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Old 03-15-2003, 05:56 PM   #1
Steve Kuffrey
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OOTP5 Financial FAQ Part 2a - Team Finances Year By Year-asamford

OOTP5 Financial FAQ Part 2a - Team Finances Year By Year

Allright, here's part 2 of the financial FAQ. I think some of the OOTP veterans will find a lot of this to be common sense and or telling them what they already know. Others will have their own systems in place that accomplishes the same thing, but hopefully there's something in here for everyone. Comments, criticisms, debates, and any other comments from the peanut gallery are welcome and encouraged.

Find Part One here: http://www.ootpdevelopments.com/boar...threadid=27941

Disclaimer: I am not affiliated with Out of the park Developments in any way, nor was I a beta tester for v5. I guess I could be fairly described as a "fanboy"

*

With the introduction of arbitration and higher minimum salaries into OOTP5, budgeting your payroll and maintaining positive cash flow have now become more of a challenge. To help those that might be overwhelmed by the new system, or completely new to the game, I have attempted to put a rough guide on managing your team's finances in OOTP5 on a yearly basis.

League Specs: Coaches/Scouts-off, Salary Cap-no, Team Cash Max - $20 million

NOTES: I haven't played with coaches or scouts since OOTP3, preferring the challenge of not beinga ble to stockpile brilliant coaches, and so that every team's prospects have an equal chance of developing. I prefer a cash maximum of no lower than $20 million so that AI teams have the resources to budget wisely in the free agent market, and rarely does a top player go unsigned.

Team Specs: Average Market/Average Loyalty, Fan Interest-55, Last Year's Revenue - $70 million, This Year's Payroll - $72 million, Cash - $7 million

A quick glance at the finances of our mid-level mid-market team show us that we're right about on budget. We might lose a little money this season, but it won't deplete our entire cash reserves. If the $72 million has been spent wisely we might have a successful season, earning a playoff berth and a boost in revenues, so that we could break even or make a small profit. However, we're going to be concentrating more on decisions that affect future seasons, rather than the present season, although issues concerning the present season will come into play. While a successful GM will monitor his team constantly looking for ways to improve via unsigned free agents, trades, and callups, they will also begin planning for the following season (and seasons beyond) not long after the umpire has cried "play ball" on opening day.

APRIL
Most players won't want to begin negotiating extensions until May, so although we can see which players' contracts expire at the end of the season, there's not much point in trying to make any offers yet. Spend April evaluating the talent that will be due for an extension or arbitration and get a general idea on which players you'd like to keep around, and who you'll cut loose.

MAY
On May 1st, players will begin listening to offers. Although you may prefer to wait until later in the season to sign players to extensions, now is the time to begin planning how to handle your players who's contracts are expiring or going to arbitration at the end of tthe season. To see who is eligible for what, go to the main Team Roster screen and select 'Salary Info' from the drop down menu. Click on the Years Left column twice and it will sort by remaining contract years and group all of the 1 YR's at the top. A player with one year left on his current contract will have one of three notations next to 1 YR:

Auto Res - Players salary will be automatically renewed for the $300,000 minimum.
Arbitr - Player is eligible for arbitration, if the player is not released at the end of the season or signed to a multi-year extension, he will be signed to a one year contract with the amount determined by OOTP's arbiter, NO MATTER WHAT. Even if you have no cash, or negative cash, and $0 available for extensions or free agents, a player eligible for arbitration will be assigned a salary that is added to your payroll. You will not lose a player eligible for arbitration because you cannot afford his new contract. The only way you will not retain a player eligible for arbitration is if you release him at the end of the current season.
FA - player is eligible for free agency and must be signed to an extension if you wish to retain his services.

We don't have to worry about players who's contracts are due to be automatically renewed. They'll be back next season at their same $300,000 salary, unless for some reason you think they aren't even worth that much money, you could release them at the end of the season with no financial penalty. That leaves us with the players eligible for arbitration or free agency. Make a list of these players, and their current salaries.

SP J. Crane (25, 9/8/8/9) - 10,500,000/FA
SP B. Kosecki (34, 6/7/6/6) - 4,700,000/FA
MR K. Murphy (24, 7/6/6/7) - 300,000/ARB
1B J. Agua (26, 6/7/6) - 4,750,000/ARB
UT W. Lopez (33, 5/3/5) - 950,000/FA
OF S. Rodriguez (28, 7/10/8) - 7,500,000/FA
OF J. Lewis (25, 5/6/5) - 300,000/ARB
OF R. Mills (27, 5/4/4) - 500,000/ARB

Now, to see how much money we can spend on resigning the players look at the Team Financial Report on the Front Office screen. You'll see a total for signing extensions, and a total for signing free agents. The amount available for extensions is the total amount of all players' contracts who are due for arbitration or free agency plus cash on hand. For us, that means we have 36 million dollars to sign extensions ($29M+$7M cash). However, instead of figuring out how we're going to spend the $36M, let's look at it a different way.

If we let all 8 players go, our payroll would drop from $72M to $42.5M. We can project that we'll bring in somewhere around $70 million in revenues and we'll have around 5 million in cash (since we're projecting losses of $2M for this season). With our cash maximum set at $20M, the maximum amount of profits that we could make & retain next season would be $15M (cash max - current cash). If our goal next season is to fill the cash reserves back up to full, we'll want to keep our payroll around $55 million. Any less, and those extra profits just disappear, when they could've been spent on players. If we want to come somewhere close to breaking even again next season, we'll want to keep our payroll around $70 million, which would give us $27M to spend on free agents and arbitration. If we want to spend every last dollar we've got, we can do that too, but unless it brings a world series appearance along with more revenue and higher fan interest, we could be gambling with multiple of years of negative revenue, meaning no money to sign free agents, and less money to retain current players.

Now that we know how much money we want to spend, we can estimate how much it will take to resign each player, or how much they will receive in arbitration. Let's start with the players eligible for free agency. When we click on the 'offer extension' button we will see one of four responses from the player:

1. A specific contract request (4 million for 5 years) - More often than not a player will sign for slightly less money, or a year or two less than what he is requesting, although occasionally it will take no less than his demands.

2. "Let me hear your offer" - The player gives you no real idea what it will take to sign him. The best way to get a good idea of how much it will take to sign him is to do a player search for players with similar ratings at the same position and near him in age and see how much they are currently making. Make sure to note whether or not the player you are comparing was signed via free agency or an extension, as players will usually get more in free agency than they would if they signed an extension. (an easy way to find out is free agency contracts signed are noted in the player history, while extensions are not).

3. "I want to test free agency" - Although they say that, they will still be willing to sign an extension. Use the same process described in #2 to get an idea of where to start your offers.

4. "I want to play for a winning team next year" - You'll see this response if the player has a strong desire to play for a winner (although others who don't care will sometimes give this response as well) and your team is currently under .500. If this is a player you want to sign, you'll have to wait until your team's record climbs above .500 and sign him immediately.

Take your list of players eligible for free agency and estimate what it would take to resign each one. Also, note who you would replace the player with if you were to let him go, whether it be an emerging prospect, a current back-up, or if you'd have to acquire someone via free agency or trade. Let's take a look at our potential free agents:

continued next post
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Old 03-15-2003, 05:58 PM   #2
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OOTP5 Financial FAQ Part 2b Team Finances Year By Year-asamford

SP J. Crane - "let me hear your offer" - Crane is only 25 and is one of the top rated SP's in the league. Although there aren't any pitchers his age with the same ratings, older pitchers with similar ratings are making between $13-17 million so we'll probably have to figure at least $15 million to resign Crane. Seeing as how pitchers of his stature aren't that easy to come by, we should probably plan on resigning Crane.

SP B. Kosecki - "I want 4,200,000 for 3 years" - Kosecki is actually asking for less than what he is currently making, but at 34 with average ratings, he would be easily replaceable with either an average or better pitching prospect or a cheaper alternative on the free agent market.

UT W. Lopez - "I want $700,000 for 2 years" - Lopez isn't asking for much, less than what he currently makes, and he's versatile playing all infield positions. A good utility guy. However, if you have even a Fair Talent infielder in the minors with even as low as 3's for ratings, they wouldn't be that much less productive than Lopez, and would only cost 300k.

OF S. Rodriguez - "I want $12,500,000 for 5 years" - Rodriguez is a stud power hitter in his prime and is looking for his big payday. Ideally, a player we'd like to keep, but if we sign both Crane and Rodriguez, we'd be handcuffing ourselves financially for the next season and possibly beyond. If we could sign 2 or 3 quality players in free agency for the same amount it would take to resign Rodriguez, that might be the better way to go. However, if the rest of the team seems solid and Rodriguez is the difference between a championship and 2nd place, then it might be worth the risk. Probably a decision that will have to be made later on in the season.

Now, let's take a look at the four players eligible for arbitration.

MR K. Murphy - Murphy has been a solid young reliever and when we look at what relievers rated similar to him have been awarded in arbitration it ranges from 900k to 1.8M. Since this is Murphy's first year eligible for arbitration, his salary will probably be toward the lower end of the spectrum, likely no more than a million. Unless we're just loaded with good relief prospects ready to step up to the majors, Murphy would be a bargain to retain since veteran MR's with his ratings will command 2-3M per year.

1B J. Agua - Agua is entering his 3rd year of arbitration and if his ratings were to stay the same, would be awarded a contract worth slightly more than his current amount ($4,750,000). Probably somewhere around 5.25-5.5M. Since Agua is only one year away from free agency, it might be interesting to see if we can go ahead and sign him long term. "Let me hear your offer". Well, looking at Agua's age and ratings it would probably take at least $7M to sign him and he would probably accept no more than 3 years. If we let him go to arbitration, we get him at a discount for one more season, and if his ratings don't go up we can sign him to that same $7-8M extension after next season and by that point he's more likely to accept a longer-term contract as well.

OF J. Lewis - Lewis is a young power hitter who still has room to develop higher ratings. Again, we'll look at what players similar to Lewis have been awarded in years past and figure he'll be on the lower end of the spectrum since it's his first year eligible. For now, we'll figure Lewis will cost us about 1.8M next year. However, we need to keep an eye on his ratings as the season progresses, if they go up, so will his potential salary.

OF R. Mills - Mills is an average talent outfielder who has been a valuable backup at all 3 positions. It is beneficial to develop talents such as Mills so that as they mature, they can be quality bench players making the minimum salary. In his first year of arbitration, Mills was awarded a small raise over the minimum, and the same should be expected this season. At 500k, Mills was still an ok value, but since that will most likely be bumped to around 700-800k next season, we'd be better off cutting him loose and replacing him with another average talent outfielder from the minor leagues.

Now that we have a general idea of who we want to keep, and how much it will approximately cost balanced against how much we have to spend, it's time to decide what to do with the players we don't want to keep, or can't afford to keep. Ask yourself a couple of questions. Are they critical to our success in meeting our goals set for the current season? If so, we should probably just ride out the contract and accept the fact that we'll lose them at the end of the year, getting nothing in return. Are we no better or worse with them than without them, or do we already have someone on the bench or in the minors ready to replace them? Then maybe it's time to look at trying to trade the player. Even if all we can get is a fair-to-average prospect, those are the kind of players that develop into adequate backups making the 300k minimum, and the money we save by not paying backups millions of dollars can go towards the marquee contracts. So if it looks like all the AI will give us for our 34 year old average SP is a fair talent middle infielder in AA, that might be a good deal for us to make.

But, it's only May. No need to rush to any decisions just yet. There are some instances, however, where it would be advantageous to go ahead and negotiate an extension right away.

- If your team currently has a winning record and the player you want to resign has a strong desire to play for a winner, you might want to go ahead and sign him. Should your team falter and have a losing record later on, the player may not want to resign.

- If a player is eligible for free agency (not arbitration) but is still young enough (generally 25 or under) that further development during the season is possible. If the ratings go up, so will the demands.

Otherwise, it's generally best to do your negotiating later on in the year, if not at the very end of the year. The AI will be done signing extensions, and you can se exactly what talent will be available in next year's free agent market. Also, players are more likely to make specific demands rather than just asking to "hear your offer". Additionally, if your team makes the playoffs or wins the championship, occasionally a player will lower his demands in order to remain a part of your winning organization. Plus, you'll have another season's full performance to help you evaluate whether or not the player is meeting your expectations. Furthermore, you'll know exactly how much money you made or lost this season, and will be able to more accurately predict next year's revenues. Finally, you'll have a better idea which youngsters in your minor league system will be ready to "make the jump" offering quality at a budget price.

So, as of right now, we've estimated the four players going to arbitration will cost us around $9 million next season, but we'll probably let Mills go, bringing the total to approx 8.2M, placing our estimated 2004 payroll at 50.3M. If we were to sign both Crane and Rodriguez to extensions, our payroll for next season would soar to 77M, which would leave us with no money to fill out the roster. However, if we do well this season and bring in additional playoff revenues and draw more fan interest, it might just be possible. If we absolutely don't want to lose either of our star players due for free agency, but don't want to handcuff ourselves financially, we might want to look at trading a couple of players already signed to long-term contracts to free up some extra cash to do this.

Although we've decided that Kosecki, Lopez, and Mills will be expendable at the end of the season, their worth on the trade market would be minimal. However, if we have players in the minors who are ready to step up and replace any or all of them, we should try and at least move them for something, so we don't end up losing them at the end of the year and get nothing in return. But, we've got a plan, and it's only May.


JUNE
OOTP5 allows the amateur draft to be held in June now, instead of January (at your option). I prefer the new June draft as it helps break up the monotony of simming through a season, plus with the added players, it might make other prospects in your system available in a possible trade. I also like not having as much work to do in the offseason to get the next season started, and never liked the shifting gears of playing the free agent market then going straight into the ammy draft. Plus, it gives us something evaluate and think about in June, since otherwise all we have to do is work on possible trades.

JULY
Trade deadline coming up at the end of the month. Time to move any players that we have no use for who we'll lose at the end of the season. Time to either acquire the players we need for a run at the pennant, or trade vets to a contender for prospects. Also, keep in mind that any trades that are made that involve players under contract will have to accounted for in all of the budget notes we made in May.

continued next post
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Old 03-15-2003, 06:01 PM   #3
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AUGUST-SEPTEMBER
The dog days of summer leading into the first days of fall. In September two important things occur. Rosters expand to 40, and the AI finishes up it's contract extensions. We can now look at the Possible Free Agents screen (found in the News Section) and see exactly what talent will be available in next year's free agent market. This will help us make our final decisions on who we want to keep and who we want to cut loose.

Also, keep in mind that any players called up from the minors during the roster expansion of September will automatically use up their 1st 300k year. Generally, I'll only call up major league veterans who are currently in the minors, so as not to waste a valuable "cheap year" on one month's worth of performance. Of course I've also had instances where I lost a key player to injury in the last month of the season, and called up a top rookie to fill in because I was in the running for a championship, and didn't want a substandard reserve starting every day. Although it cost me a "cheap year" the rookie batted .417 and helped me get to the playoffs, so it may have been worth it.




END OF SEASON
Once the season ends, we have our last chance to sign our players to extensions. Also, any players eligible for arbitration who we don't want to keep, now is the time to release them. Also, review your finances, see if your revenues were ahead or short of your projections and adjust your budget accordingly.

Revenue - 71,000,000 Payroll - 72,000,000 Net - negative$1,000,000, Total Cash - $6,000,000

We sign Crane to an extension worth $15,200,000 for 5 years. We decide that since our best prospect is an outfielder and should be ready next season, we don't resign Rodriguez (which hurts, since we fell just short of the playoffs anyways, and could've gotten a ton of value in return for a superstar like Rodriguez on the trade market). We also are letting Kosecki and Lopez walk. We're going to let Murphy, Agua, and Lewis go to arbitration, and we release Mills so that he won't go to arbitration.

Now it's time to hit THE BUTTON.

'Proceed To Next Season'

Free agents are processed, amaterus are generated, and it's time for another season. Taking a look at 'League News' we can quickly see what all of our players eligible for arbitration were awarded. MR Murphy got 1,050,000. 1B Agua got 5,300,000. OF Lewis got $1,900,000. This puts our current team payroll at 65.9 million. In order to stay profitable we shouldn't spend any more than 4-5 million in free agency, although the game will tell us that we have 11.1 available to spend. If there's a huge name free agent that we really want, we'll have to trade salary to make the money available. Otherwise we need to figure out a way to turn that 5 million into a SP, a MIF, and 2 OF's. We have 2 young outfielders and a young infielder in the minors that will be adequate replacements. They will cost us 300k each this season, so that puts us at 66.8M. We now take the rest of the money we want to spend and get the best possible SP available in free agency, and with what we've got to spend, we should be able to get an upgrade over Kosecki, the player we let go last season. If we think one great pitcher is all we're lacking to have a championship club, then it may be worth the risk to go ahead and spend all of our available money (last year's revenue - current payroll + cash) on that one marquee arm.

One new feature in OOTP5 is the ability to offer players Minor League Contracts during the 30 day free agent period. This is extremely beneficial if you need a backup catcher or a fifth outfielder and have no extra money in the budget to get them. Look for for players with ratings in the 3's and 4's and fair to average talents, and these are the kind of players that will consider signing minor league contracts before the 30 day free agent period ends.

Finish free agency, get your 25 man roster together, run spring training, set your rotations, lineups and depth charts set, and, guess what, it's April again. Go back to the top of the article and repeat as necessary.
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