Howes: Feds take bite out of new Cobo marketing pitches

The massive marquee looming over Jefferson Avenue is part of the $300 million overhaul of Cobo Center, but companies and the center’s management can’t use it for commercial advertising.

Credit the Highway Beautification Act of 1965, a provision of which designates Woodward Avenue a “national scenic byway” that cannot be despoiled by large crass advertising — and if it is, the state of Michigan risks losing as much as $100 million of its $1 billion in annual federal highway funds.

Doesn’t matter that in the real world Woodward ends at the north edge of Jefferson. In the bureaucratic world of 50-year-old legislation, complicated by state law and the ability to spy the digital marquee from the corner of Woodward and Jefferson, the venerable spine of Detroit apparently runs all the way to the river.

“The whole thing is ridiculous,” says Patrick Bero, CEO of the Detroit Regional Convention Facility Authority that manages Cobo. “If I accept any money for off-site advertising, I lose the right to use that board.”

Not even during next month’s North American International Auto Show, the annual global automotive extravaganza that next month is expected to pump some $420 million into the local economy. The net effect is less ad revenue for the coffers of an authority charged with breaking even, without public subsidies, by 2023.

Put simply: Anti-business legislation originally aimed at shielding rural vistas from gaudy billboards threatens to weaken the business case of a renovated, urban convention center devoted to showcasing commerce in all its forms. This in a town built on business and in the process of rebuilding itself.

The catch, as Bero and his team learned, is the Johnson-era Highway Beautification Act. Backed at the time by Lady Bird Johnson, the first lady, the law was primarily aimed at protecting rural routes from creeping commercialism in general and paid advertising in particular.

The federal act says billboards of more than 1,200 square feet may not be within 660 feet of a designated scenic byway. Michigan law extends the setback, complicating Cobo’s predicament with its 4,800 square-foot digital sign visible from Woodward.

“Well before the sign was built, they knew the rule requirement,” says Matt DeLong, administrator of the development services division of the Michigan Department of Transportation. “That sign is visible from what’s defined as Woodward Avenue, and Woodward is designated a scenic route — an All-American Road. You can’t put a billboard there.”

Detroit is not alone. The Obama administration earlier this year tangled with New York City over its oversized billboards circling Times Square because the iconic patch in the heart of Manhattan now is considered a part of the national highway system, putting it under the Highway Beautification Act.

When the Cobo authority three years ago solicited bids for what it estimated would be a $4 million digital sign, it was surprised to learn that for $2 million, it could hire the low bidder to install two — a larger board overlooking Jefferson and smaller one at the corner of Congress and Washington.

Because the digital sign wrapping the northeast corner of Cobo cannot be seen at any point from Woodward, the convention center can sell commercial advertising. But only for 25 percent of the total time in a given month; the other 75 percent of the time, the sign can only market events inside Cobo.

“On the north board, we can generate revenue,” Bero says. “On the main board we cannot. If you receive a single penny for any advertising on that board, you’ll be in violation of the act ... and you lose that board forever.”

Cobo can run spots on the main digital sign urging folks to enjoy a Coke at Cobo Center, but it can’t run one of Coca-Cola’s popular polar bear ads. Cobo can show Fiat Chrysler Automobile NV’s revealing its next-generation minivan from the floor of the show, but it’s not allowed to show a Chrysler spot featuring Eminem.

Only now, with the renovated Cobo and its two digital boards making their official auto show debut, is the absurdity of the situation — and the limits to commerce during an event celebrating commerce and the economic lifeblood of this place — now in full view.

Bero and the authority’s five-member board knew all this three years ago, when their architect alerted officials to the issue during a protracted permitting process with the city. Officials weighed their options then, including lobbying the state Legislature to pass a Cobo carve-out or repeal the state law altogether.

But the federal act requires that states maintain their own billboard act essentially to enforce the federal law, or risk losing highway money. The authority decided to move ahead anyway, chiefly because the installation of two boards instead of one would enable them to book as much as $500,000 a year in ad revenue from the north board.

Still, the digital billboards are hot with automakers and others preparing for next month’s show. During the press days and the public days, running Jan. 10-24, all the slots are taken — either to advertise on the north board or to use either to promote events on the Cobo show floor.

“We’ve got them booked during the whole run of show,” says Max Muncey, spokesman for the Detroit Auto Dealers Association, sponsor of the Detroit auto show. “We filled all of our available slots with automakers. We haven’t had any problems with using the boards.”

Daniel.Howes@detroitnews.com

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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.