Making Sense of the PEBA's New Media-Rights Deal

[roncollins]

Yes this would be very helpful. The latest in-game estimate for next season shows us taking a rather large budget cut.

This is, I think, the reason small revenue teams (which is different from small market teams) have to avoid over-spending as they grow. Yes, the team made the playoffs once, but now that's almost impossible to sustain because the team's expenditures beyond budget drove the owner to slash budgets.

[Simon]

I got 2M increase...

[roncollins]

I got 2M increase...

Your Budget was $100M, your players and staff cost $67M (by statslab, anyway). One assumes then that your scouting and development budgets added up to less than $33M, so you operated at a profit. My guess would be $30M for your S&D, but that's a pure guess. I think it's about as simple as that, operate at a profit and your budget goes up, operate at a loss and it goes down. If I'm right, it's quite important to build slowly if you want to create a dynasty or at least a consistent team because if you over-shoot, you get a budget cut, and your organizational momentum goes down the tubes.

We (Toyoma) generated $164M in revenue (6th best in the 16 team SL, 10th or 11th best across all PEBA). We spent $150M (which I'll tell you included $36M in Scouting+Development), so we made $14M in pure profit (to go with the cash we had on hand). This led to our budget increase of $18M (from $138M->$156M). This will probably put Toyama almost in the top 10 budgets in the league next year, depending on several other things. If I keep it up for another two seasons or three seasons, I might force my way into the Big Boys' Country Club as a Top 5 Revenue Generator...but it's a long, long haul.

I've been working on this for four very long seasons. To give you a clue how far I have to go, my $164M revenue was $61M shy of both Aurora and Shin Seiki...both of whom were $225M+.

$61M is more money than Dayton ($49M) and Neo-Tokyo ($53M) spent on their entire teams last year. Canton spent $64M. San Antonio spent $67M. So the gap between Toyama at about #10 and the top is, on average, about what it took to staff any one of four different teams. :)

[roncollins]

Just 'cause I got interested, here's our march through the ranks:

Toyama/Lupin Budget:

2020: 26th Biggest (last season in LRS, but compared to all PEBA teams)
2021: 25th
2022: 23rd
2023: 15th
2024: 10th

[Simon]

My season profit was...1.96M, so basically nothing.

I had 12M in development and 12M in scouting last year, and its absolute minimum i want to have.
The only thing i can do is keep winning so i can rise ticket prices.

And keep payroll low.
Im gonna risk and offer qualifying offer to my soon-to-be free agent Johnson. He wants 22M extension, hopefully wont accept 15M.


By the way, i have 30M cash. If i dont spend it on free agents, will it count to season profit later, or its just wasted money?

[roncollins]

Profit is profit. That $2M profit is probably what got you the $2M budget bump (my opinion, anyway).

Your cash will not count to your profitability, but obviously having cash on hand (or extra budget for that matter) allows to you spend more in other areas that don't go to budget or that are constrained to only this year.

Note that you can blow budget by spending case or trading for players with higher salaries than your budget allows and still be very profitable.

Our budget last year: $138M
Our expenses: $150M ($12M more than budget)
Our revenue: $164M

You have to be careful, though, and at least somewhat cognizant of what you're doing. If I take that tact, I always do my best to have an "out" pre-planned because I always want to be profitable. Right now, for example, the plan for 2024 is to make $27M on our new $156M budget (I project $183M of revenue next year). It assumes our gate will not go up. Depending on how things look, I might spend up to an additional $15M on "one-year-things" (total spend $171M). That would reduce our projected profit to $12M, but should ensure we increase budget next year. If attendance looks like it will go up early in the year, then I might increase our estimate for expected gate and hence allow myself a little more growth.

[roncollins]

These are among the things that make me keep saying that revenue is the real king here, and that budget is the effect, not the cause, of success. Revenue allows teams to grow and win and keep adding to budget. Budget constrains growth to a greater extent, and (for those who try to win "too fast") lack of budget deflates teams and leads to very short runs.

This is opinion, by the way. Semi-experienced opinion, but opinion, nonetheless.

It's probably _possible_ for small revenue teams to win in a burst and make it sustainable (mostly due to very low payrolls and lots of young kids), but I think those are as much lucky GMs as they are good.

[Simon]

Our budget last year: $138M
Our expenses: $150M ($12M more than budget)
Our revenue: $164M

Nothing of this sort is going to happen in San Antonio next year

[Denny]

Profit is profit. That $2M profit is probably what got you the $2M budget bump (my opinion, anyway).

Not sure that is the whole story--Palm Springs made $3.1M in 2022 and was rewarded with....a $4M budget CUT in 2023 So I think there must be more going into it than just profit -> budget increase. Probably the cheapness of one's individual owner makes a difference, plus who knows what else.

In a way that is comforting....if there was a single "right way" to win, it would take the bloom off OOTP for me quite a bit.

[roncollins]

Profit is profit. That $2M profit is probably what got you the $2M budget bump (my opinion, anyway).

Not sure that is the whole story--Palm Springs made $3.1M in 2022 and was rewarded with....a $4M budget CUT in 2023 So I think there must be more going into it than just profit -> budget increase. Probably the cheapness of one's individual owner makes a difference, plus who knows what else.

In a way that is comforting....if there was a single "right way" to win, it would take the bloom off OOTP for me quite a bit.

Perhaps you have to make a small return. $3M profit on your budget is in the ballpark of 1.5%. Or, yes, it could be leveraged to owner.