This month, New Yorkers witnessed the mass installation of Citi Bike stations and racks. The peculier blue monoliths seemed to pop out of nowhere and are ready to change the economic landscape of New York City. An obvious advertising bonanza for sponsors, can the program bring fortune to local businesses as well?
The extensive program is title sponsored by Citigroup (C). Citi dropped a cool $41 million to have the over 6,000 bikes in the system plastered with its logo. Mastercard (MA) footed $6.5 million to be the preferred payment provider. "Unlocking" a bike is as easy as the swipe of a credit or debit card. 24-hour access passes cost $9.95 while year long memberships are $95 a person.
Locations are everywhere between Manhattan and Brooklyn.
Citi Bike will contribute to the fitness and convenience of businesses below 60th St. Business that rely on short haul deliveries can cut down on fixed bike and maintenance costs. The proliferation of stations in Lower Manhattan also promotes tourism. Businesses located near bike stations get more visiblilty and access. The NY Department of Transportaion claims the program will stimulate $36 million in economic activity.
The grey bike racks themselves are about as nimble as a pair of children's safety scissors. Their clunky presence is pushing out familiar street vendors, forced to relocate to more remote corners. Neighborhood activists find Citi Bike invasive of parking spaces and obstructive of foot traffic. Petrosino Square (down the street from Kapitall!) has been a center of local attention as the expansive bike station there is crowding out pedestrians.
Many are in support of the program as a step towards healthier lifestyles and widespread acceptance of biking as a clean mode of transportation. Citi Bike is expected to create jobs for app developers, maintenance workers, and open up marketing possibilities. However, the impact on local business will be hard to miss. Bicycle shops around the city hope for renewed interest in their products while your favorite food truck may have to relocate. With 6,000 more bikes on the street, that Domino's (DPZ) delivery might be a bit slower.
Citi Bike's sponsors:
1. Citigroup, Inc. (C, Earnings, Analysts, Financials): Provides consumers, corporations, governments, and institutions with a range of financial products and services. Market cap at $149.98B, most recent closing price at $49.29.
2. Mastercard Incorporated (MA, Earnings, Analysts, Financials): Provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers' cheque programs. Market cap at $67.32B, most recent closing price at $553.72.
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