Billboard Business, Billboard Investing, Digital Signs

Accounting for a 10 Year Digital Sign Life In A Land Lease.

Most billboard companies fail to account for sign replacement expenses in their projections.  This is not a big issues with static boards which last 40 years.  It matters however, with digital signs because they have a useful life of 100,000 hours or 11.5 years.  If you exclude replacement costs you will be overstate your projected cashflow.

I am beginning to see digital sign replacement costs incorporated into land leases.  If you must make a payment equal to a % of collections then deduct a monthly amount sufficient to replace your digital sign within 10 years.  For example, if you are installing a $350,000 digital sign and you must pay 20% of net revenue to the landlord then define net revenue as collected cash less $2,916/month which is an amount sufficient to create a reserve to replace your sign within 10 years.

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