Steel in the Air, INC.

When People with Good Intentions Make Poor Decisions Out of Ignorance

A gentleman contacted me this past week, a bit upset in that his church board had decided to sell a cell site lease to Wireless Capital Partners.   The Board had heard the pitch from the lease buyout company and was persuaded by Wireless Capital’s pitch that they would market the site to other carriers and get additional tenants to use the property.   The gentleman had pleaded with his church board to use our services or at least consider the alternatives, but they directed him to “let it rest”.   In this case, this was a bad decision by the church board on many fronts, and they will end up paying for their ignorance many times over.  

So why was this decision so bad?

The main reason the church believed this deal was a good one was because Wireless Capital had suggested they would market the location and get additional revenue.   In exchange, Wireless Capital Partners would receive 50% of any revenue for additional users.   The church’s rationale was that if WCP was successful at getting 2 new tenants on the site, they would be in the same position as if they got one on their own.   Suppose that each lease was paying $1000/mo.   That means that Wireless Capital would get $1000/mo for two leases and the church would get $1000/mo for two leases.   Over 20 years, the church would give up $322,444 in lease income that they would have received 100% of had they not entered the deal with WCP. 

The Church assumed incorrectly that there hadn’t been greater interest in their location from other carriers because of a lack of marketing.   In fairness, this is a common assertion that we hear from landowners who feel that they aren’t marketing their property effectively.   However, this ignores the fact that the carriers choose where they want to place their equipment, and then they send site acquisition agents to the area directly to find the most suitable property.   We know this because we provided site acquisition services to carriers like T-Mobile and Nextel for years.   Not once did we ever look at a list from Wireless Capital Partners or similar firms to see what sites they were marketing.   There was no reason to because we always approached the landowner directly first.   ALWAYS.

Even assuming that a lease buyout firm could get to the carriers directly and could convince them to look at their marketing list, the carriers don’t decide which site to use based upon price unless all other factors are equal.   Meaning that if your steeple is taller than other rooftops, site acquisition agents will approach you regardless of whether your site is on a list.  And if your rooftop is the same as other rooftops in the area, the site acquisition agents might even avoid your site so as not to have to negotiate with landowner representative.   When I did work for T-Mobile, we were advised to avoid working with one specific site management company because the process was always longer and the cost always higher than going to a competitive building without a site manager.   (See Marketing your Cell Site for more information)

To further compound matters, I question whether Wireless Capital Partners even has the resources to market the property.   In 2008, Wireless Capital Partners shut their doors to purchasing new leases.  This is the first purchase offer from Wireless Capital that we have seen in 2 years.  Many landowners who were in negotiations with Wireless Capital Partners in 2008 thought they had a deal only to have Wireless Capital Partners try to re-trade the deal and then back out altogether.   In 2008, Wireless Capital Partners went from 200 staff members to a skeleton crew.   I suggested to the gentleman who called me that the church board ask WCP how many people they have on staff whose sole job was to market sites to the carriers.  The board rebuffed this request.  

(EDITOR’S NOTE:  A week after I posted this, I received a friendly note from the President of WCP.  He forwarded a press release from Nov 10, 2010 that they have acquired $327 million in capital.  I also heard from an associate that they have been reaching out in the industry looking to hire a sales staff.  It appears that WCP may be back in business.  I can’t tell at this time whether any members of their sales staff will be focused solely on marketing acquired properties to wireless carriers.)

I understand that some landowners may still find value in marketing of their property despite our recommendations otherwise.   Even then, there are other lease buyout firms that will purchase your lease at competitive rates to Wireless Capital and market the property for 20% of the future revenue – not 50%.   We strongly suggest to any landowner considering a lease buyout to get multiple offers.  You wouldn’t consider selling your house to the first person that walks in the door, accepting their terms and conditions.  You would list the home, get multiple offers, and compare them to determine which was best for your situation.   Why did this particular church accept this offer?   I am sure they thought they were doing what they felt was best, but unfortunately, they didn’t know that there were better offers out there. 

If you are in this same situation and have been contacted by Wireless Capital Partners or another lease buyout company to purchase your lease, please see our Cell Tower Lease Buyouts page.   We can either be retained on a consulting basis to help you figure out whether it makes sense to sell your lease, and if so, to whom.   Alternatively, if you are simply interested in seeing what other lease buyout firms will offer for your property, both in terms of lump sum and marketing percentages, we are happy to solicit additional offers for you at no cost to you.

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Irresponsible School Boards and Churches

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