The deal is on! $1.9 million to CTA from Groupon for 250K 3-day passes

Such the deal!

  • The CTA gets rid of 250,000 three-day passes in its inventory for almost $1.882 million in immediate cash from Groupon.
  • Groupon buys each pass for $7.53 apiece and sells them for $9 each.
  • Riders can buy the pass that usually costs $14 from the CTA for just $9 from Groupon.

That's what you call a win-win-win.

This deal with the CTA marks the first time Chicago-based Groupon has partnered with any transit agency to sell fare media. And of course, our mayor loves it:

"This innovative deal is exciting in many ways," said Mayor Rahm Emanuel. "It will generate nearly $2 million of immediate additional revenue for CTA, it will introduce and attract new potential customers to CTA, and is an innovative example of the government and business community working together to benefit the entire city."

Groupon customers will be able to buy up to four passes each. I'll bet the CTA is hoping visitors buy the passes, and maybe don't use them to their full potential.

But smart regular riders who don't buy monthly passes should snap up this deal. If they transfer from a train to a bus on their daily commute, they stand to save $5.25 over three days. That will buy a cup of coffee on two of those days.

So, way to go CTA, and go get those discounted passes, CTA riders.

Comments

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  • This will only be a win-win-win depending on what the city does with the $1.882 million. If it goes to the pockets of CTA hacks and city employees, this deal sucks, and we're all fools. If it goes to more security and safety on CTA lines then this deal is good.

  • In reply to gwill:

    I'd be fine if they bought a bus with it.

    Are they doing away with the 3-day pass?

  • In reply to chris:

    It'll go to operating, just like any fare revenue does.

    The enormity of the deal first escaped me, but I am somewhat shocked that CTA isn't writing this off as a $1.6 million loss on the passes (from the $14 face value to the $7.53 wholesale). At least the administration has enough sense to figure this one out.

    But, I'm sure that anyone who wants to put $14 into a vending machine can still buy a pass.

  • Why are you capitalizing the second O in Groupon? They don't, why are you?

  • In reply to whateva:

    Something for cunning linguists.

    Kevin may be capitalizing the second O, but either Groupon or CTA (or both) is capitalizing on this deal. Properly, I say. ;-)

  • In reply to jack:

    Oh, and good comeback Jack!

  • In reply to whateva:

    Why did I misspell it? Because I'm human and didn't have you editing this till now! Thanks.

  • I doubt that the CTA would care if anyone buys the passes at this point. They already have the money after all. I would guess that, if anything, they would prefer that no one buy the passes so that they wouldn't have to provide the service. I plan on buying as many as I can, though. I actually have credit on Groupon from referrals, so this might even be a freebie for me.

  • In reply to eBob:

    In fact, that was the whole purpose of the transaction. Groupon has its $1.9 million at stake, and CTA got the money. For making that investment, Groupon has the chance to make $1.47 a pass. If they sell out all 250K, Groupon makes $36,750, or 19%. If they don't, they are stuck with the leftovers That sort of sounds like capitalism, otherwise an anathema to CTA riders.

    From what I understand, this is better for the CTA than what the usual Groupon deal is to the merchant, i.e. the merchant has to decide on the discount, Groupon collects the money and pays the merchant after the vouchers are redeemed, and because it often relies mass hysteria, the merchant may be overwhelmed with those with Groupon vouchers. I might be misunderstanding that business model, but the CTA deal seems dissimilar in favor of CTA.

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