You don’t know Ron Sherman, but you’ve probably ridden in one of his yellow cabs. Chances are you’ve used his credit-card machines to pay for rides, too.
The 52-year-old owns nearly 200 taxi medallions—the piece of aluminum attached to a cab that gives its owner the exclusive right to pick up street hails. Valued at more than $1 million each, the medallions are just a portion of Mr. Sherman’s business empire and only hint at his outsize influence in the highly insular and powerful taxi industry.
As president of the Metropolitan Taxicab Board of Trade, an industry group whose 35 member companies operate about 40% of city cabs, Mr. Sherman works to keep power concentrated among a collection of corporate medallion owners that industry players routinely refer to as the “cabbie cartel.”
Mr. Sherman has fought off threats to their clout for years, but he’s in the midst of perhaps his greatest challenge. Mayor Michael Bloomberg, a free-market billionaire who has clashed with the city’s tightly regulated taxi industry, persuaded the state Legislature to pass a bill allowing livery cars in northern Manhattan and the outer boroughs to pick up street hails. An industry veteran believes the mayor’s goal in part was to break the medallion owners’ grip. “The mayor has never believed in the medallion system,” the insider said, citing past comments by the mayor.
That has put Mr. Bloomberg in frequent conflict with the city’s cab king. “Ron Sherman’s like a gnat gnawing at the mayor,” said one taxi industry source.
Bit by bit, Mr. Sherman draws blood. Last year, his lawsuit prevented the city from requiring all cabs to be hybrids. Earlier this month, a state Supreme Court judge—a former cabbie—sided with Mr. Sherman’s group, whose high-priced lawyers outclassed the city’s attorneys, and issued a temporary restraining order stopping the launch of outer-borough livery cabs. It was the latest in a string of legal victories for the industry over the city.
Now Mr. Sherman wants the Taxi and Limousine Commission to increase fares—but only if fleet operators like him can get a piece of the extra revenue by charging more for cabbies to lease their cars. The Bloomberg administration supports a 17% fare increase but only a $9 raise on leases. (A standard lease for a cabbie is capped at $129 for a weekend night shift.)
The small lease increase does not sit well with fleet owners. Sources said Mr. Sherman and his lobbyists at Connelly McLaughlin & Woloz are hoping to persuade a majority of the nine taxi commissioners to oppose any fare increase. (Mr. Sherman’s Metropolitan Taxicab Board of Trade and his company pay the lobbying firm a combined $12,000 a month.)
Even when Mr. Sherman and the mayor have stood side by side, the good will has been hard-bargained. The two were together at last year’s announcement that Nissan would produce the Taxi of Tomorrow. Not a fan of Nissan, Mr. Sherman lifted his threat to sue only when the mayor agreed to approve the Ford Transit Connect as a city taxi. He has been a bulk buyer of Ford cabs for decades.
“Ron Sherman feels he—not the regulator—should be in the driver’s seat when it comes to making certain policy decisions,” said former TLC Commissioner Matthew Daus, now a partner at law firm Windels Marx. “He’s been a persistent, respected adversary who can be very calculating. He’s at the forefront of every major issue in the taxi industry and is a very successful businessman.”
Like so many medallion millionaires, Ronald Mark Sherman got started with the help of previous generations. His grandfather, with some high-school friends, bought six medallions in the 1940s, shortly after the medallion system was put in place to tame streets teeming with New Yorkers hoping to make a buck off a fare. They cost not much more than $10 apiece.
Since then, the number of medallions has barely budged—and neither have the clans that first got them. Today, five families have an ownership interest in 17.4% of the medallions owned by corporations, according to city records reviewed by Crain’s. And 22 individuals own a third of all corporate medallions.
The records show that the Weingarten family has the most. Fred and Victor Weingarten and their cousin Jacob Popovic began as hacks before buying loads of medallions in the 1970s. They accumulated so many that they became known as the “Three Wise Men.” Around that time, Mr. Sherman joined his father, and together they expanded their holdings, building Midtown Operating Corp. into one of the largest fleets in the city.
Today, the Weingarten family has ownership stakes in 620 medallions and the Popovics in 147. Mr. Sherman and his sister Debra Tiffenberg together own 192 through numerous limited-liability companies.
“Ron Sherman bleeds yellow,” said Evgeny Freidman, whose 232 medallions are the most owned by any individual. “He understands the importance of the taxi industry to New York City.”
Mr. Freidman, the son of a cabdriver, added: “There’s no fat cats and no cash cows. I work 18 hours a day, and because we’re so regulated, we are completely aboveboard.”
That has not always been the case. In 1987, Mr. Sherman, who declined to be interviewed for this article, and his father were ensnared in what federal and state authorities called an illegal scheme to net free taxi medallions. Charges against Mr. Sherman were dropped, but his father, Donald, pleaded guilty in 1989 and paid a $125,000 fine.
Some believe the case is one reason Mr. Sherman has not been buying many more medallions in recent years. After all, life is good. He owns a house valued at $1.5 million in Tenafly, N.J., and a yacht that travels the world.
But there may be another reason: Mr. Sherman doesn’t have to own medallions to profit from them. He is CEO of Creative Mobile Technologies, which has touchscreen TVs in roughly half the city’s 13,237 cabs and gets 5% of credit-card payments. The card fees alone, after expenses, are worth tens of millions of dollars annually. And even though he opposes the borough cabs, he’s leaving nothing to chance: His company is vying to put its TVs in those cars, too.
Mr. Sherman’s savvy extends to his fleet operations. Despite cabbies’ lease rates having been frozen since 2004, he’s managed to keep costs unusually low. He inked deals with Ford to buy thousands of stretch Crown Victorias for barely more than it cost the automaker to build them, according to a source. He saves money through deals that let Shell and auto-parts makers test their products in his taxis, which run 24 hours a day and average 100,000 miles a year on some of the roughest roads in the country.
Every 12 hours, the cars return to his blockwide garage in Long Island City, Queens, for a shift change. He calls it “Ford country,” and on most days it’s where he parks his Lincoln Navigator. Last week, drivers milled about smoking cigarettes as they waited to lease a taxi for the evening. Many complained that they had to tip garage managers to get a car on a busy night. (The practice is illegal but not uncommon, as there are more than three licensed cabdrivers per available vehicle. A sign in Mr. Sherman’s garage reminds drivers they need not tip to be assigned a car.) They moaned about the cost of gas. They worried that any fare hike would be eaten by higher lease payments to owners.
But they came to Midtown Operating Corp. over other fleets for a simple reason. “These are the best taxis in the city,” said a cabbie with the nickname “U.N.” (“Because I talk to everybody,” he said). “The cars are clean; the suspension is always good.”
Mr. Sherman refers to “my drivers” in TLC testimony, but his first loyalty is to his business. When the city changed a rule prohibiting fleet owners from passing state sales tax on to cabbies, he sued and won. Now drivers must pay owners 4.5% tax on the cars they rent. (Mr. Sherman’s drivers grumbled about that, too.)
Industry representatives describe the lawsuits as a last resort, but because Mr. Bloomberg is one of the few city politicians immune to the industry’s influence, legal tactics may be employed to keep thorny issues like borough cabs unresolved until the next mayor takes office.
“Mayors and taxi commissioners come and go,” Mr. Daus said. “Ron is still here.”