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Old 04-24-2023, 02:40 PM   #93
SirMichaelJordan
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Quote:
Originally Posted by Le Grande Orange View Post
According to real-life references, clubs should have the following regularly ongoing revenue sources:

Gate receipts
Local TV/Radio
Concessions & merchandise
Venue
Advertising & promotions
National

Venue revenue is primarily premium seating (club seats & luxury suites), but also such things as parking and stadium rental for other events. While premium seating could be thought of as a 'modern' category starting with the new parks built in the 1980s and 1990s, the box seats in the parks of old were effectively the premium seating of their day.

National revenue is the income from the league as a whole, and is distributed in equal amounts to each team.

One could argue that advertising & promotions could be combined with concessions & merchandise for OOTP's purposes to streamline revenue sources. But I would argue they should be separate as concessions & merchandise is earned from the fans attending the games, while advertising & promotions can be thought of as the level of corporate support for a club.

To the foregoing can be added revenue that can occur but is not necessarily regularly recurring:

Post-season
Gain on player transactions
Revenue sharing
Luxury tax
Expansion fees

Note that, starting with the 2017 CBA, some of the luxury tax proceeds from paying teams can be distributed to non-paying teams.


On the other side of the ledger, the expenses real-life teams have:

Players (including bonuses and player benefits)
Managers & coaches
Team operations
Venue operations
Scouting
Minor league operations
Administrative & general

Note that real-life sources sometimes roll the costs of the manager and coaches into team operations or as part of player costs. Player benefits include the myriad of in-season benefits the players get such as meal money as well as contributions to the players' pension plan. In 2022 these group benefits cost each team $16 million (plus another $1.67 million per team for the newly created pre-arbitration bonus pool).

Team operations includes such things as travel, hotels, uniforms, insurance, payroll taxes, etc. Venue operations are the cost of operating the team's park, i.e. grounds crew, power, ticket takers, ushers, security, maintenance, etc.

Scouting in real-life sources is sometimes rolled into the player development category, which includes the cost of running the minors. Minor league operations is the cost of running the affiliates which includes the salaries of the players, manager, and coaches, financial support to the affiliate from working agreements, spring training, and so forth. One expense not usually separated out in real-life sources is the cost of signing bonuses to drafted players. Presumably it's included as part of player development.

Expenses which can sometimes occur but are not necessarily regularly recurring:

Loss on player transactions
Revenue sharing
Luxury tax


Real-life example of the 1996–98 Cleveland Indians (which does show signing bonuses for drafted players separately, but on an amortized basis). Percentage of revenue and expense have been added as a convenience to see the proportion each category contributed. The percentage figure for net operating income is that figure divided by the total revenues amount.
Code:
                                   1996             1997             1998 	
REVENUES						
						
Gate Receipts (net)              45,658  46.0%    49,279  43.8%    55,830  44.0%
Local Media                      13,631  13.7%    17,014  15.1%    19,649  15.5%
Concessions & Merchandise (net)  17,717  17.8%    18,562  16.5%    20,353  16.0%
Stadium                           7,035   7.1%     8,704   7.7%     9,358   7.4%
Advertising & Promotions (net)    4,046   4.1%     5,031   4.5%     6,171   4.9%
National (net)                   11,225  11.3%    13,932  12.4%    15,600  12.3%
---------------------------------------------------------------------------------
Total revenues                   99,312 100.0%   112,522 100.0%   126,961 100.0%

						
OPERATING EXPENSES						
						
Players                          47,687  56.0%    58,865  58.7%    56,843  52.8%
Major league team                 5,768   6.8%     5,155   5.1%     9,769   9.1%
Player development                8,889  10.4%    10,536  10.5%    11,540  10.7%
Ballpark operations              10,834  12.7%    11,539  11.5%    12,283  11.4%
Administrative and general        8,756  10.3%    10,499  10.5%    12,709  11.8%
Signing bonuses and contracts	  3,212   3.8%     3,630   3.6%     4,412   4.1%
---------------------------------------------------------------------------------
Total operating expenses         85,146 100.0%	 100,224 100.0%   107,556 100.0%

						
OPERATING INCOME (LOSS)          14,166  14.3%    12,298  10.9%    19,405  15.3%

						
SPECIAL INCOME (EXPENSE)
					
Post-season (net)                   624            6,799            5,374 	
Player transactions (net)           616            2,696           (1,355)	
Revenue sharing                  (5,731)          (7,186)         (10,209)	
Luxury tax                            0           (2,065)             (24)	
Expansion fees                        0            9,286                0 	
---------------------------------------------------------------------------------
Total special income             (4,491)           9,530           (6,214)	

					
NET OPERATING INCOME (LOSS)       9,675   9.7%    21,828  19.4%    13,191  10.4%
Good stuff!

The current model does not generate enough revenue, which is why I think cash max is used in the first place to add money from the previous year, even though this option becomes a cheat if you are using "Owner decides the budget.

In my previous post, I should have mentioned that I up the media contracts to match reality and added concessions into merchandise. I then bumped up the player development baseline and scouting to offset the adjusted revenue figures.

The average profit number looks good for the first season with the default roster set. However, as the years go on, that number gets lower and lower, especially with the default inflation settings and using the default cash max settings, as that will also drive up player contracts demands.

Last edited by SirMichaelJordan; 04-24-2023 at 02:43 PM.
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