Resolution approving Amendment No. 3 to the Airport Advertising Lease No. 12-0231 between Clear Channel Outdoor, LLC d/b/a Clear Channel Airports, as tenant, and the City and County of San Francisco, acting by and through its Airport Commission, as landlord, for the addition of premises solely for the promotion of large sporting events and establishing a new rent structure for those locations.

Summary

This resolution approves Amendment No. 3 to the Airport Advertising Lease No. 12-0231 between the City and County of San Francisco, through its Airport Commission (landlord), and Clear Channel Outdoor, LLC d/b/a Clear Channel Airports (tenant). The primary purpose of this amendment is to add new advertising locations, designated as "Sporting Event Promotional Premises," solely for the promotion of large sporting events in the San Francisco Bay Area, such as the Super Bowl 2026 and 2026 FIFA World Cup.

Clear Channel has held the SFO advertising lease since October 30, 2012, initially for an eight-year term with a flat Minimum Annual Guarantee (MAG) of $10 million, subject to annual Consumer Price Index (CPI) adjustments. The current MAG for 2025 is $14,205,786.08. Previous amendments included COVID-19 rent relief (waiving MAG for March, April, and May 2020) and a 3.5-year lease extension, setting the new expiration date to October 31, 2027.

For the newly added Sporting Event Promotional Premises, a new rent structure is established: 65% of the gross revenue generated from advertising in these specific locations, with no associated MAG. The tenant is responsible for all costs related to installing and improving advertising equipment in these new locations. Projected revenue from these new premises for 2026 is approximately $1.3 million, which is expected to contribute $195,000 to the City's General Fund (based on a 15% transfer rate of concession revenues). The total estimated rent from both existing and new premises for 2026 and 2027 is $28.5 million, with an estimated $4.3 million transferred to the General Fund.

A key policy consideration highlighted by the Budget and Legislative Analyst is that the original lease's flat MAG structure for existing premises has historically resulted in missed revenue opportunities. If a 65% percentage rent had been applied to existing premises from 2015-2024, it could have generated an additional $20.6 million for the Airport (and $3.1 million for the General Fund). The BLA recommends that the Airport incorporate both percentage rent and MAG structures in future advertising lease RFPs.

Citizen Impact

This amendment is expected to generate additional revenue for the San Francisco International Airport and the City's General Fund, potentially totaling $1.3 million from new advertising spaces for major sporting events in 2026. Residents may notice enhanced promotional displays at the airport related to events like the Super Bowl and FIFA World Cup. However, the analysis also points to missed revenue opportunities from the existing lease structure, suggesting that future contracts could be more financially beneficial for the city.

Confidence

high