In a luxury apartment in Boston's Back Bay.
Soft Utah Jazz was playing in the living room, and the early autumn evening breeze blew in through the half-open French windows.
Lin Qi sat on the sofa, holding a newly delivered copy of the Wall Street Journal. His gaze didn't linger on the dismal Nasdaq tech stock section, but instead turned to the inside pages, his eyes landing on a brief report about "commercial real estate development in downtown Phoenix, State of Arizona."
" Beth," Lin Qi said casually, turning a page of the newspaper, "Have Patrick take some time to go to State of Arizona."
He looked up at Beth: "Go visit Jerry Colangelo."
" Phoenix?" Beth thought for a moment. "The owner of the Suns and Diamondbacks? I heard the Diamondbacks have a good chance of winning the MLB World Series this year. Lin Qi, if you want Patrick to buy his team, that's unlikely. He has no reason to sell the team right now."
"You're overthinking it." Lin Qi placed the newspaper on the coffee table. "It's just a pure real estate investment, and making friends on the side."
Lin Qi leaned back on the sofa, speaking as if it were a casual conversation, " Colangelo is a very ambitious man. He not only owns two top-league professional teams, but he's also acquired a large amount of land in downtown Phoenix, trying to develop the stadium, surrounding commercial districts, and municipal infrastructure all together. He wants to build a massive sports commercial district."
Beth pondered his line of thought for a moment, "I know him. He just took Major League Baseball (MLB) to the desert in '98. At the same time, he was supporting an NBA team ( the Suns ) and an MLB team ( the Diamondbacks ) that was in championship contention... The daily expenses of these two assets are enormous. Last week's sports section mentioned that the Diamondbacks ' payroll had reached $80 million last year, and it's probably going to approach $100 million next."
"Yes, Colangelo is an old-school sports man. To bring a championship trophy back to Phoenix, he signed a superstar like Randy Johnson with a top-tier salary in the league," Lin Qi stated calmly. "Not only that, the Bank One Ballpark and the Suns ' American Airlines Center, which he built, consumed almost all of his cash flow. He is indeed a city hero in Phoenix, but maintaining this situation often requires taking on a heavy burden of bank debt."
Lin Qi paused for a moment, then continued, "Look at the current macro environment. The Nasdaq has crashed, the tech bubble has burst, and to save the market, the Federal Reserve will most likely continue to cut interest rates. Funds always seek safe havens, and low interest rates will push some hot money into the real economy and real estate market. In State of Arizona, especially in Phoenix with its large amount of undeveloped land, land prices still have room to rise."
Beth immediately grasped the key point. "So, Colangelo holds the most prime real estate in downtown Phoenix, but he's currently heavily invested and short on cash. He needs a lot of liquid funds to support the team, pay bank interest, and advance his commercial real estate projects."
"That's it." Lin Qi nodded. "Relying on his own borrowing from banks to drive such a large-scale downtown redevelopment will put his cash flow under severe strain in the coming economic cycle."
Beth picked up her glass and leaned back on the sofa thoughtfully. "Actually, this timing is perfect for Patrick. Thanks to the Celtic Tiger ' economic boom in recent years, the family has indeed accumulated a lot of cash on its books. But Ireland's domestic market is too small, and Europe capital is looking for channels to go overseas. If Patrick goes to Phoenix under the guise of 'diversifying overseas assets and allocating dollar real Phoenix,' it's logically flawless."
She looked at Lin Qi, a slight smile playing on her lips, "Those shrewd investigators on Wall Street will only see him as a slightly old-fashioned Europe tycoon who's come to United States to buy land. Nobody will connect an Ireland real estate businessman who builds bridges and roads with an NBA team acquisition."
"That's exactly the identity he needs," Lin Qi said gently. "An Ireland tycoon who knows the construction industry, has tons of clean cash, but knows absolutely nothing about running professional sports."
"Why is this identity so important?" Beth asked, following up on the topic.
"Because of Colangelo's pride." Lin Qi's gaze was calm and clear. "He built the Suns from scratch and brought baseball to the desert. In Phoenix, he was used to being the one making the decisions. This kind of old-school sports patriarch is naturally averse to Wall Street investment banks."
Lin Qi pointed to the financial newspapers on the coffee table. "If a New York private equity firm were to invest in him now, they would definitely demand to join the board of directors, demand to audit the accounts, and might even force him to trade away those highly paid star players to balance the finances. For Colangelo, such an investment that relinquishes control would be a humiliation."
"But Patrick is different." Beth's eyes lit up completely; she had fully grasped this seemingly gentle business logic. " Patrick doesn't want a board seat with the Suns, and he doesn't understand baseball tactics. He went to Phoenix simply to partner with Colangelo to develop the commercial plaza next to the stadium, earn some rent, and incidentally, get a VIP box to drink beer and watch a couple of baseball games he doesn't even understand the rules of."
"That's right." Lin Qi picked up his glass and gently clinked it against Beth's. "In Colangelo's eyes, Patrick isn't a power-grabbing barbarian. He's simply a good-natured, wealthy, and fully respectful multinational partner who respects his authority in the sports world. Colangelo will welcome this funding because it will allow him to maintain his dignity and continue pursuing his sporting dreams."
Lin Qi took a sip of red wine and gazed out the window at the tranquil Boston night sky.
"But the debt will inevitably cause problems sooner or later. Perhaps in two or three years, when Phoenix's basketball revenue and real estate profits can no longer cover the huge bank interest, he will have to divest some high-quality sports assets to survive in order to preserve his life's work."
Lin Qi turned to Beth and said, "By then, rather than selling the team to those investment firms he dislikes, he'd definitely prefer to entrust it to an old friend he worked with on a project in the desert—someone with deep pockets and whom he knows well. Dealing with acquaintances is always more reassuring. We just need to become his friend before that day comes."
Beth listened quietly.
"This is a very patient long-term investment," Beth nodded. "I'll have Patrick's secretary arrange the itinerary. It seems our Ireland cousin is going to be looking at land in the America desert next."