Financial Issue 4 to 5 years in

[md40022]

In trying to sort through relevant info and irrelevant info on this thread, it would seem setting inflation to OFF is a wise move for someone who uses a modern day sim with real rosters? Is that accurate?

And also, where would you find the inflation setting? Sorry for the dumb question, but I'm not in-front of the PC that I run the game from and I don't think I've ever touched that setting in years past.

[SirMichaelJordan]

Originally Posted by md40022

In trying to sort through relevant info and irrelevant info on this thread, it would seem setting inflation to OFF is a wise move for someone who uses a modern day sim with real rosters? Is that accurate?

And also, where would you find the inflation setting? Sorry for the dumb question, but I'm not in-front of the PC that I run the game from and I don't think I've ever touched that setting in years past.

Depends on what do you want to achieve. Do you want 2023 player contracts and other expenses in the year 2050 or do you want a more realistic rise? If you want things to be the same then turn inflation to 0% but if you want a more realistic rate than set the min to 0% and the max to 3%

[md40022]

Originally Posted by SirMichaelJordan

Depends on what do you want to achieve. Do you want 2023 player contracts and other expenses in the year 2050 or do you want a more realistic rise? If you want things to be the same then turn inflation to 0% but if you want a more realistic rate than set the min to 0% and the max to 3%

I'm mainly looking to avoid the financial jam-up that many posters were saying occurs a few years in where all teams are over budget and can't maneuver.

I'm not particular if salaries increase over the years or stay in line with present day, as long as the end result doesn't have all teams over budget 3 years down the road.

[Carplos]

Originally Posted by md40022

In trying to sort through relevant info and irrelevant info on this thread, it would seem setting inflation to OFF is a wise move for someone who uses a modern day sim with real rosters? Is that accurate?

And also, where would you find the inflation setting? Sorry for the dumb question, but I'm not in-front of the PC that I run the game from and I don't think I've ever touched that setting in years past.

It's under the Financials tab of your league settings.

[OutS|der]

Originally Posted by HRBaker

I can't help but wonder though; if the current ownership of the game would invest a significant amount of effort in the financial "shoebox" of the classic game when the same amount of time invested in the Perfect Team side of the game could bring bigger profits.

I'm afraid this will be a continuous "thorn" in the sides of some very valid improvements to the base game.

Is it too crazy to hope that the PT side of the game would eventually also include financials? ...thus the effort could benefit both sides of the game.

PT is the future of OOTP, if it's not the main focus for the Dev team now it soon will be so yeah it's not crazy to hope that PT evolves in any way so that maybe we can have their scraps.
That's where we're at now, begging for scraps from the PT table.

[SirMichaelJordan]

Originally Posted by md40022

I'm mainly looking to avoid the financial jam-up that many posters were saying occurs a few years in where all teams are over budget and can't maneuver.

I'm not particular if salaries increase over the years or stay in line with present day, as long as the end result doesn't have all teams over budget 3 years down the road.

3% inflation max should be fine. You could also reduce the cash on hand max so that contract extensions don't get out of hand.

It should also be noted that during the season, many teams may look over budget but the figures will update once the offseason happens. A few patches ago fixed the inconsistencies with the offseason money start date.

[PSUColonel]

I think it’s safe to conclude at this point, that they are now driving the car in another direction. They aren’t going to announce it..but after the car makes enough turns in a given direction, you sort of get the idea where you are headed.

[wallewalls]

3D, Perfect Team, and then some half-baked features for the GM-mode-only type of players while longstanding issues get neglected.

[Le Grande Orange]

Originally Posted by SirMichaelJordan

One thing I did for last year version of the game was massively increase the Scouting and Development Team expense baseline. After some research, I came up with a number (not sure what exact number that was) but the default seem low considering the technology & infrastructure that’s now available.

But yes, this was the artificially massaging of numbers to keep finances at a realistic level.

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.

                                   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%

[HRBaker]

Originally Posted by Le Grande Orange

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.

                                   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%

My point exactly... is this what we want? A detailed business simulation? First, I highly doubt COM2US is interested in this, and my own opinion is I don't either. Although it's tempting to think we want to control every penny because we may be able to "out game" our fellow owners from a financial point of view - I simply don't want to spend my baseball time "working". Also, in a real world scenario, there are HUNDREDS of people that do this work on a daily basis. In a single game each of us has to do ALL of it. So much for the sports game.

I know, I can here the arguments now, but if OOTP got this complex on the business side, I'd likely find something else to do.

[Le Grande Orange]

Originally Posted by HRBaker

My point exactly... is this what we want? A detailed business simulation?

Most of the revenue and expenses require no input from the user, however. They can be generated automatically by OOTP to fill out the amounts to bring them to appropriate totals.

Concessions & merchandise is derived from attendance and fan interest in the club much like attendance and its gate receipts; advertising & promotions is derived from the corporate level of interest in the team. As a GM, your main focus is on the players and their payroll and working within the budget set by the owner.

If you want the finances to make sense, however, the revenue and expense categories have to come to totals which echo those in real life.

Originally Posted by HRBaker

Although it's tempting to think we want to control every penny because we may be able to "out game" our fellow owners from a financial point of view - I simply don't want to spend my baseball time "working". Also, in a real world scenario, there are HUNDREDS of people that do this work on a daily basis. In a single game each of us has to do ALL of it. So much for the sports game.

You're making the mistake of thinking you would have control over every revenue aspect. There is no need to. Most can be generated abstractly based on team support. The point is to get overall revenue and expenses into totals approximating real-life to get the system easier to relate to real world data.

As the user your focus remains on the amount of money you have to spend on players.

[Le Grande Orange]

Consolidated financial statement of the New York Yankees for the 1945 season, as published in the July 17, 1946, edition of The Sporting News. It is reproduced as it appeared in that publication (i.e. no simplification or combining of categories).

                               NEW YORK  Farm Clubs      Total    1946 Forecast
RECEIPTS

Home receipts                   895,909    275,623   1,171,532       1,500,000
Abroad receipts                 262,122     96,529     358,651         400,000
Playoff and exhibition games      5,740     41,431      47,171          50,000
Training trip receipts           16,635      5,979      22,614         175,000
Park privileges                 159,376     95,098     254,474         300,000
Stadium rentals                  55,587     43,790      99,377         140,000
Radio                            65,000     16,400      81,400         120,000
Miscellaneous income              6,618      2,455       9,073          10,000
Sale of player contracts        130,000     68,100     198,100         150,000
--------------------------------------------------------------------------------
TOTAL                         1,596,987    645,405   2,242,392       2,845,000


EXPENSES

Stadium operating expenses      118,473     78,060     196,533         250,000
Playing expenses                365,158    190,580     555,738         650,000
Abroad expenses                  38,903     50,222      89,125         100,000
Scouting expenses                   ---    109,890     109,890         175,000
Traveling expenses               16,680     17,912      34,592          83,000
General and overhead expenses   326,212     92,549     418,761         550,000
Taxes                           341,199    183,912     525,111         600,000
Miscellaneous                       ---      2,800       2,800           5,000
Depreciation                     63,910     18,799      82,709         100,000
Interest                         19,962        294      20,256          23,000
Purchase of player contracts        ---      4,996       4,996          75,000
--------------------------------------------------------------------------------
TOTAL                         1,290,497    750,014   2,040,511       2,611,000

              
PROFIT (LOSS)                  306,490    (104,609)    201,881         234,000

Park privileges is concessions. Playing expenses presumably includes player salaries.

The Yankees had five farm teams during the 1945 season:

Kansas City Blues (American Association, Class AA)
Newark Bears (International League, Class AA)
Binghamton Triplets (Eastern League, Class A)
Norfolk Tars (Piedmont League, Class B)
Wellsville Yankees (Pennsylvania-Ontario-New York League, Class D)


This example does show the trickiness of reference sources due to the varying ways revenue and expenses are categorized. Thought has to be given as to how to classify things to give the widest possible way to compare source examples as well as streamlining matters for game purposes.

[PSUColonel]

Right...LGO is talking about a fully functioning financial world simulating around you, where you as the GM more or less only control the baseball operations part of it.

[rudel.dietrich]

OOTP seems to be able to correctly do inflation (which it should since this is basic math) but is unable to properly increase teams’s revenue to account for this inflation.

A least, that is my takeaway from reading what happens when you use the default inflation number and teams run out it spending room.

[Le Grande Orange]

Originally Posted by rudel.dietrich

OOTP seems to be able to correctly do inflation (which it should since this is basic math) but is unable to properly increase teams’s revenue to account for this inflation.

The tricky part about that is, for a long time, team revenues grew relatively slowly before exhibiting a sharper rise starting in the late 1970s.

MLB total revenue hit $12.3 million in 1930. The Depression took its toll, as revenue fell to $7 million in 1933, but by 1939 it had recovered, reaching $12.3 million in 1939. The war years saw a slight dip, but the big jump in attendance post-war and the beginnings of the broadcast TV era saw revenue rise to $28 million in 1946. It hit $33.2 million in 1950; $39.5 million in 1954; and $44.5 million in 1956.

In 1969, total MLB revenue was up to $126.3 million. By 1975 it was at $162.6 million. In 1980, thanks to expansion and the rise of cable TV, it was $351.4 million. Five years later, in 1985, revenue had more than doubled to $717.8 million. MLB crossed the billion dollar mark in 1988 with $1.008 billion in revenue. In 1993 income hit $1.866 billion.

The 1994–95 strike had a significant impact. It wasn't until 1997 that revenue surpassed the 1993 amount, reaching $2.067 billion. In 2000 revenue was up to $3.325 billion; in 2003, $3.728 billion; and in 2006, revenue crossed the $5 billion mark, hitting $5.206 billion. In 2010 it passed $6 billion, reaching $6.137 billion. Revenue reached $7.098 billion in 2013; $8.394 billion in 2015; and $9.460 billion in 2017.

Of course the events of 2020 and 2021 caused a slowing of revenue growth, but in 2022 it reached $10.320 billion.

[wallewalls]

My fix in the past was to just bump up every team's budget every few years in commissioner mode. Something like 5 to 10%.

[chanceliebau]

It's been a problem since they were added to the game, but two-way contracts are absurd. I'm about ten years into my sim (miraculously) and there are 28 y/o, five-star batters who have rookie league-level pitching skills that are commanding just $5M, and this is in 2030ish. There are also too many two-way guys in general. Shohei is once-in-a-generation player, there shouldn't be 25+ players with two-way skills in every single draft.

[wallewalls]

Originally Posted by chanceliebau

It's been a problem since they were added to the game, but two-way contracts are absurd. I'm about ten years into my sim (miraculously) and there are 28 y/o, five-star batters who have rookie league-level pitching skills that are commanding just $5M, and this is in 2030ish. There are also too many two-way guys in general. Shohei is once-in-a-generation player, there shouldn't be 25+ players with two-way skills in every single draft.

I've just turned them off completely once Shohei has retired because of this.

[PSUColonel]

I am amazed there hasn’t been any official comment on this.

[renojedi]

Originally Posted by chanceliebau

It's been a problem since they were added to the game, but two-way contracts are absurd. I'm about ten years into my sim (miraculously) and there are 28 y/o, five-star batters who have rookie league-level pitching skills that are commanding just $5M, and this is in 2030ish. There are also too many two-way guys in general. Shohei is once-in-a-generation player, there shouldn't be 25+ players with two-way skills in every single draft.

Glad you brought this up. This was one of the worst parts of 2023 that apparently is still there. So many two way players in the draft that within 5 years, almost every team has one. And, because they aren't shohei, you get the contract issues you mentioned.