[The characters, places, organizations, events, and so forth that appear in this work have no relation whatsoever to reality and are fictional creations of the author’s imagination.]
June 11, 1979, Devenger The Manor.
After waking, swimming and morning exercise, then riding lessons; after lunch, inspections of and meetings with the companies under the family. After repeating this diligent routine, all the meetings were finally over. Henry, too, had managed to grasp the overall outline of the family, if not perfectly, then at least roughly.
Those inspections had included a visit to Manhattan. It was a city of chaos where prosperity and crime strangely coexisted.
Over the city center, where endless lines stretched out in front of every gas station in the aftermath of the second oil shock, broken neon signs cast a pale light over streets steeped in prostitution and drugs. From piles of garbage abandoned by the New York City authorities on the verge of bankruptcy, a pungent stench rose in waves, and the sight of swaggering thugs and clean-cut suits flowing together through it all was grotesque beyond words. Only the old-fashioned neon signs, evoking something faintly steampunk, held their place amid the chaos.
Henry keenly felt the gravity of reality, which was no less severe—if anything, worse—than the Gotham version of New York he had seen in the movies.
‘Tomorrow is finally the day of destiny, huh.’
Since tomorrow was the family council meeting (a full meeting of those with real authority), Henry once again reviewed the materials he had prepared.
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[Status and Projections for the Devenger Family’s Unlisted Subsidiaries, 1979]
1. Devenger Winery & Brandy Distillery (Agriculture and Brewing)
* Personnel: Approximately 750 (farmers and master brewers who have lived on the family estate for generations)
* Revenue: $16.5 million per year (Riesling white wine dominates. By contrast, the distillery is still only generating losses.)
* Expenses: $13.9 million per year (imports of premium oak barrels, maintenance of low-temperature storage, the distillery’s massive deficit, all labor costs within the estate)
* Status: [Profit of $2.6 million] - Avoiding losses thanks to the Riesling wine from a perfect cash-cow winery.
2. Devenger Construction (General Construction Company)
* Personnel: Approximately 8,000 (skilled stonemasons, carpenters, architects, and on-site labor)
* Revenue: $85 million per year (New York landmark renovations and commissions for ultra-luxury mansions)
* Expenses: $87 million per year (soaring building material costs, union wage increases, a sharp decline in new orders due to the recession)
* Status: [Loss of $2 million] - Its luxury mansion craftsmanship is among the best in the world, but the economic crisis has frozen the market for luxury housing, a luxury good.
3. Devenger Resources (Security and Protection - Formerly Devenger Shield)
* Personnel: Approximately 800 (former special forces, informants, bodyguards)
* Revenue: $12 million per year (bodyguard dispatch and security consulting for major figures in New York’s political and business circles)
* Expenses: $9 million per year (labor costs, introduction of state-of-the-art communications equipment, recruitment costs for informants)
* Status: [Profit of $3 million] - One of only two cash cows within the family, thanks to New York’s abysmal public safety in the late 70s.
4. Devenger Hospitality Group (3 hotels)
* Personnel: Approximately 600 (managers, bellboys, cleaning teams, chefs, etc.)
* Revenue: $18 million per year (prime locations, but falling occupancy rates due to aging facilities)
* Expenses: $21 million per year (mostly facility maintenance and repair costs)
* Status: [Loss of $3 million] - The family’s sore spot, still trapped in its glory days of the 60s and 70s.
Extra. Devenger Family Trust & Committee (Asset and Legal Management)
* Personnel: Approximately 100 (chief attorneys, accountants, tax accountants, family secretariat administrative team)
* Revenue: 0 (purely a management organization)
* Expenses: $4.5 million per year (high salaries for elite personnel, legal litigation costs for managing 49 ground lease rights, etc.)
* Status: [Labor expenditure of $4.5 million] - It serves as the head of the family, but the maintenance costs are considerable.
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[Family Subsidiary Overall Cash Flow Overview]
1. Total subsidiary revenue: Approximately $131.5 million
2. Total subsidiary expenses: Approximately $130.9 million
(Operating profit of $600,000 for subsidiaries excluding the trust)
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“Even if they pushed even the wages of the estate servants into subsidiary expenses for tax reduction purposes, the consolidated profit is only $600,000...”
Henry let out a hollow laugh, as though dumbfounded. Only now did he understand in his bones why the family accountant he had met not long ago had spoken with such fervor. The accountant had argued that the proportion of dividends from [THE TIME] in the family’s financial structure was far too high, and that the subsidiaries needed to be overhauled on a large scale in order to diversify the profit structure.
There was nothing wrong with what he had said. Viewed as a whole, the current Devenger family was no different from a patient barely breathing with an “IV drip” of dividends from a giant media company stuck into its arm.
‘The subsidiaries are making $600,000 in profit, but $4.5 million is going out just to maintain those bastards in the family secretariat? This isn’t just the tail wagging the dog—the tail is devouring the person whole.’
The sensibility Henry had developed in his previous life as a debt-ridden office worker, when he had trembled over mere tens of thousands of won, stimulated his brain. The momentary “Wow!” he had felt upon seeing revenue approaching $100 million was short-lived; once he checked the operating margin crawling along the floor, irritation surged up in him.
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[Devenger Family Consolidated Annual Revenue Report, 1979]
1. Ownership of 49 Manhattan Ground Lease Rights
* 3 core revenue sources (1-1293-0001, etc.): $5,500,000 per year ($5.5 million)
-Lease payments are abundant thanks to Consumer Price Index (CPI)-linked contracts.
* 46 underdeveloped areas (SoHo, Chelsea, Hell’s Kitchen, etc.): $500,000 per year ($500,000)
-For more than half of them, the building owners have gone bankrupt and revenue is zero, or they are loss-making parcels for which the family pays taxes instead to avoid losing the land.
* Subtotal: $6,000,000 (approximately $6 million)
2. Stock Dividends
* America’s THE TIME (69% stake): $31,180,000 per year ($31.18 million)
* Britain’s The Timeg Group: $0
-Before acquisition; currently undergoing acquisition due diligence
* Cornic Glass Works (6% stake): $2,600,000 per year ($2.6 million)
* Chait Manhattan Bank (1.2% stake): $1,400,000 per year ($1.4 million)
* New York Time Class B (voting shares): (3.5%) + Class A (common shares): (1%) $120,000 per year ($120,000)
* Subtotal: $35,300,000 (approximately $35.3 million)
3. Fixed Income
* 30-year U.S. Treasury bonds ($40 million): $1,600,000 per year (4% interest rate) ($1.6 million)
* New York City fiscal crisis rescue bonds (1975), 8-year ($30 million): $2,850,000 per year (assumed interest rate in the 9.5% range, including risk premium) ($2.85 million)
* Blue-chip corporate bonds (GI, A&T, etc., $10 million): $700,000 per year ($700,000)
* Subtotal: $5,150,000 (approximately $5.15 million)
4. Unlisted Subsidiaries and Other Income
* Devenger Winery/Distillery/Resources (Security) profit: $5,600,000 ($5.6 million)
* Combined hotel/construction settlement: -$5,000,000 (net loss of $5 million)
* Subtotal: $600,000 (approximately $600,000)
Extra. Devenger Family Trust & Committee (Asset and Legal Management)
* Personnel: Approximately 100 (chief attorneys, accountants, tax accountants, family secretariat administrative team)
* Revenue: 0 (purely a management organization)
* Expenses: $4.5 million per year (high salaries for elite personnel, legal litigation costs for managing 49 ground lease rights, etc.)
* Status: [Labor expenditure of $4.5 million]
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[Final Settlement: Family Consolidated Cash Flow]
1. Total Annual Income (Gross Revenue): $47,050,000 (approximately $47.05 million)
2. Total Annual Expenses (Total Expense): $31,260,000 (approximately $31.26 million)
*Prestige maintenance expenses: $10,000,000
*Mansion maintenance costs and various taxes (Property & Income Tax): $15,000,000
*Operating expenses for the Devenger Family Trust and Committee organization: $6,260,000 (includes existing labor costs of $4.5 million, as well as pensions for family elders besides the mansion servants, scholarships and medical support for family personnel, etc.)
[Final after-tax surplus cash: +$15,790,000 (approximately $15.79 million)]
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‘The asset organization is more or less finished, so all that remains is deciding the direction for how to restructure things at the family council meeting? After that, I can go straight into growing the wealth. First, let’s tear out this decrepit system by the roots and rebuild it.’
Henry slowly read down the document he had prepared, “Modern Restructuring of the Family System.” His eyes gleamed sharply as he meticulously checked the parts that needed revision and the content that needed to be added.