Wednesday, September 2, 2009

League Changes?

I have some concerns about competitive imbalance and the future of this league. I thought I'd make a post to see if anyone else shares these concerns, and if so, whether there is a way to address them. I started drafting this post a few weeks ago when we were still in the regular season, but I decided to wait until the new budgets and media contracts were announced to see if the problem is getting better or worse. I'm now convinced that it is not getting better and may be getting worse. A while back, I started a post about some possible changes to the financial settings. There was a good discussion but many of the suggestions either died on the vine or were voted down. Since then, we've all gotten a bit more familiar with version 9.0, so this seems like a good time to revisit the discussion.

My concern is that we basically have two teams that have accumulated such a high degree of talent and wealth that it will be extremely difficult (but not impossible) for other teams to remain competitive. Much of it is the result of excellent strategy and planning by the GMs of those teams and they deserve credit for doing so well. This post is not, in any way, an attack on those GMs who obviously play the game the way it should be played. :) But for me, at least, it's not a lot of fun playing in a David versus Goliath environment.

Here is a quick background to illustrate some of what I'm seeing. I took over my team just prior to the 2013 season. The team had a fan interest rating of 13. It was a terrible team overall, but I had a few really good young players that I could build around. I ended up with a 58-104 record in 2013. In 2014, my team's record improved to 72-90 and attendance/fan interest/revenues increased significantly over the prior year. As a result, I was hopeful that my 2015 budget and media contract would increase. But in the last sim I learned that my budget actually DECREASED by $3 million this year. This severely hampers my ability to compete in the free agent market and to acquire good players via trade, which makes it almost impossible to contend. It just doesn't seem right to me that an organization should be penalized for improving, which is essentially what has happened.

I'm competitive by nature, and honestly, it's just not fun for me right now playing in the current environment. It would be different if I felt that I had a decent chance to win in a few years, but I don't. Cleveland was a nice story this year, making it to the finals and coming ever so close to winning the championship, but (no offense intended to Jeremy whatsoever) given the difference in talent between the River Cities team and the Cleveland team, I view that as an extremely improbable and unlikely outcome. It happened, though, which cannot be denied. But even if I am wrong that Cleveland had no business getting to the finals in the first place, Cleveland's 2015 budget ($57 million) is barely higher than mine ($52 million) even after making it to the world series! That is just wrong.

So here is a list of possible changes for consideration and comment. This is not intended to be a complete list, just a starting point for discussion.

1. Impose revenue sharing and/or a luxury tax. According to the OOTP manual, revenue sharing only benefits teams that sustained a loss, so that is unlikely to benefit many teams. Personally, I don't like the idea of revenue sharing because it has a tendency to "reward" teams that lack financial restraint. A luxury tax is permitted by the game, but the manual doesn't explain how it works. If a luxury tax is implemented, I think we would probably need to do something about the cash cap. It wouldn't make sense to divide the proceeds of the luxury tax among the smaller market/less competitive teams, only to have that money be lost to the cash cap.

2. Impose a salary cap. This probably deserves its own topic because there are likely to be many opinions about it. But it's definitely something that should be considered.

3. Modify or eliminate the cash cap. I know we discussed this previously and the decision was made to keep it unchanged, but it can't hurt to revisit the issue now that we have another year of experience. My opinion is that the cash cap should probably stay even though it is artificial, because the most successful teams could just start hoarding cash and become even more dominant. But I do wonder whether it should be modified. At a minimum, it seems to me that the cash cap doesn't always work as intended. In at least one situation, the cash cap actually helped a team (Los Angeles) by capping its annual loss at $10 million when its actual loss was significantly higher. This isn't Michael's fault at all, but it has happened for 2 years now. Honestly, I don't know if the solution is to increase the cash cap, eliminate it entirely or do nothing - perhaps people with bigger brains can weigh in.

4. Adjust the media contract settings. The variance in media contracts in this league is extremely significant. Seattle's media contract exploded this year to $70 million, twice the amount of the two lowest teams (one of which is world series runner-up Cleveland, at $35 million). My team is one of the $35 million teams, even though I have a "Big" market. Every team in the league has a "Big" market or better, so it seems that "Big", in this case anyway, is actually small. It is my understanding from speaking to Mack that media contracts are renegotiated from time to time, but I don't know when that happens. The OOTP manual is somewhat confusing on this point. It says: "Media revenue is partially driven by team market size, fan loyalty, and fan interest. However, the biggest influence on media revenue are the Average Media Contract and Media Contract Fixed? settings." So possible changes include changing the average media contract amount (currently at $40 million), or fixing the media contract amount for all teams (each team gets the same amount in annual media revenue).

5. Change the "Team Owner Controls Budget" setting. I am not sure about this, but I think that changing this option to GM control will make more money available.

6. Free agent compensation. OOTP 9 permits this, but it doesn't always work very well. Still, it's another option for less competitive teams to get some compensation if they can't afford to resign their good players before they depart for free agency.

7. Greater flexibility in spending. Nate made some good suggestions in the last thread that are worth repeating. Some of the options he mentioned are allowing teams to spend their cash on things like (a) custom stadia (i.e., changing park dimensions, dome/open, adding seats); or (b) team "marketing" (to increase fan interest, fan loyalty, and/or market size). Adding these options will increase the administrative work for Zev, so that's something to consider as well.

I just re-read this post and I think I come across like a self-absorbed whiner, but I've spent far too much time on it already, and I'm not going to spend more on editing. :) So please accept my apologies for the tone. Thanks for considering the above. Any thoughts?

14 comments:

  1. There's a lot to chew on here, and I'm going to spend some time thinking about it. But, it seems to me that there are two issues. First, Nate and I have really good teams and organizations from a talent perspective. I've worked hard to build my team though, and I don't think that any feasible way to correct for that (e.g., taking players away in some form from Seattle and River Cities) is particularly fair. And, I don't think that's what Matt is suggesting anyway, so let's set that aside.

    The second issue, which Matt seems to really be addressing, is the financial disparity. I mean, Seattle's budget is twice as high as Maui's. Some of that is justifiable because my team has been really successful. It also mimics real MLB. But, let's face it, the parity level in MLB sucks. A few low revenue teams sneak into the playoffs, and can even win, but it's a hell of a lot easier to win if you're the Yankees or Red Sox than if you're the Twins or Royals.

    So, to me, the question is whether it's worth cutting down on the financial disparity among the teams. And, I don't have a problem with that. Since I've already spent basically all of my money for the 2015 season, I'd just suggest increasing teams' revenue and budgets as necessary to bring all the teams within, say, $20 million of each other.

    It's going to cause some serious inflation, but it's probably good for the long-term success of the league.

    Anyway, that's my quick reaction. As I said, there's a lot to consider here, but I'm glad Matt raised the issue.

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  2. So as I'm looking at this, I take a look at my budget for the year, and I admit it makes sense - my attendance income was down from last year, but my media income is up next year. So my budget is around $4M over my last year's revenue.

    Can anyone explain Michael's budget?
    His revenue last year was $74M. His media number for the upcoming year is the same as last year. And his budget is $102M???
    Having a high budget let him run an $18M deficit last year, and in theory next year he could run at an even higher one, with no penalty (except perhaps that he'll be limited to a lower scouting budget, if I understant that right).

    Like Matt, I don't want to appear whining, but for the life of me I can't figure that out. Is it his Market Size of Huge?

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  3. I would suggest we not get side-tracked onto Michael's unique budget/revenue issues. I think it's a carryover effect from his team's significantly larger merchandising revenue in 6.5 and something that the conversion to 9.0 didn't handle well. That's its own issue that I trust Zev to handle and sort out fairly.

    The larger issue is the level of competitive balance/imbalance in the league, whether steps should be taken to address it, and (if so) what steps should be taken.

    If I get the time tonight, I'll post some data I came up with looking at version 9. The quick synopsis is that revenue appears to follow team success pretty well. The budgets are much harder to understand.

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  4. I understand what you're saying Mack, but it's really budget that's important, not revenue.

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  5. I think I disagree, Paul. But I would set a 'no deficit' rule if I had my way. Or, if there was a deficit, have it accumulate and need to be paid back in future years or out of savings.

    Let's try Matt's point one at a time:

    1. Luxury Tax/Revenue Sharing. Implementation becomes a tricky thing as several teams have players locked up for long term deals and the ability to change the settings and adapt to those changes is limited.

    2. Salary Cap could be implemented but the point at which it should occur is open for discussion. Also, does it impact player salary demands? If not there will be a lot of players that won't get signed at the top of their careers and will retire.

    3. Modify or eliminate the cash cap. I support this utterly. I think I always have.

    4. Adjust media contract settings. I agree that this is where the disparity comes from. My current run of success began when my media income jumped $17MM in one year due to both of my contracts renewing the same year and my tema finishing just out of the playoffs. I could see altering this in such a way as to not raise the average (that's inflationary) but rather bringing teams at the high and low end closer to the mean.

    5. Team owner controls budget. I have no idea what the impact of this would be and I hesitate to speculate.

    6. Free agent compensation. I support this wholeheartedly as well. Draft picks are valuable commodities.

    7. Nate's great plan to burn off money. I also support these uses for money provided the cash cap is raised or eliminated.

    But I look forward to seeing Mack's data.

    Look, I was a primary advocate of introducing the wild card into the league to promote competitiveness. And no team has been hurt by it more than mine as I would have gone one-on-one against Mack the last two seasons but was beaten by the wildcard team each time. I dig competitiveness but I'd like to see subtle, clever solutions to the problem that work within the system instead of attempting to fix something that might not be broken.

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  6. Very well written post, and was quite fun trying to read it on my Blackberry this morning on the Tube. Matt had bounced some of these ideas off of me earlier through e-mail, and I know has been thinking of this for a while, and I do think it is a good idea that it is now out in a forum.

    So here is where I am coming from. I have been working hard to take my team the last 3 seasons from 100+ game loser year in and year out to Cecil Cup Champion, and I came within one game of doing so, 2 years ahead of schedule. It has been a tough road with many trades that were questionable at the time, some have worked out and some have not, but I am getting there. I think I have proved that it can be done; you just have to be patient. As Mack knows, I am for realistic play, and in real life there are teams that have lots of money and those that do not. It also takes many years to turn a team around; it does not happen in one season. I knew that it would take time to get my pitching in order and get things right, and I did, one piece at a time. The challenge will be keeping the team together as they start to head to FA, and that will be impossible if my revenue does not increase as I am better longer, which I think it will. Everyone knows that you do not receive the income til the year after you are good, we will see if the program follows this pattern.

    The main thing that I think has to happen in this league is the abolition of the cash cap. I have been for this forever. I would have about $30-$40M in the bank that I could use this offseason in FA to make up for the loss of Villapando (Yes, I am going to keep brining that up), who was going to be a very big part of my team next season and beyond.

    I am not really for the rest of the ideas, except for the FA compensation; I can go along with that. The media contracts are odd and have come up in other leagues I am in, but I would like to see how it goes in the future before I jump to changing that one.

    There is my comment; I look forward to the rest of the discussion.

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  7. Sorry I didn't get to post last night, but that pesky real life thing got in the way. Here's the first data set.

    To my mind, version 6.5 had the budget thing right. The budget basically equalled last year's revenue, adjusted for changes in media contracts, plus available cash. I haven't figure out the formula behind how version 9 sets the budget. But, here are the budgets as they are and as they "should be" in Mack's view:

    Brooklyn: is $94.4M, should be $98M
    Cleveland: is $57.1M, should be $67.4M
    Danville: is $62.6M, should be $60.8M
    Hickory: is $64.9M, should be $74.6M
    LA: is $102.2M, should be $64.7M (or less, if the cash were adjusted downward)
    Maui: is $52.6M, should be $58.4M
    NY: is $77.2, should be $77.7M
    River Cities: is $114.1, should be $126.2M
    Saskatoon: is $83.1M, should be $96.9M
    Seattle: is $118.5M, should be $134.9M
    Walla Walla: is $78.9M, should be $93.4M


    What do I conclude about this? A couple things.

    1. Fixing how budgets are set to make them better track revenue is not the answer to addressing the parity issue. Nate and I would benefit as much or more than anyone from an adjustment to the 6.5-style formula.

    2. If I had to guess, I'd say that the budget in version 9 is set to "drag" behind year-to-year fluctuations in revenue. It's also possible that the game tries to create profits for the owners, which I guess is realistic.

    I'll try to get my revenue numbers up later today. But, I suspect people want me to do the work that they pay me for first.

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  8. I just saw a math error. Seattle's budget should be $144M ($119M revenue + $25M media contract increase +$10M cash).

    I don't think "fixing" budgets to match available resources is going to be a winner of an idea. :)

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  9. I also looked at team success, revenue, and the ensuing budget. Here's the data:

    Brooklyn - Huge market size
    2013 - 82-80 (Wild Card), $71.3M revenue, $91M budget for 2014, $13M media revenue increase in offseason (high budget IMHO)
    2014 - 79-83, 97.8M revenue, 94.4M budget for 2015 (low)

    Cleveland - Rather Big
    2013 - 61-101, $43.5M revenue, $56.7M budget (high)
    2014 - 83-79 (Wild Card), $57.5M revenue, $57.1M budget (low)

    Danville - Huge
    2013 - 66-96, $50.4M revenue, $65.9M budget (high)
    2014 - 65-97, $50.8M revenue, $62.6M budget (high)

    Hickory - Big
    2013 - 79-83, $53.9M revenue, $65.3M budget (high)
    2014 - 83-79 (Wild Card), $64.5M revenue, $64.9M budget (low)

    Houston - Huge
    2013 - 71-91, $49.4M revenue, $67.5M budget (high)
    2014 - 74-88, $56.7M revenue, $64.1M budget (low)

    LA - Huge
    2013 - 74-88, $74.5M revenue, $107.6M budget (way high)
    2014 - 75-87, $74.7M revenue, $102.2M budget (way high)

    Maui - Big
    2013 - 54-108, $42.5M revenue, set $55.4M budget (high)
    2014 - 72-90, $48.4M revenue, set $52.6M budget (low)

    NY - Rather Big
    2013 - 112-51 (Wild Card), $82.0M revenue, $81.2M budget (low)
    2014 - 73-89, $73.3M revenue, $77.3M budget, $5M media increase (ok)

    River Cities - Very Big
    2013 - 113-50 (Division), $108.1M revenue, $112.1M budget, $7M media increase (low)
    2014 - 109-53 (Division), $116.2M revenue, $114.1M budget (low)

    Saskatoon - Huge
    2013 - 81-81, $68.9M revenue, $79.3M budget, $15M media increase (low)
    2014 - 69-93, $86.8M revenue, $83.1M budget (low)

    Seattle - Astronomical
    2013 - 119-43 (Champs), $113.9M revenue, $117.1M budget (low)
    2014 - 109-53 (Champs), $119.9M revenue, $118.5M budget, $15 media increase (low)

    Walla Walla - Huge
    2013 - 61-101, $55.9M revenue, $74.5M budget, $19M media increase (low)
    2014 - 81-81, $83.4M revenue, $78.9M budget (low)

    I haven't thought about this enough to draw many conclusions, but one is that I think revenue does roughly track team performance, with perhaps a slight lag (as in the real world).

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  10. Damn. I just realized that the way budgets work is that owners can spend the budgeted amount plus any available cash. That makes a lot of the above off. Damn.

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  11. Just a quick note about Michael's situation -- Michael and I have discussed it. In short, I'm trying to work out an ideal solution that balances two needs:

    1. Preventing the situation from happening again and ensuring that he (and other teams) stay reasonably within budget.

    2. Not just yanking the money away and causing LA to be cashless for the next four years.

    Zev

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  12. As for Matt's post --

    I normally don't get too involved in league debates on issues because I don't want to influence the matter as commissioner. However, I do want to give a suggestion or two.

    Personally, I don't like the idea of a hard salary cap. OTOH, a looser model of a cap might work -- for example, perhaps something along the lines of a tighter range of media contracts for everyone with a higher cash cap -- this would keep most teams in the same range while allowing owners greater flexibility to save money from one year to the next.

    Zev

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  13. Zev's suggestion is something I can support. With that framework in mind, and considering the comments above, I'm going to posit a few suggestions for voting or discussion. Would other owners support changes along the following lines?

    1. Adjust media contracts to be roughly within $20 million of one another. Seattle's would stay at $70 million and other teams' media contracts would be adjusted upward with the lowest teams at $50 million. This is probably the best way to help league parity without taking money away from teams.

    2. Increase the cash cap. There doesn't seem to be wide support for eliminating the cash cap entirely, so increasing the cap may provide a good compromise. Maybe $25 million?

    3. Allow for free agent compensation.

    4. Allow teams to spend extra cash on marketing or similar items as suggested in point 7 of my original post. This assumes that Zev and Michael are willing to shoulder the additional administrative burden of this change.

    If the above framework is acceptable to other owners, my suggestion is that we implement them now while the issue is primed, rather than let another season go by.

    Thanks to everyone for the good discussion so far.

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  14. Another thing I forgot to mention is that the free agent compensation system in the game doesn't work perfectly. If we choose to activate this option we'll either need to live with the quirks or additional work will be needed from Zev or Michael to "fix" it. So that's something to consider as well.

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