Information about distribution of ad revenues was incorrect in the original version of this story and has been corrected.
CINCINNATI -- The first passengers boarded Cincinnati's new streetcars Friday, and a $3.4 million sponsorship deal has rebranded the streetcars as the Cincinnati Bell Connector for the next decade.
The deal provides a long-term revenue stream for the streetcar that helps pay for operations. But the city won't see all of the $3.4 million.
The contract shows Cincinnati Bell doesn't directly pay the city. Instead, they pay another company, Advertising Vehicles, which also handles ads on Metro buses. That company keeps $400,000 off the top, Metro spokeswoman Sallie Hilvers said.
Click here to read the contract
"There are expenses that need to come out of that, for example the wraps that need to come out of the vehicles, and the branding that goes on the shelters," Hilvers said.
Advertising Vehicles also keeps 38 percent of the remaining $3 million. It will pay the Southwest Ohio Regional Transit Authority the remaining 62 percent -- about $1.8 million.
Between the $400,000 off the top and the 38 percent, that means Advertising Vehicles gets a significant portion of the naming rights money.
"They are not only doing the sales," Hilvers said. "They're doing the design in some cases. They're doing the production of the vinyl and the ads."
The deal provides SORTA with close to $200,000 per year for a decade. It's expected to cost $4 million per year to operate the streetcar.
"You have a guaranteed stream of revenue for the streetcar for those 10 years," Hilvers said. "You know how much revenue you'll be bringing in."
By comparison, Kansas City's streetcar made the same amount -- $200,000 -- in its first four months from a sponsorship deal with Sprint. Kansas City isn't using a third party to find sponsorships, but its deals are short-term.
Working with Advertising Vehicles gives the city the sales staff they lack to find advertisers, Hilvers said.
Hamilton County Auditor Dusty Rhodes said he thinks the city got a bum deal on selling the streetcar naming rights.
"I've worked in sales," he said. "I never got a 38 percent commission on anything."
Rhodes believes someone else should get credit.
"Actually, the sponsor is the taxpayer who coughed up just shy of $150 million to put it there," he said. "So they don't get credit, but Cincinnati Bell will get the credit."
Metro has also sold naming rights to all of the streetcar stops. Advertising and fare revenue will also help offset costs. SORTA receives 57 percent of ad sales revenue from the shelter advertising and naming rights.
Click here to read the contract
The city uses revenue from a variety of sources to keep the cars rolling along, including parking meters.
Hilvers said every deal helps:
"Would you rather get 62 percent of whatever the revenue is, or 100 percent of nothing?"
Read the sponsorship deal with Cincinnati Bell below:
Final Executed CB Sponsorship by James on Scribd
