Point of View
Anti-Shoupistas, Central Buzz and Manatees
John Van Horn
Wow! In just a couple of days, the anti-Shoupistas have launched a counterattack. I got waylaid at the Temecula Parking Group* meeting in February, and PT’s Parking Blog has exploded with folks lining up to malign the poor innocent professor ever since.
I thought it time to get some support, so I called Don Shoup and asked for help. I didn’t get a lot. He acknowledged that he is an evangelist, and sometimes evangelists have to get people’s attention. He certainly has done that. He also said he was ready to debate anyone, anywhere.
From the comments I have gotten, I can see that there is a lot of misinformation out there about Don’s market-based parking theories. And perhaps there is some information that could be gleaned from the parking pros who make their living every day designing, selling, researching and operating parking across the fruited plain.
I’ll check with Professor Shoup and see if we can set up a time to open a dialogue. Perhaps online. It seems that give-and-take is in order.
Don told me that he is spending the first week in March in New York City meeting with business development leaders to discuss his theories of returning parking revenue to the business development districts. Naturally, they are extremely interested.
If you want to learn more about his theories, and some of the “push back,” log on to PT’s web site and click on our blog.
I have been keeping my ear to the ground on the sale of Central Parking. The buzz is all about what will happen.
Central owns a lot of real estate (much due to its acquisition of Allright), and the value of that real estate is anywhere from $250 million to as much as $600 million. Many believe that much of that will be sold in the near term. Makes sense: The buyer can get back a lot of their investment by simply selling the real assets. Of course, much of that real estate may be what is called “junk property” that is not good for much except, well, a parking lot.
Most feel that in the late 1990s, the company lost its core focus – parking cars. It reached out to international projects, set up shuttle and transportation systems, and ran on-street operations in the U.S. and abroad.
The consensus of folks with whom I have spoken is that the new owners will sell off those operations. They will also quickly look at management agreements around the country and divest themselves of those that aren’t profitable. These private equity firms love cash, and parking companies are supposed to be cash cows. Central hasn’t turned a lot of cash lately, so the new owners will be looking for that.
These private equity firms can also be ruthless. Although the word is that the current management will remain in place, the conventional wisdom is that it seldom really does. They may be given an opportunity to turn the company around, but the pressure will be on and the timing short. It is probable that the very high salaries and bonuses paid to senior members of the company will have a direct relationship to the bottom line.
After all, the new owners are dealing with OPM (other people’s money) and succeed when they make money, period. Money, that’s the only issue. And it must be. Under-performing contracts and staff will be cut. Focus will be placed on cash generators such as the myriad of leases Central has in the Northeast. It wouldn’t surprise me if the headquarters is moved to New York.
But don’t take my word for it. Here’s a comment to one of my recent blog posts on Central:
“I am a recent former employee of Central, and have nothing but good things to say about them. However, I do agree that over the last several years, they became more concerned about stock price and what ‘the street’ thought, rather than fundamental parking operations and bid acquisitions for leases and management agreements.”
“I worked for Central in the 13th-largest market in the country and witnessed a loss of a large amount of market share over that time.”
“Wouldn’t it be more likely that the new equity firms that have bought Central would take a hard look at the operations in this market (both present and historical) and likely either sell or shut down the operations in this market unless they were convinced that a turnaround was forthcoming in a very short amount of time, rather than giving them a year or two to work out of it?”
*Temecula Parking Group? Want to learn all about it? I have posted a blog entry in the print edition of PT’s Parking Blog in this month’s Parking Today.
All the secrets of the group are laid bare, including my swimming with manatees. I will tell you that being in the water with a critter the size of a hippo and having it come over and “ask” to be petted is a trip. They will hang around for a while, and when they tire of your scratching their tummies, they just swim away. You are forbidden to follow them.
If you haven’t done it, I strongly recommend the trip.
For those of you in New York, Chicago, San Francisco and Seattle, we’ll see you later this month at Park Across America (see info in this issue of Parking Today).
Article Abstract from April, 2007