On the market for outdoor advertising in the capital there has been chaos for years. Everyone violates the regulations and hence the revenue for the municipality of an otherwise profitable business is slim. Of the thousands of billboards, posters, banners, etc. only about 2.5 million levs per year is collected, even though the amount under good management could reach 20 million levs.
In practice, after the old contracts expired in 2009, together with the annexes to extend them until October 2010, the companies now continue to pay the municipality the old rates for the right to advertise on its terrain. Amounts are symbolic and that’s why nobody wants to sign new contracts that will possible see rents swelling significantly. Of course, for this absurd situation, the one to blame is the .
municipality itself, which after the agreements expired had to remove all promotional items, but failed to do so. It is true that local officials made feeble attempts to dismantle some illegal advertising, but the effect was not noticeable.
There is something else – such actions are inherently doomed to failure because the municipality has been accpting the voluntary payments by advertising firms after the end of their contracts. And according to the Law on Obligations and Contracts, after the money had not been refused, contracts can be considered extended for an indefinite period. So any order for removal of the advertising facilities would not hold up in court.
All these details did not stop the local government to prepare for a new attempt to forcibly remove promotional items. For this purpose, a few days ago is has been announved a public procurement procedure for selection of three companies with which to conclude a three-year framework agreement for the removal of illegal sites. The City Hall has provided for 1.2 million levs in salaries, but will pay only for actual work done and it can happen that the budget may not be utilized in full.
To participate in the competition, applicants must lodge a deposit of 12 thousand levs; prove at least 200 thousand levs turnover for the last three years and have the necessary specialists and equipment described in the requirements of the municipality. Tenders will be accepted until August 5, suggesting that the winners will be announced as early as September. Noone, however, should expect that it will put everything in order in outdoor advertising in the capital city. On the contrary – the problems may become more so in the meantime, and the end of the painful saga with the redistribution of the market shares may again be postponed. Which clearly shows that billboards in Sofia are a source of higher profits than expected.
However, it came to lisitng of the candidates for large billboards (of 12 square metres) and the companies connected with the main players on the market – Krasimir Gergov and Dilyana Grozdanova, took four packages. Originally Guergov received five packages and Grozdanova – only three, but after re-listing of one of the packages associated with Krassimir Gergov’s company K out off Home was replaced by Image of Dilyana Grozdanova. In the camp of Guergov are also Prime Outdoor with two packages and Pierrot 97 endash with one. In addition to Image, which won two positions, Grozdanova took another two packages through Bulmedia. For the other two sets of billboards the first place was awarded to Austrian-Bulgarian consortium EPA Media – Idea Komm.
The auction was attended by Sofia Outdoor, Blue Star Outdoor, Radea, ABB Engineering as well as Billboard Motion Arts, Consortium Bum and Argents-Remedy but they never managed to win a piece of the pie.
There followed a number of complaints and ultimately it never came to contracts with the winners. There was much criticism that the selected winners offered the lowest bids, although it is in the interest of the municipality to collect as much money from the rental of billboards as possible. Generally speaking, in 9 out of 10 cases, the selected offers were several-fold less favourable than the other bids.
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There were cases where three of five participants were eliminated and finally won the company with the lowest bid. In a package 1 the eliminated were Consortium Bum, Radea and Argents-Remedy that offered prices of 2154 lev, 1602 and 1182 levs respectively per month and the tender was won by Prime Outdoor that offered 552 Levs. Pack 2 was dominated by Bulmedia with an offer of 553 levs, while the other candidates have offered respectively 2684 and 1698 levs. So noone should be surprised by the fact that Sofia Administrative Court overturned as unlawful the rankings for the eighth, ninth and tenth package. Along with the hot political situation in the country in recent months, however, these decisions somehow passed unnoticed, and identified serious administrative violations, attempted manipulation and breach of statutory provisions.
The last judgment (for package 9, won by K out off Home) found that there is a large discrepancy between the estimates of the candidates’ experience, suggesting the lack of objectivity of the criteria. There have been some strange circumstances in removing some of candidates. On its turn, the Sofia Municipality appealed the court’s decision. Otherwise, for the entire period of the contracts that are expected to be signed after the contest, the municipal budget should get at least 46.4 million levs, since the minimum annual fee per lot has been fixed at 4.64 million levs. In the beginning, the figure was set at over 5.4 million levs, but the decline came after violent protests by the industry and its arguments related to the severe financial crisis. For anyone, however it is no secret that the revenue from outdoor advertising could be much more significant. This is show in the bids of some of the candidates. The problem is that in recent years, businesses and local officials themselves put a lot of effort to prevent this from happening.
