NEW YORK (TheStreet) -- Since New York City taxi-meter revenue peaked in May 2013 at $599 per day per medallion, according to the New York Taxi and Limousine Commission, the average taxi-medallion owner has experienced a sharp drop in pre-tax income after debt service -- more precipitous than anyone has yet admitted.
The culprit? Primarily Uber, the hot on-demand car-service start-up that has been valued in excess of $40 billion -- a number that keeps on rising, even as valuations fall for medallions, the license needed to operate a cab in New York. Corporate medallions (those sold in pairs for use as part of a taxi fleet) were last auctioned in April 2014 and sold for $2.6 million per pair, or $1.3 million each. In March 2015, there were transfers of medallions for as little as $1.8 million for a pair, or $900,000 each.
The introduction of new, free-market-based, for-hire vehicles, for the first time in the seven-decade history of the New York City taxi medallion system, is shaking incumbent medallion owners and threatening to render the historically bullet-proof medallion a superfluous piece of tin.
The stress on taxi medallion cash flows, in turn, is affecting lenders like Medallion Financial (TAXI), Signature Bank (SBNY) and credit unions Montauk, Progressive, Melrose and Lomto Federal, according to conference call transcripts as well as filings over the last two quarters with the Securities and Exchange Commission and National Credit Union Administration, the body that regulates credit unions.