After seeing off the two core members who had just renewed their contracts, the office returned to silence.
Lin Qi sat alone in the large executive chair, took out an extremely thick, beautifully bound, and complex financial statement from the deepest part of the drawer, and spread it out on the table.
This is a five-year financial estimate report for the Boston Celtics and related industries, prepared by PricewaterhouseCoopers' top actuarial team.
Lin Qi pulled out his pen and drew a heavy red line on the prediction column for the break-even point of total player salary expenditure.
The red line is stuck on a very precise number: $80 million.
Starting next year (the 2002-2003 season), the Sword of Damocles hanging over the heads of all NBA owners...
The "luxury tax" will be officially implemented. This not only means that salaries exceeding the tax threshold will face a one-to-one cash penalty, but what's even more disgusting is that this penalty will be directly distributed by the league to competitors who have not paid the luxury tax.
It's certainly not a pleasant feeling to use your own money to fund the enemy.
In response to the impending policy, Lin Qi immediately prepared to launch his next acquisition: to buy the property rights of Boston's home arena New Garden, from one hand to the other. Only by pooling all the cash flow from tickets, luxury boxes, merchandise, catering, and concert rentals can Boston, a mature basketball market, unleash its true money-making power.
According to actuarial models, after fully owning the arena, the Celtics' total annual revenue could be boosted to $150 million to $160 million. After deducting approximately $40 million in massive daily operating expenses, if Lin Qi keeps the team's total salary cap at $80 million (assuming the luxury tax threshold is $50 million), then he would only need to pay a $30 million penalty.
$80 million (salaries) + $30 million (fines) + $40 million (operating expenses) = $150 million.
This calculation is so precise that it just barely stays within the "break-even" threshold.
Lin Qi is rich. He could easily have piled up his salary to over $100 million, like Chris Paul Allen of the Portland Trail Blazers or Dolan of the New York Knicks, and carried over $50 million in luxury tax, losing tens of millions every year...
But Lin Qi absolutely cannot do that. This is the NBA, a closed league controlled by David Stern that places extreme emphasis on a balanced business ecosystem.
Stern can understand if you occasionally lose a little money while trying to win a championship. But if you are in a state of large-scale irrational losses for a long time, and you are destroying the salary ecosystem of the entire league with bottomless spending, forcing other small market teams into bankruptcy, the league headquarters will definitely not sit idly by.
If financial problems become intractable and threaten the league's overall survival and credit rating, the league even has the right to take the most stringent measures, directly stripping the owners of their operational rights and forcibly placing the team under official trusteeship.
In another timeline of Lin Qi's memory, in 2010, the New Orleans Hornets were burdened with $111 million in debt and suffered huge losses year after year. In an unprecedented move, the NBA directly funded and forcibly placed them under trusteeship, until they were freed two years later when a new buyer was found.
Therefore, to dominate this league in the long run, one must adhere to the red line of not allowing the team to fall into "devastating losses".
"$80 million."
Lin Qi gently traced the red line on the report with his fingertips. This was the "tightening headband" that was binding him.
However, when his gaze moved upwards to the bills for the upcoming 2001-2002 season, his brow relaxed and a smile even appeared on his lips.
Because this season, that damn luxury tax hasn't officially taken effect yet.
This means that the Boston Celtics are about to usher in a truly "profitable year".
The table clearly states that the Celtics ' total salary for the upcoming season is $65,836,000.
Without paying a single penny of luxury tax, and after deducting $40 million in operating costs, the total expenditure is less than $110 million. Meanwhile, Boston, holding a three-peat, has already sold out of home game tickets, and its playoff broadcast revenue and sponsorship offers are soaring. Actuaries' conservative estimate is that in this season without constraints, the Celtics will generate a net profit of over $40 million.
This is an incredibly high earning capacity in the entire North America professional sports world.
However, Lin Qi's good mood didn't last long. When his gaze followed the red line down to the next page, which showed the Boston Celtics' actual total salary for the 2002-2003 season (the first year of the luxury tax), his eyes narrowed slightly.
With Pierce and Big Ben's max and near-max contract extensions taking effect, plus the automatic increment clauses in other players' contracts, a glaring number, accurate to the single digit, is prominently displayed at the bottom of the table.
$88,423,000.
Lin Qi quickly went through the accounts in his mind.
This exceeds his absolute safety line of $80 million by a full $8.423 million. Under the "1:1 luxury tax" penalty next year, this means he will not only have to pay an extra $8.42 million in salary, but also an additional $8.42 million in fines to the league. Add to that the extra insurance premiums resulting from the increase in player salaries.
This staggering $88.42 million salary cap will inevitably result in a direct net loss of approximately $17 million for the Celtics next season.
Lin Qi stared at the loss figure for a long time, but there was no panic or regret in his eyes. Instead, his eyes revealed a cold and decisive look.
The team should absolutely not suffer from "long-term, bottomless irrational losses". He can tolerate short-term strategic deficits in one or two years in order to win the championship, and he himself is not afraid of losing money.
What he fears is the league's intervention, using the pretext of "the team being insolvent" to forcibly take over the team.
Prolonged losses are absolutely unacceptable, absolutely unacceptable.