A Citi Bike station in New York City on May 30, 2013.
Citi Bike, the New York bike-sharing service, has been struggling with cash flow since its inception. But it might soon be able to ride out its money troubles thanks to an investment company affiliated with the gym Equinox.
Under the proposed deal, REQX Ventures, formed by executives from Equinox and the gym's parent firm, Related Companies, would take a 51% stake in Citi Bike's parent company. This would give REQX full control of Citi Bike's future — as well as that of bike share programs owned by Alta Bicycle Share, from Chicago to Toronto and Melbourne, Australia.
Alta Bicycle Share, Citi Bike's operator, lost millions of dollars during the program's first year of existence. If the REQX deal goes through, the company would increase prices, replace Citi Bike's faulty software with its own and potentially help the program expand its reach throughout the city, according to Capital New York. It's unclear how much money the investment firm would provide.
REQX has been interested in the service for at least a few months. A deal between them, Alta and the New York City government is now reportedly within reach—though not finalized.
The investment firm declined to comment on the deal, and representatives of New York City and Citi Bike did not immediately respond to requests for comment.
Citi Bike is immensely popular, but it struggled with money even before the first customer put foot to pedal.
Hurricane Sandy plunged the program into millions of dollars in debt when it destroyed 90 stations and 1,000 bikes several months before it started, leaving the bike share with 330 stations and 6,000 bikes.
Citi Bike ran into more issues after its software-provider went bankrupt. It replaced proven software with a glitch-ridden backup that prevented some customers from paying and rendered certain stations useless for long stretches of time.
Citi Bike had intended to sell more $9.95 day passes to tourists than it has done. Unfortunately, Citi Bike isn't as well known outside the Big Apple as in it, and the company has had to rely more on residents paying $95 for a one-year pass.
Alta has suggested raising its year-long pass price to $140, but city officials have rejected that idea. Citi Bike's parent company also wants to expand its numbers to 10,000 bikes — making it more of a truly city-wide service — for an estimated cost of $14 million.
Citi Bank, the bike service's primary sponsor, agreed to provide $41 million over five years when it launched in May 2013. Goldman Sachs and MasterCard also back the program, but the city provides no funding. New York City Mayor Bill de Blasio has said he will not entertain putting public money into the bike share, contrary to the way many other cities run their bike programs.
Still, the mayor says he wants to see the program succeed. If the deal goes through, it may be the extra gear Citi Bike needs to pedal up its mountain of unforeseen money problems.
Tags: BICYCLE, CITI BIKE, EQUINOX, HEALTH & FITNESS, NEW YORK CITY, TRAVEL & LEISURE, U.S., US & World