Highway Beautification Act limits Cobo's advertising options
The Cobo Center has a new pair of big, electronic billboards. They’re part of Cobo’s $300 million renovation plan, and according to Daniel Howes, they’re wrapped up in an example of “stupid government writ large."
Howes tells us that a few years ago, those in charge of planning renovations for the Cobo Center were attracted to the idea of putting a large, digital billboard on the outside of the building.
They budgeted around $4 million for it, according to Howes, but after taking bids discovered that they could put up two billboards for half the cost.
“In the process, one of the things they learned was about the Highway Beautification Act of 1965,” Howes says. He explains that it was originally designed to keep big billboards off rural roads across the country.
The act was never intended to apply to urban roads, “but nevertheless, at some point in that history, Woodward Avenue – which by nobody’s definition would be, I think, considered a rural road – was designated under this act,” Howes says.
And because one of the big new billboards is visible from the southern end of Woodward Avenue, Howes tells us the Cobo Center is extremely limited in what it can advertise.
“If you can see it from Woodward, you can’t sell commercial advertising. You can promote what’s inside the show, you can say, ‘come to Cobo and drink a Coke,’ but you can’t advertise directly for Coca-Cola or run a Coca-Cola ad and collect money from Coca-Cola or from distributors or whoever for that advertising,” he says.
The second billboard on the northeast corner of Cobo isn’t visible from Woodward, so while they can sell commercial advertising on that one, Howes says, “they can only sell it 25% of the time.”
“So here you have a situation where … they’ve got to be unsubsidized and be breaking even by 2023 … and they can’t make revenue on this investment.”
If they decided to sell commercial ads on the Woodward-facing billboard, Howes tells us Michigan could lose as much as $100 million, “up to 10% of your annual allotment under the federal highway bills,” for violating the Highway Beautification Act.
According to Howes, those in charge knew about this requirement before the signs were built, and have been very up front about it.
“They did know it, and they went ahead because they believed that the revenue that they would book off of the north-end screen would help them pay for the investment and help the overall financial picture,” he says.
It’s a problem the Cobo Center is certainly eager to address, but Howes doesn’t see any possible solutions coming their way in the near future.
Daniel Howes is a business columnist with the Detroit News. You can find his recent piece on Cobo and its billboards here.