For Sale: City Sidewalks
Most people look at Mike Patel's newsstand on the corner of Broadway and Chambers Street and see just that: a little four-by-eight green metal box, a place to buy newspapers, gum, candy, cigarettes, soda, and lottery tickets, all the small, sundry items that ease our way through the workaday world.
From where Patel sits, in the 18-inch-wide space, peeping out at the passing public, it is something else as well: a living. He has worked on the corner for 26 years, his earnings sending two children through medical school. Both are now doctors. "This is how I made my life," he said last week between sales.
But Patel and the rest are people who literally can't think outside the box. They also think a bus shelter is just a place to keep you dry while you wait. Listen up: First and foremost, newsstands and bus shelters are places to hang adshighly visible, heavily trafficked spots where advertising would otherwise not be allowed. Lucrative ads at that. Call them stationary urban marketing vehicles. On second thought, that's too long a handle and probably too clearly descriptive. Given the money at stake here, a little obfuscation is called for. How about "street furniture"? Yes, that'll do nicely.
And so we report, to surprisingly little interest, that the City of New York, after more than a decade of futzing around, is preparing in a few weeks to award a 20-year contract for its street furniture. The award will go to a single firm that will have citywide custodial care over 3,300 bus shelters, some 330 newsstands, and 20 public toilets. The winner will define the look of the city's streetscape for a generation and is also likely to wipe out Mike Patel's newsstand and as many as 60 others that don't fit the new guidelines.
"They don't think of us, only the big companies," Patel said as he made change for a Lotto purchaser.
There's nothing small change about this contract. With the right to sell advertising on all of the fixtures, revenues are expected to exceed $1 billion, with the city receiving $100 million of that. It is potentially the most profitable contract the city has ever awarded. It is also the biggest single such deal in the world, where outdoor advertising is now an $18 billion-a-year industry dominated by several large firms, all of whom have been scratching and clawing at one another for years in an effort to capture markets in U.S. cities, with New York's the biggest prize of all.
Last month, the Voice has learned, the city sent letters to the five entities that responded to the city's September 2004 Request for Proposals. Knocked out of the running for reasons unspecified, at least for now, were two domestic giants: Viacom and Clear Channel.
Viacom, of course, is the Engulf and Devour of American media, with holdings that include CBS, Infinity Broadcasting, and Outdoor Systems, the firm that has held an interim contract over the city's bus shelters for the past decade. Clear Channel, the San Antonio-based, Bush-friendly radio-and-entertainment behemoth, is the world's largest outdoor advertising firm, with $2 billion in such sales in 2003.
Invitations to submit their last and best offers went to JC Decaux, the French firm that ranks just under Clear Channel in revenues, and which has landed contracts in San Francisco, Los Angeles, and Chicago in recent years; Van Wagner Outdoor, a major local billboard and telephone kiosk advertising firm (and a bus shelter novice); and Cemusa, a Spanish company that holds street furniture contracts in Miami.
Representatives of Viacom and Clear Channel declined comment, citing an official gag order imposed on bidders. But one well-placed source described the firms as stunned by the rejections. "They were crushed beyond words," he said.
The narrowed field has made Decaux, which teamed up with NBC Universal for the bid and which has been trying since 1990 to secure the city's franchise, the odds-on favorite. Company founder Jean-Claude Decaux was the first to provide bus shelters for free, in exchange for cutting municipalities in on the ad revenues. His products are now in 1,500 cities in 36 countries.
The Giuliani administration sought proposals for a street furniture franchise back in 1997, but politics quickly interceded. A British firm, Adshel (later acquired by Clear Channel), hired the law firm of Giuliani's political mentor, former Liberal Party boss Ray Harding, who had an inside track: Overseeing the franchise review was Harding protégé and Giuliani deputy mayor Fran Reiter.
Several observers said that they believe the city panel charged with evaluating the proposals rated Decaux the highest. But the results were never disclosed as Giuliani, faced with election-year criticism that his pal Harding was getting rich lobbying his administration, put the entire project on hold and, in 1998, quietly pulled the plug altogether with no explanation.
"I chalked it up to politics," said former councilman Walter McCaffrey, who scrutinized the 1997 proposals. In the end, he said, the street furniture project came to have "less and less to do with public service, and more and more to do with advertising."
The plan was dead until Bloomberg deputy mayor Dan Doctoroff revived it in 2002. Part of the attraction for Doctoroff was the city's 2012 Olympics bid. When the city released its new RFP last year, the most significant changes were requirements that a portion of the signage be held for Olympic ads, as well as for other city marketing franchisees, such as Snapple.
Doctoroff's schedules show that in June 2002, he sat down at City Hall with Jean-François Decaux, one of Jean-Claude's two sons and the firm's co-chief executive officer. A week later, Doctoroff attended a meeting of the street furniture franchise committee. A City Hall spokeswoman said at the time that the Decaux meeting was just a get-to-know-you effort on Doctoroff's part and that he met with officials of other interested firms as well. Sometime afterward, however, JC Decauxbased just outside of Paris (which is making its own Olympics bid)made a $50,000 contribution to Doctoroff's favorite charity: NYC 2012.
Decaux's lobbyists include former city councilman Ed Wallace of the law firm Greenberg, Traurig, whose name is listed as a frequent Doctoroff contact in the deputy mayor's phone logs and schedules (his firm also represented the Jets in the West Side stadium effort). Since 2002, when Bloomberg took office, Decaux has made $665,000 in lobbying payments to Greenberg, Traurig, records show. (To its credit, the law firm has disclosed all associated legal fees as well.)
Decaux needs high-quality representation. The company has been investigated several times for allegedly pushing the envelope in their efforts to win contracts. Founder Jean-Claude was convicted and given a one-year suspended sentence in 1992 in Belgium for unlawfully funneling funds and trips to officials in a city where it held the street furniture contract. That conviction was later expunged, but in 2001 Decaux received another suspended sentence, this time for six months, in Bordeaux, France. Wallace said that matterinvolving a sole-source dealinvolved conduct that would not be illegal under New York law, as would be a similar incident in which JC Decaux was recently fined $850,000 by the French Competition Council.
Those incidents were highlighted by a competitor when Decaux sought street furniture contracts with Los Angeles in 2001. The city hired an outside counsel to look into charges that Decaux had failed to disclose the violations, but later found no wrongdoing and awarded the contract anyway. "Everything required has been disclosed here," said Wallace. "There is no conduct by this company which is criminal under U.S. law."
City officials say a decision on the contract will be made "sometime this summer." As for Mike Patel and his fellow newsstand owners who face potential eviction, they've gotten no answers. Although Doctoroff has flown around the world several times in pursuit of the Olympics bid, he's never walked the two blocks from City Hall to talk to the dealer, or for that matter, even discussed the issue with Robert Bookman, the newsstand owners' lawyer. "We asked [Doctoroff] numerous times to meet," said Bookman. "There's just been an out-and-out refusal."
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