Under Armour founder Kevin Plank plans to acquire the company that runs Baltimore's water taxis and overhaul the service with new boats, longer hours, more stops, and an on-demand offering in partership with Uber. (Baltimore Sun video)
Under Armour founder Kevin Plank, who is planning a $5.5 billion waterfront development in South Baltimore, is moving to buy the company that operates the city's Inner Harbor water taxis.
Plank's firm Sagamore Ventures is expected to buy Harbor Boating Inc. as the city agrees to award the firm another long-term contract to operate passenger service around the Inner Harbor, with stops in Fells Point, Canton and other waterfront spots.
It would be another line in a growing business empire that has expanded from athletic apparel into real estate, horse racing, whiskey and more.
Sagamore hopes to expand the water taxi, adding new boats, longer hours, more stops, and an on-demand offering in partnership with Uber. Under Armour already partially funds the city's free Harbor Connector commuter boat service, and water taxis play a large role in the plans for Plank's massive mixed-use development in Port Covington.
"What we really want to do is make this a truly commuter-friendly service," said Demian Costa, managing partner of Sagamore Ventures, Plank's venture capital firm.
The Board of Estimates on Wednesday is expected to approve an agreement on Wednesday that would give Harbor Boating exclusive rights to the city's docks and wharves for at least 20 years, renewable for up to 10 more.
Harbor Boating operates both the Baltimore Water Taxi, which caters to tourists, and the free Harbor Connector service for commuters, with boats that stop at Canton, Fells Point, Locust Point, Harbor East and the Rusty Scupper on weekdays between 7 a.m. and 7 p.m.
The city pays about $600,000 per year to run the Harbor Connector, according to Department of Transportation spokeswoman Adrienne Barnes. Harbor Boating would continue to operate the water taxis at no charge to the city.
The city would receive a 7 percent share of ticket sales as a wharfage fee or a guaranteed minimum payment, Barnes said. She did not know the minimum payment.
The existing Harbor Connector service, which costs about $1 million a year to operate, would continue to run for free, but the firm would charge for other options, Costa said.
Harbor Boating, which was founded in the 1970s, has been the city's sole water taxi operator since 2005.
Sagamore's purchase of Harbor Boating is expected to close in the next 30 days if the city contract is approved, Costa said. Terms of the sale were not disclosed.
Laurie Schwartz, president of the nonprofit Waterfront Partnership, said Sagamore would offer creative ideas and better technology to make water transportation more attractive.
"It'll bring a new sense of energy, a new infusion of capital and new creativity for how Baltimore can best operate a water transit system," she said. "They're looking at it not only as a business investment but as a way to serve the city better."
Expanding the water taxi and Harbor Connector makes sense, Schwartz said, given the "explosion of millennials and young families" living in neighborhoods around the city's waterfront.
Michael Middleton, chairman of the Cherry Hill Community Coalition, said adding stops in those neighborhoods shows Plank's commitment to residents who live around the site of the proposed development.
"We admire what Under Armour has been doing in attempting to work with surrounding communities and to enhance services to this community that we've never had before," he said.
Scott Connelly, a co-owner of the Charleston Water Taxi in South Carolina, said operating a successful water taxi service requires constant maintenance checks and logistical planning to balance the number of boats with passenger wait times.
"Trying to keep your ticket price low without being subsidized is extremely difficult because there's a fine line between too much money and not enough money," he said.
Baltimore's water taxis have the advantage of longtime operations and a proven ridership, Connelly said. Charleston Water Taxi, a private operator, has been operating its three boats since 2005.
Michael McDaniel, president of Harbor Boating, will remain at the firm along with its other employees, according to Sagamore. The hope in Baltimore, McDaniel said, is to bridge the gap between the $8 one-way tourist prices and commuter-friendly fares.
The new fees have not been decided, but changes should start to appear next spring, he said.
The city received at least one other bid to operate the water taxis. Ferries Inc., which is headquartered in Washington state and runs high-speed ferries around the country, did not respond to a request for comment.
Harbor Boating has commissioned a new, energy-efficient fleet from Baltimore's Maritime Applied Physics Corp. The first vessel should be ready for launch this fall, Costa said, with three more ready early next year.
The bigger boats will be able to carry about 50 people, but Harbor Boating is also exploring a smaller model that would fit about a dozen people, who could hail the boats on-demand via Uber. Commuter boats would be outfitted with tracking devices so riders could see when they were arriving.
McDaniel said water taxi ridership is down this year after a rainy spring season, but typically averages between 300,00 and 400,000 a year. Tourists represent the majority of riders today, he said, but the changes are intended to bring more local residents to the water.
In the first years, the firm expects to make about $3 million to $4 million in ticket sales, he said.
The Evening Sun Newsletter
Get your evening news in your e-mail inbox. Get all the top news and sports from the baltimoresun.com.
"This is definitely going to be a profitable business," McDaniel said. "Probably not as profitable as some of their other ventures, but we're going to hold our own. Otherwise I'm not sure they would be talking to us or retaining us."
The expanded service will mean about 50 additional hires, according to Sagamore, for a total of up to 150 people at high season. Most are expected to be Baltimore residents.
McDaniel said Plank's acquisition will allow the company to get to the next level.
"I saw what they were willing to provide and what they could do for this company," he said. "It was just kind of a no-brainer for me."
This article has been corrected to reflect what the city currently pays for service.