CTA makes a deal with Groupon

Chicago’s transit agency will receive nearly $2 million in upfront cash from Groupon in a deal announced Wednesday to offer three-day passes on the daily bargain website.

Searching for new ways of raising revenue without hiking fares, the Chicago Transit Authority said it hoped the deal would encourage new ridership, especially among tourists and out-of-town visitors. Using Groupon’s national platform is also a chance to extend the agency’s visibility, it said.

“This is a great way to unite two highly visible and respected brands,” said CTA President Forrest Claypool.

Chicago-based Groupon will pay the agency $1.8 million up front for 250,000 of the passes — just over $7.50 apiece. Groupon will sell the passes for $9, a discount from the CTA’s $14 price.

It’s the first time Groupon has teamed up with a city transit authority.

Mayor Rahm Emanuel praised what he called an “innovative deal” to draw new customers to the city’s bus and train network, which is the second largest in the nation.

The transit agency went into this year with a forecast deficit of more than $277 million. It has been trying to come up with ways to decrease costs and generate revenue beyond the fare box, helping it to close the budget gap and abandon threats of a fare hike.

Besides the Groupon deal, the agency this year awarded its first concession for a Starbucks at an el stop and also for a gourmet doughnut shop. It has offered naming rights to 11 rail stations and allowed more advertising on the train cars, buses and stations that 1.7 million daily riders pass through.

One ad campaign, dubbed “Station Domination,” allows a single company to plaster a station in ads. Tropicana also has rights to wrap entire train cars — inside and out — in colorful ads.

“The CTA is looking at ways to maximize the assets it has because these are non-fare box revenues that go directly toward supporting and maintaining our existing service,” spokesman Brian Steele said.

The agency has also been negotiating with organized labor to try to reduce costs through changes in work rules.