The warm lights of the Madera Restaurant went out behind Lin Qi; the July night in Belgrade was as sweltering as a sauna.
Lin Qi and Gherardini climbed into the back seat of the car one after the other; the driver had already turned the air conditioning up to the maximum.
Lin Qi leaned back in his chair, his gaze sweeping across the gray apartment buildings outside the window, his mind racing with thoughts of his activities in Europe over the past two years.
Olympia Milan, Badalona Joventut Virtus Rome, Belgrade Red Star.
These four top-tier league teams spent a total of less than $13 million.
Lin Qi suddenly laughed silently.
"What's wrong, boss?" Gherardini noticed the meaningful smile and asked, somewhat puzzled.
"In Silicon Valley, $13 million is only enough for a Series A round for some internet startup that hasn't even finished its website." Lin Qi closed the list and turned to Gherardini. "But in Europe, that money buys four hole cards that put you right at the table. Gherardini, now you should tell me just how bad this table is."
Gherardini's tone carried the weariness of years spent in Europe sports. "It's worse than you think, boss. This May, ULEB ( Europe Basketball Union ) and FIBA officially broke up. ULEB, along with Spain and Italy powerhouses, wanted to go it alone, and FIBA immediately created a ' Super League ' to compete. Now Europe basketball is divided in two, broadcasters are all watching and the sponsors are holding onto their money."
"Doesn't ULEB have a $35 million sponsorship from Spain Telecommunications?" Lin Qi asked casually.
"It's just on paper," Gherardini shook his head. "Sixteen teams share it, ULEB takes its cut, and the Chinese Basketball Association skims off the top. In the end, each big team is lucky to get a few hundred thousand dollars a year. Moreover, the payment cycle in Europe sports is extremely long; this money might take a year to be fully settled."
Gherardini paused, then cut to the heart of the matter. "But that's just the surface. The fatal flaw in Europe basketball is... it wasn't a business from day one."
Lin Qi looked at him, gesturing for him to continue.
"Look at these team names, Benetton, Kinder, Virtus. Here, sponsors aren't buying advertising space; they essentially own the team," Gherardini explained. "In Italy, the wealthy use teams as a form of charity to give back to the community. In Greece and Turkey, oligarchs use teams as public relations tools to maintain political influence. They don't care about profits or losses; they only care about sitting in VIP boxes watching their teams win on weekends."
"So they have no financial discipline," Lin Qi pointed out incisively.
"Absolutely not." Gherardini flipped through the financial report at his side. "To compete for the Europe championship, Bologna Virtus's salaries and operating expenses this year exceeded $12 million. Key players like Ginobili and Danilović have contracts in US dollars. But what about their actual revenue? Broadcast rights are sold piecemeal to local stations, and tickets are cheap. Their real income for the year is at most $5 million. The $7 million loss in between is entirely covered by the owner, Madrigali, out of his own pocket."
"Once the owner's main business experiences cash flow problems, the team will be left to stagnate and wait to die."
"That's right. Even for a team like Verona, a cash flow crisis of a few hundred thousand dollars can bring a long-established club to an instant halt," Gherardini sighed. "Everyone is walking a tightrope, and the infighting between FIBA and ULEB is just adding insult to injury."
Lin Qi listened quietly, then took out a pen and wrote three letters in his notebook: EBA (European Basketball Association).
"Trying to teach Europe tycoons how to do business is futile." Lin Qi's tone was calm, imbued with pure business rationality. "We don't need to change their culture; we'll simply help them adopt a new set of financial logic."
"How do we change it?" Gherardini asked.
"Bring the remaining top clubs over and start afresh. I've divided them into three categories," Lin Qi said, tracing lines on the paper with his pen. "The first category is distressed assets like Bologna and Verona, high in debt but with great brand value. The second category is oligarchic playthings like Efes and Panathinaikos, extremely dependent on their parent companies for financial support. The third category is the most unique: Real Madrid and Barça, member-only clubs."
"The first two categories are easy to handle, but Real Madrid and Barça can't acquire them," Gherardini cautioned. "The law stipulates that they belong to all 100,000 members collectively."
"The biggest weakness of the membership system is the inability to raise equity financing." Lin Qi leaned back in his chair. "They want to compete with Italian Basketball League teams for star players and are equally desperate for cash. Since everyone is short of money, we'll provide the simplest and most direct solution."
Lin Qi wrote down a number on the paper: $1,000,000/year.
"As long as they agree to become one of the founding teams of the EBA, they won't have to wait for settlements or worry about broadcasters before the start of each season. $1 million in cash will be directly deposited into the club's account. There's only one condition: the EBA must buy out all their broadcasting rights and commercial development rights within the league."
Gherardini quickly went through the math in his mind, his expression turning serious. "A full $1 million in cash upfront. For owners struggling to pay next month's salaries, no one can refuse that amount. But for the owners, with 13 teams, that's a fixed expense of $13 million from the start. If the broadcasting contract hadn't sold for a high price in 2000, we would have had to pay that ourselves."
"That's why I bought four teams first," Lin Qi replied calmly.
Gherardini paused for a moment, then realized what was happening.
" Olympia Milan, Badalona Joventut Virtus Rome, and Belgrade Red Star. These four teams were also founding members." Lin Qi pointed to the asset list, "Of the $13 million in expenditures, $4 million went back into my own account. I actually only spent $9 million a year."
Lin Qi looked out the car window. "For $9 million, you could buy the exclusive broadcasting rights to the 13 most commercially valuable basketball powerhouses in Europe, package them into a high-quality product. How much do you think Sky Sports or Canal+ would be willing to pay for broadcasting rights to such a top-tier event, one where there are no more bad teams to coast through?"
Gherardini shook his head. "Boss, you're oversimplifying things. Sky Sports and Canal+ aren't fools; they're not going to prepay tens of millions of dollars for a new league that hasn't even played a single game."
"What will they do?" Lin Qi asked.
"A trial run," Gherardini said. "They'll offer a minimum guarantee of $3 to $5 million, or maybe just air the first season for free, promising only advertising revenue. Only after you prove the ratings, prove these 13 top teams can really play high-quality games, prove the audience is willing to pay... will they put in the real money in the second year."
Lin Qi remained silent for a few seconds.
"So in the first year, I need to pay the entire $13 million guarantee myself," Lin Qi said calmly. "The broadcasters might not pay a single penny, or only a symbolic fee of three to five million."
"That's right." Gherardini nodded. "The first year you're burning money to validate this business model. If it fails, 13 million is down the drain. But if it succeeds..."
"If we succeed, the broadcast contract for the second year could be $20 million or even $30 million," Lin Qi continued. "In the third year, when FIBA and ULEB viewers all come to our side, the contract could exceed $50 million."
Gherardini looked at Lin Qi: "So how much money are you prepared to bet on this first year?"
"$21 million," Lin Qi said casually. "$13 million is the minimum guaranteed expenditure, and the remaining $8 million will be used for operations, promotion, and arena upgrades. If we can't even get $5 million in broadcast revenue in the first year, I'll lose $16 million."
"But if the gamble pays off, starting from the second year, the league can become self-sustaining. By the third year, I can not only recoup my costs but also earn tens of millions of dollars every year without lifting a finger."
Lin Qi looked out the window. " Gherardini, that's why I bought four teams first. If I were just an outsider, the broadcasters wouldn't even bother with me. But now, I have four teams in my hands. I'm not just selling a concept; I'm telling them: the games are ready to start, do you want to give it a try?"