy part. Much harder is bringing a potential partner to the negotiating table. It was strongly recommended to MTS that we should not issue an RFP to solicit naming rights partners. Public transit assets are unique. The potential impressions they can create and their relative value compared to more traditional advertising media are not so easy to explain in a written document.

MTS was convinced that a more personal approach with introductory letters, follow-up calls and one-on-one meetings would provide better results. In the end, that approach may have taken longer, but I believe the end result was worth the wait.

Working in our favor is the constrained out-of-home advertising market in San Diego. The inventory of billboards and bulletins is very small here and there is a moratorium on adding any new boards. Also, the city of San Diego’s very strict sign ordinances do not apply to MTS, making our assets fairly unique.

When potential partners are shown the cost per thousand impressions for MTS assets compared to billboards, TV, radio and print advertising, their eyes light up.

Also working in our favor was the presence of a couple of highly competitive industries in our market: healthcare and Indian gaming. Meetings with a number of competitors in the same arena helped maximize the value of our assets.

We are now turning our attention to the bus side of operations. We have several BRT lines that can also provide a naming rights partner with considerable benefits.

BRT services generally travel along major corridors. These high-profile services usually include enhanced customer amenities such as dedicated fleets, unique and upgraded stations, real-time information and more.

These are the type of amenities that are really attractive to potential partners. They gain not only by reaching their target audience along the corridor, but also by association with a project that is providing a city and its citizens with a positive and new transit option.

Superlative has just completed its asset valuations for our BRT projects, which range from $350,000 to $500,000 per year. It will use the same model to engage potential partners and negotiate a long-term contract.

I believe this approach is repeatable in almost every market. Look at your assets as would an advertising buyer. Determine how many eyeballs will see your assets every day. Evaluate what it would take to purchase those impressions via other advertising media. Then take a look at who is making big ad buys in your market. Hire a firm that will be persistent.

Before proceeding, I highly recommend that you revisit your advertising policy. At MTS, our policy was drafted to ensure a non-public-forum status on our advertising spaces. It further states that the “subject matter for all advertising materials displayed on MTS property shall be limited to commercial speech… [which] does no more than propose a commercial transaction or is an expression related solely to the economic interests of the speaker and its audience.”

Of course, all these decisions are directed by our respective boards of directors. MTS had a huge assist by a board member who championed the cause and assisted in negotiations.

The naming rights process is a win-win for the agency and the partner. We deliver impressions. They provide much-needed non-fare revenue to help systems keep up a high level of service.

"Commentary" features authoritative points of view from various sources on timely and pressing issues affecting public transportation. APTA would like to hear from you. If you are interested in submitting a original, thought-leader Commentary for consideration, please contact Senior Managing Editor David A. Riddy.

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