The bankrupt monorail isn’t doing much to help itself these days
Until now, most of us assumed that the struggling and bankrupt Las Vegas monorail operators were doing their best despite so many challenges. Its lousy location, lack of connection to the airport and lackluster support from resorts along the way seemed pretty abysmal.
What I never seriously considered was that the people running the thing had actually given up on saving the mess. Until now.
Earlier this month, the system said it lost $23.1 million in 2010, down from $2 million in 2009, and carried 5.2 million passengers along its tracks last year. In 2005, it had 10.3 million runners. In January 2010, Monorail filed for Chapter 11 bankruptcy and is now in the process of reorganizing its deluge of debt.
None of this is surprising, but one stat provided a shock: The monorail raked in $190,000 in ad revenue in 2010, down from about $2.3 million in 2007. That’s a drop of nearly 92 %.
To whom I had one thing to say: “Huh?”
You see, the monorail may be a failure as the for-profit mass transit system it claimed to be when it was built, but even with 5.2 million riders – a captive audience of conventioneers and of high-value tourists – it should organize a huge potential marketing. Beyond the opportunities inside its cars, the trains also meander along crowded Paradise Road and through some of Nevada’s busiest intersections. As of this week, most, if not all, of the monorail cars were unboxed nonetheless, meaning the exteriors weren’t sports ads either.
What could explain this pathetic result? Monorail officials simply blame the economy, an easy scapegoat.
“As you probably know, the current recession has affected many industries, and the advertising industry has been particularly hard hit,” spokeswoman Ingrid Reisman wrote to me in an email. “Our business was not immune to this and also experienced a decline in ad revenue. We are seeing an increase in valid ad requests, and we have heard similar reports from other advertising venues, although the ‘the industry is expected to slowly rebuild.
Makes sense, except advertising experts say even the worst of this recession shouldn’t have lowered ad revenue in this a lot. I spoke to several about it, but the only one willing to record was Tom Letizia, whose company owns most of the mobile billboards circulating on the Strip. These vehicles aim for the same eyeballs as a monorail and, ironically, sometimes the monorail itself plays advertisements on Letizia’s traveling billboards.
“Even though ad revenue fell from 2007 to 2010, most of us didn’t drop by that percentage,” he said. “Yes, we are down, but some are down 30% or 50%. No one is 90%. Not only are we dealing with a shrinking economy, but they may be putting less effort into it. Otherwise, I don’t know how they earn so little.
In other words, Monorail officials may have simply stopped caring or trying. They are stuck in a financial slide that can never lead to solvency and they know it no matter what they say in bankruptcy court. Why bother working hard for another million dollars of income that would end up in the pockets of creditors anyway?
Reisman won’t say what Monorail charges for the ads, who is responsible for trying to sell them, or how they compensate their ad sellers. It’s a private company, so they don’t have to, she notes, unaware as usual that this private company wouldn’t exist without donations from the public sway and the ability to get low-interest loans using the state’s then-sterling credit rating.
Creditors involved in chasing their money are already worried, that’s for sure. But the public should be too. I was a supporter of the monorail even though taxpayers have to subsidize it because it eases traffic and car pollution, but I also wanted to believe that the people who ran it were doing their best.
Now, that assumption has also gone off the rails.