Lamar Advertising is suing Detroit over the city's "sign license fee" that it charges to put up a billboard. Lamar claims the fees are "an unconstitutional tax designed to limit free speech."
What's at stake in the suit is so de minimus -- about $40,000 a year -- that it draws attention to how much financial trouble Lamar is in. Its revenues sunk by 13 percent in Q1.
But those revenues are still $247 million per quarter. Lamar alleges Detroit has sought $198,000 in fees since 2004. Here's the math: Detroit seeks about $40,000 a year in exchange for giving Lamar the right to put up its signs. In other words, Lamar is litigating over what amounts to a rounding error on its income statement.
The "sign license fees" charged by the City of Detroit far exceed any expense that the City reasonably incurs in rendering the services and regulation attendant to the license.Conversely, if Lamar wins a significant federal ruling that sign fees are against free speech rights, then cities will lose the power to control billboards. Every building owner will rent out their space and turn the entire country into Times Square -- which Lamar would love.
It is questionable whether the City of Detroit incurs any costs in regulating Lamar's billboards.
Processing applications for billboards and discipling billboard offenders (some cities, such as Los Angeles and New York, are plagued by illegal billboards) does generate some costs for a municipality. So $40,000 a year doesn't seem unreasonable considering that a single billboard can generate tens of thousands of dollars in revenue a year.
Image by Flickr user grittycitygirl, CC.