As I am want to do, I got interested in BBA finances this morning. Blame it on Lane and Jim and Mike for a little conversation they had on discord. It's really not my fault. Yet still it happened and so I went to stats plus and pulled some information from both last year and this. Ultimately, what I was trying to do, was to confirm my basic idea that this year's budget is simply last year's revenue. That's always seemed like a good rule of thumb to me, and it's always made sense when I thought about it from a simple owners point of view. An owner's role in OOTP, barring the fact that we in the BBA use them for storylines and other frivolous fancies, is to keep a team from going too far into debt. Therefore, I figure an owners only goal is to project out how much money our team will make in a season, and then set the budget to make sure we don't overspend too far.
But is that true?
So I took all of our revenue data from 2056, split by revenue source (media contract, season ticket revenue, gate, merchandising, and playoffs). I sorted this by media contract, and then against each teams revenue structure I plotted each team's payroll, and both this year and next year's budget.
Here's the data. It's interesting isn't it?
A Few Words of Analysis:
On the whole I'd say my viewpoint is pretty much still a reasonable estimate, meaning that last year's revenue (discounting playoffs) it's a pretty good representation of next year's budget it's not as perfect as I would have expected as there are five teens for which that method overstates by upwards of $5 million or more. There are also several teams with budgets this year not in considerably higher than their revenue last year. So am I wrong?
Well...
I don't think so. Or at least perhaps there are a few nuances to learn here.
First and foremost pretty much every situation where this year's revenue understates next year's budget comes accompanied with a fairly substantial increase in media contracts. For example Atlantic cities media contract in 2057 is $80 million, whereas it was only $68 million last year. You can find similar jumps in other places.
So I need to adjust my frame of reference, which was built on the idea that all media contracts were the same. Now that we allow them to vary, it seems like the better rule of thumb is that the owner will set next year's budget based on this year's variable revenue (meaning season tickets, merchandise, and gate) and then tax on the newly identified media contract. That may seem like a trivial statement, and i suppose i could get away with that, but as you can see in this chart BBA media contracts range a considerable distance.
I'm still not sure why we changed to allow them to vary again, but it is what it is.
Interesting point #2:
I also note how most of the teams whose budgets (revenue predictions) are on the richer side of the chart, and how almost all teams in the lower 3rd of revenue projections have slightly higher budgets than I would have expected by my simple rule of thumb. This suggests to me that the game itself is doing a little bit of adjustment, limiting the top end slightly, and giving a very small leeway to small market teams. This makes some sense from a system engineering standpoint, as applied to game development theory. It makes sense that the game would attempt to tilt the competitive environment to a game that remains interesting. That said the tilt is very small. Assuming it is there to begin with. This is after all only one piece of information built off of one league and one year. Treat as you will.
Interesting point #3:
Take a look at the “payroll” line. I note that it is not actually payroll, but is instead player expenses. Which maybe is the same thing but not in the way I tend to think about it. Payroll is what I think of as dollars that go to players who get onto the field. But this line is capturing all the money we spend on players of any kind, meaning free agent bonuses, or, I assume performance bonuses (that's something that always annoys me that OTP does not actually split out into its own financial line, but i assume that those expenses go into “play your expenses”).
For example look at Sacramento, which obviously I am very familiar with. Their player expenses were well over $140 million. This reflects the bucket loads of dollars that I spent on bucket loads of minor league bonuses. In a year with IFA, those dollars would fall into this bucket also. Note also, for example Charm City, another notorious user of IFA and minor league bonuses. If you got it, use it, right?
Interesting point #3:
Notice how playoff revenue does not seem to budge anything. To me this is a very good indicator that my viewpoint that playoff revenue is not incorporated into the owners viewpoint seems to be consistent with the data.
Interesting point #4:
Notice two major outliers, which are extremely interesting points of conversation. I am not 100% certain what to make of them, but they are fun to think about.
The first is Chicago, where the team is purposely not using its funds to boost payroll. They spend less on players than any other team, by a very wide margin, despite having an extremely large budget. I find it interesting that their budget remains as high as it is. Part of that is because their media contract is still on the very high end. And in fact it did increase something like $3 million this year. Why that is, is something for OOTP wonks even nerdier than me to figure out. But the bottom line is that financially, they can keep running quite well forever at this level. Of course they are not winning any games right now, so one wonders at which point that are lower season ticket and revenue streams will collapse to the point where they fall to the back end. If that time is soon, the crash could be pretty harsh. But we will see.
Learn something new everyday, right?
The second outlier is Des Moines, where the story is happier. Des Moines still has a very low media contract, but they have managed to build an infrastructure that leads them toward budgets of $140 million. That really nice playoff spike is going to do nothing but help, and one can't help but feel that somewhere in the ether that be Kernel for life, Ed Murphy, is smiling broadly. Congratulations to Patrick.
Interesting point #5:
Notice there are sixteens (Brooklyn, Charlotte, Edmonton, Bikini, Madison, and San Antonio) whose total revenue stream lies considerably under the $120 million salary cap. This means that for those six teams the salary cap is essentially meaningless. Even with a full $20 million of cash on hand they could not spend past the salary cap. This is a dynamic that existed before we had stable or media contracts, and obviously it exists now too. Technically if Madison has $20 million of cash on hand they could spend it all on players and get to the cap. But that means they would have no coaches, be unable to sign draft picks, be unable to participate in IFA, or other such reindeer games.
Operationally, what this means, is that if you are managing a small market team in the BBA, you have to set your own spending limits on players. If we assume spending only $5 million on your coaching staff, and drafting at the high end means you will need to spend upward of $15 million to sign big name pics, and you want to play in FIFA to some degree—let's say $3 million worth, you'll need to set aside something like $25 million to start with.
Bottom line: it's probably time to get super active on the forums, the team news, and features, because you're gonna probably want to use PPT to bump up that budget, and to add cash. In that 10 PPT per $1 million, that's a lot of writing.
Interesting point #6:
I know it also a simple scan across the chart shows another sixteens that are right at that $120 million salary cap line. Depending on their specific situations, there is some reasonable likelihood that they could benefit from bumping cash on hand or budgets, also. They say that because for the most part there play your expenses line runs up there pretty close to the salary cap level, would suggest to me that they are unable to spend money in other areas that might help them in the future.
Admittedly though, I remain blissfully ignorant about their specific situations. Anything I say about them right now is purely hypothetical.
Final Summary:
As noted above, on the whole I still think the idea that the owner sets next year's budgets by projecting out next year's expected revenue. The one piece I need to personally add into my frame of reference is the idea of variable media contracts come on which I find a little bit irksome simply because I do not know how to project their movement, and that makes it feel like semi-random point of competitive advantage. I assume it will have to do with market sizes, fan loyalty(history of winning?), and fan interest, but I've not been able to assess a reasonable guesstimate for this behavior. Please educate me in the comments if you know better than I do.
