Evgeny “Gene” Freidman, once known as New York’s “Taxi King”—now better known as a potential witness against President Donald Trump’s embattled lawyer, Michael Cohen—will get a farewell from the yellow-cab industry June 14. That’s when 139 taxi medallions he once owned will go on the block at the Sheraton LaGuardia East in Flushing, Queens.
The auction of the foreclosed assets comes at a time of growing stress and uncertainty for the industry as medallion values have fallen and some owners cannot meet payments on their loans. Five drivers—including two medallion owners—have taken their own life in recent months under the pressure of declining income and relentless competition between cabbies and e-hail drivers.
Investors will be watching the auction closely to see whether prices continue to fall.
One potential buyer told Crain’s he is planning to bid $140,000 apiece for all 139, which would mark a steep drop from recent prices. Forty-six onetime Freidman medallions went for $186,000 each at an auction in September.
The metal placards, which bestow the right to pick up passengers on the street across the five boroughs, fetched $1.3 million as recently as four years ago. They were routinely selling in the million-dollar range in the years before Uber gained traction in New York in late 2014 and riders started to hail cars by app.
“I know how to make money on a $140,000 [investment],” said Boaz Bagbag, owner of Luxury One Corp., a leasing company for black-car drivers, and the point man for a group of eight investors assembled to buy these medallions. “How many other people will show up with $140,000? I don’t know.”
In the past year, the declining price of medallions has increasingly drawn the attention of financial players, including Greenwich, Conn.–based hedge fund MGPE, which bought the group of 46 medallions in the fall. Its idea, insiders say, is to have lease managers rent them to drivers, a practice that can bring in around $1,200 a month.
Bagbag, who is working with financial investors from outside the taxi industry, has a different plan for what to do if his group wins the auction: sell the medallions, with financing, to owner-drivers.
“The only hope for this business is to bring in the owners,” he said. “They’re building equity for themselves. They’re their own bosses.”
Bagbag believes the tide could be turning against the e-hail industry as elected officials consider new regulations that could restrict its growth and make it easier for yellow cabs to compete.
He foresees offering the medallions to drivers at a price of $250,000, with a 20% down payment, and financing at 9% a year over a 20-year amortization period. That’s considerably higher than the 4% that credit unions have traditionally offered, but he believes it’s reasonable, given the risk: As bullish as he is on the future of yellow cabs, he thinks they need upgrades—such as removing the glass partition between driver and passenger and using nicer cars—if they’re going to compete with the likes of Uber.
He would also offer other enticements to owner-drivers, such as low-cost insurance and car maintenance through Luxury One Corp., which operates a garage as part of its 40,000-square-foot facility on Jerome Avenue in the Bronx.
Bay Ridge Federal Credit Union has taken a similar approach. In March the lender took possession of 15 medallions following an auction with a $200,000 minimum bid that drew no takers. It is now offering them to owner-drivers for about $275,000, with 4% financing.
Monthly payments on the loan would come to around $1,500, which Bay Ridge Chief Executive Anthony Grigos said he considers a manageable number, given the average gross revenue of $85,000 a year for the owner-drivers in the lender’s portfolio.
So far, Grigos said, the credit union has received eight offers it considered serious, of which four were deemed acceptable risks. One candidate is moving forward on the purchase.
He was surprised that investors were planning to make a bid of $140,000 apiece. “I would have thought $150,000 would be the lowest, but $140,000?” he said. “Ouch.”
Andrew Murstein, president of taxi lender Medallion Financial Corp., said he has been meeting with private-equity investors kicking the tires on the taxi industry. “They are looking to buy for prices at around $190,000,” he said.
- Going, going…. gone… 139 New York medallions going on the block tomorrow.