“MLB `06: The Show” Franchise Management FAQ By MR. Kim Dalton Rodieck ----------------------------------------------------- TABLE OF CONTENTS ----------------------------------------------------- Version history Introduction Explanation of cost structures Viewing your financial health The Save-Test-Load method PRESEASON MANAGEMENT Franchise goals Editing Players Releasing players Setting rosters Free Agents Hiring a staff Training and rehabilitation budgets TV contracts and primary advertisers Billboard advertising Loans and banking Transportation IN-SEASON MANAGEMENT Player fatigue Player morale Player advertising Team advertising Promotions Ticket prices Concession prices Overhead Adding vendors Parking prices Adding seats Loose Ends OFF SEASON MANAGEMENT Shared revenue tax Resigning players Trading players Amateur Draft Signing Free Agents How Did I do In Season 1? Last Words OTHER STUFF Appendix 1: Elasticity Appendix 2: Accounting for the shared revenue tax Wish List for Future MLB Games Reader questions Contact information Music List Credits and thanks Legal stuff ----------------------------------------------------- Version History ----------------------------------------------------- v.1.0 3/9/06 -First version complete. V.1.01 3/20/06 v.1.02 4/02/06 v.1.03 5/10/06 -Corrected as many spelling errors as I could find. -Added "Overhead" section. -Updated "Releasing Players" section -Added "Editing Players" section -Updated "Setting Rosters" section -Updated "Resigning Players" section -Updated "Promotions" section -Updated "Reader Questions" section -Added "How Did I Do In Season 1?" section -Added a personal music list at the end -Updated "Amateur Draft" section -Updated "Ticket Price" section ----------------------------------------------------- INTRODUCTION ----------------------------------------------------- Hello, once again, baseball fans to another season of MLB video games. The year is 2006 and we are going to take a look at MLB `06: The Show. More specifically, we are going to take a look at how to manage a successful franchise in this game. In my FAQ for MLB 2006, I focused on, for the most part the business side of running a franchise. This FAQ will contain all the business know-how that you need to run a profitable franchise, but I have also added a few sections that have nothing to do with business. This makes this FAQ more about being successful at more aspects of franchise mode as opposed to just making money (which is actually the point of franchise mode). I also wanted to be a lot more thorough because I believe that there will be many players out there who are totally unfamiliar with the MLB franchise mode, and I would like to give them as much information as possible to see what this game has to offer and what you can do. Most of this FAQ is brand new, but there were some sections that I simply copied from my MLB 2006 FAQ and pasted (with negligible modifications) them here because I really have nothing new to say. In such cases, I like what I previously wrote, and I am going to stick with it. In those cases, the rules still apply, and it just saves me a lot of time. However, I really wanted to write a new FAQ because, since the competition for new baseball games has been narrowed, many of you will be playing an MLB game for the first time, as opposed to some of the other baseball games on the market. If you are playing a baseball game from this series for the first time, then this FAQ is really for you. I try very hard to make sure that my strategies are understandable and clear to the average gamer. This FAQ is, after all, about Franchise mode, which can be rather complicated to manage. Therefore, I hope that new players of this series can be helped by my FAQ. Many of you are already familiar with the MLB series and I hope that my last guide was helpful to you in being able to run a successful franchise. If that is the case, then I should mention that there is little change in franchise mode from MLB 2006 to MLB 06: TS. If you gained a lot of financial success in the previous game, then all you have to do is apply the same rules and you will continue to be successful. However, I strongly recommend that you at least skim through this FAQ to pick up on any new strategies and recommendations that I have made so that you can compare strategies. There are two major improvements in this FAQ that I have made since the last one, and I hope that you will take a look at them. First, I added a little section about what the Save-Test-Load method is all about and how to use it. That way, I don’t have to painstakingly describe how to properly employ this method in each relevant section. I can just refer to the STL method, and you should be able get the hang of it. Second, I added two lengthy appendices at the end which will give you an even deeper understanding of how the business side of this game works. Appendix 1, which is about the economics concept of elasticity, will give you some insight into the dynamic relationship between price and revenue. Appendix 2 is about using a real life example from MLB 2006 to calm everyone’s fears about the dreaded shared revenue tax. In that section, I explain why it doesn’t matter that your income statement shows a loss of $47,000,000. Lastly, as I said before, I am sure that there will be many of you out there who will be playing a game from the MLB series for the first time. I hope that this guide is helpful to you, and even more importantly, I hope that I have written this guide clearly enough for anyone to follow. Play ball! ----------------------------------------------------- EXPLANATION OF COST STRUCTURE ----------------------------------------------------- Understanding this section is very important to having a good understanding of how costs are paid. First, almost all costs and revenues are tracked on a daily basis. In other words, you will have to pay out money for salaries, training, rehabilitation, and other things for every day of the season (including the playoffs if you are skilled enough to make it to the post season). For example, if you have a player who has a yearly salary of $10,000,000, then you will have to pay $55,555 per day to that player. This same rule applies for all players as well as coaches and scouts. Training and rehabilitation follow the same rule. If you decide, at the start of the season to, devote $30,000,000 to training, then that will cost you $166,667 per day. The above principal is very important to making decisions about hiring new personnel (which is discussed later). Here is how to view costs with a simple example. Suppose that you have a hitting coach who is being paid $1,500,000 per year. You decide that you want to hire a new hitting coach who wants $2,000,000 per year. What is the cost of the new coach? The answer is $500,000 because that is how much more money you have to spend in order to upgrade your coach. But we want to view this upgrade in terms of daily costs. Since the cost of the upgrade is $500,000, that added amount spread out over the period of (approximately) 180 days is just $2,778 extra per day. Costs like those mentioned above have to be paid every single day of the season, no matter what. You will notice that your balance sheet will be in decline when you have a day off or if you are playing games on the road. That's because you are paying the cost of salaries and such during this time. When you are playing home games, you will be able to collect revenue from concessions, tickets and parking. This is when you earn your profits. You are still paying out the costs mentioned before, but you will also be earning revenue from which costs will be deducted. The difference between revenue and cost is your daily profit. Just remember that you can only earn profits when you are playing at home. The cost of things like new vendors, additional seats, training and rehab facilities are one-time costs, and you do not pay for these over a time period(aside from maintaining the facilities of course). Transportation is a cost that is paid in full at the start of every year. This will be discussed more later. ----------------------------------------------------- VIEWING FINANCIAL HEALTH ----------------------------------------------------- There are two ways to check the financial health of your franchise. The first way is by checking your balance sheet and the second way is to check your funds. Let me talk about the balance sheet first. You can access this information by pressing the circle button when you are in the franchise menu screen. Your balance sheet (Actually, what you are looking at is not a balance sheet, it is an INCOME STATEMENT, and it annoys me to no end that it is referred to as a balance sheet, because you don’t want this to balance! If it balanced, your net income would be zero. That’s enough of my little accountant rant) has two major categories which are INCOME and EXPENSES. Your NET INCOME is income minus expenses. The balance sheet is just a year to date snapshot of your profits (or losses) for the year. The only real reason to be concerned with the balance sheet is that it can be used as a tool to determine how much money in profits you are earning per home game. When you are about to play a home game, write down how much net income you have earned to date. Play the next game and take a look at your new net income figure. The difference between those two figures is the profit that you are earning per home game. Thus, every time you play a home game, your funds will increase by that much in the short run. Ultimately, every dollar of revenue that you take in and every dollar of expense that goes out is logged somewhere on the balance sheet. Let’s take a look at it the balance sheet and see where your business activities will be logged. INCOME FACILITIES: money earned by selling concessions, tickets and parking. LICENSING/AD SALES: money earned from TV, billboard and primary advertising contracts. SHARED REVENUE: this is the rebate that you get at the start of the year from the shared revenue tax. LOANS: If you took out a loan, then the amount of that loan is logged here. EXPENSES STAFF SALARIES: this is where the salaries of your coaches and scouts is logged. TRAINING/REHAB: the amount of money that you spend on training and rehabilitation is logged here. FACILITIES: When you spend money on new vendors, new seats, training facilities, rehab facilities, the cost will be logged here. The cost of transportation is also logged here at the start of every year. Overhead costs are also logged here. MARKETING: Money spent on player advertising, team advertising and promotions. BANKING: Money spent on repaying any loans that you have taken out. SHARED REVENUE: At the start of every year (except the very first year), the amount of shared revenue tax paid is logged here. The shared revenue expense, for you, will almost always be higher than the shared rebate resulting in a large negative balance sheet at the start of the year. PLAYER SALARIES: Money spent on player salaries. Whenever you play a home game, you will notice that your net income is rising. That's the income that you earned for a home game minus the expenses paid. When you add a new facility, like a vendor or additional seats, your net income will fall because you added an immediate expense without adding any immediate income. In my opinion, your funds are the best way to judge your financial health. This tells you how much money you have to add vendors and seats and such as well as your ability to absorb the hit from the shared revenue tax and transportation costs. The balance sheet simply tells you how much money was added to the amount of funds that you started the season with. ----------------------------------------------------- THE SAVE-TEST-LOAD (STL) METHOD ----------------------------------------------------- The Save-Test-Load method is something that I came up with in order to make sure that it is worth it to make a certain business decision. Basically, this works by saving your game at a strategic time, and then simulating the next game as a control test. Once that is done, you load your game back to where you started. Now that you have two data figures (your starting data, and your control test data), you can test the effects of changing certain variables in your franchise such as ticket prices and concessions. For example, suppose I want to see what will happen to attendance if I raise the price of left field bleacher seats by $1. The first thing I do is write down the current price and the total attendance to-date for the left field bleacher section. Then I simulate the next home game and I check how attendance normally would react if I did not change the price at all. By doing that, I can discover that attendance increased by 2,165 in a section with a capacity of 3,500. Now, I load my game so that I am back at my starting point. Before I simulate the next game, I raise the price of those seats by $1. Now I simulate the next game and I discover that attendance increased by 2,134. Now I load my game again. By doing that test, I concluded that there was no significant drop-off in attendance when I raised the price. In fact, that small drop-off could just be attributed to the unpredictable nature of day to day attendance. Therefore, it is clear that I can raise the price by $1, and since there is no significant drop-off in attendance, the total revenue gained from that section will go up and attendance stays level. I will not stop there however. From there, I will do another test to see if raising the price by one additional dollar will have any effect. If not, then I know that I can safely raise the price of those tickets by a total of $2 now. I will keep doing this until I notice that raising the price one additional dollar beyond my last test shows a significant fall in attendance. If the fall in attendance is significant enough, then it will be made clear that the fall is almost entirely due to rising prices. Ultimately, this is how the STL method works, by providing you a safe method to play around with different variables to see how they affect your bottom line and your business goals. There are five distinct times where you will use the STL method to run some tests, and they are these: Ticket prices – Your goal is to see how high you can raise the price of certain tickets without having any significant effect on attendance. Concession prices – Your goal is to find a price that maximizes revenue for each individual concession. Adding vendors – Your goal is to find out whether adding a new vendor produces a positive net present value. Parking prices – Your goal is to maximize revenue. (This is the toughest one) Adding seats – Your goal is to see how many additional seats can be immediately filled by the addition of new seats. Some of these terms like “net present value” might seem a bit strange, but each one of these sections is described in more detail later, so don’t worry about it for now. Also, these tests should be done precisely in the order listed above. I will get more into that later, but there is a reason why I listed these tests in this particular order. Also, just to clear up any confusion, testing for concession prices and ticket prices should be done in bulk. In other words, test the prices by increasing all prices at the same time and checking the effect on each individual section or concession. If you did a test for one concession at a time, it would take you forever. ----------------------------------------------------- PRESEASON MANAGEMENT ----------------------------------------------------- Before you even play your first game of the regular season, you will need to create a solid foundation for your franchise to grow and prosper. You can treat this section as a checklist of things to do before you begin. FRANCHISE GOALS The very first thing that you have to do when you start a new franchise is to sign on to a list of goals that you must accomplish within a span of 4-6 seasons. Same with last year’s game, the difficulty of these goals is directly linked to how well your team did (in real life) during the 2005 season. This means that if you are a Mariners fan like me, then your franchise goals will not be too difficult to fulfill. Cardinal and White Sox fans, on the other hand, will have to deal with a tougher list of goals that need to be accomplished. Most of these goals will be will be related to on- field performance such as winning a post season award, leading the league in a certain statistical category or making the playoffs. Other goals deal with non-performance requirements like maintaining a certain level of fan loyalty, earning profits, and such. The only requirement that I don’t like having is the requirement that your stadium host an All-Star game. I don’t know how cities are awarded this honor, and I don’t like it since I don’t have much control over that. You also don’t need to worry about the possible goal “Draft and All-Star potential player”. This one is actually pretty reasonable, and you can read more about this in the AMATUER DRAFT section of this FAQ. You may ask “OK, so what happens when I finally complete all of my goals after 4-6 seasons?” As far as I know, you don’t get anything other than the honor of being able to keep playing. I’ll try to test this in the future as well as to see what happens if you don’t fulfill all of your goals in the stated time frame. ***UPDATE*** For quite a while, I thought that it was not possible to switch teams during franchise mode. Apparently, you can and it is directly linked to your franchise goals. Here is what ashawn1234 wrote to me: "you can change teams in franchise mode you just have to wait to your contract is up and weather or not they want to resign you just click on view other offers and depending on how you did other teams will want you to run there franchise for example i started with the rangers and won 4 world series in a row no cheating and at the end of my contract they wanted to resign i clicked view other offers and the rangers, Yankees, red sox, and giants wanted me to run their operation." EDITING PLAYERS Each organization will have about 6-12 real life minor league prospects. Chances are, that hot prospect for your favorite team will end up on the team's AAA roster, or possibly a few on the AA roster. The rest of the players are all fictional. So it might be a bit of a bummer for many fans to find that the one prospect that they had hoped would be in the game is not there. If that is the case, then you can always edit a fictional player into that missing prospect. You can either edit rosters from the game's main option screen or, while you are in franchise mode, go to veiw rosters. From there, highlight the player that you want to edit and press the X button. First of all, when it comes to editing real life players, your options are limited. You cannot edit that player's name, age, height, weight, or throw and bat hand. Everything else is fair game. When it comes to editing fictional players, you can edit anything you want. Therefore, it is very possible to establish an entire AAA or AA roster of real players. The announcer will still not use that player's name in PA announcements, however, even if it is a common name. For example, if I edited the name of the Tacoma Rainiers' center fielder to Adam Jones (which is the actual name of the prospect), the annoucers will still refer to that player as "Number 10". Finally, this method of editing is far superior to usinf the create- a-player option because inorder to make room on your roster, you will have to release current players under contract(see section below), and if your prospect his high playing attributes, it can be inordinately expensive to sign him from the free agent screen, which is where created players end up. RELEASING PLAYERS If you recall from MLB 2006, you are not really releasing a player, you are in fact buying out his contract for the year. For example if you have a player with 1 $15 million, 10 year contract that pays $1.5 million per year, then you will have to pay out only $1.5 million, not $15 million.(I am not sure if you have to pay that player's $1.5 million/year salary in following years because the salary composition of my team changes every year.)This means that you cannot cut costs by simply cutting players from your roster. The remainder of that player’s salary is spread out over about 180 days, Besides you will need full MLB, AAA and AA rosters to have valid line ups. The only reason to release a player would be if you have too many players at a single position (see the section below) and you need to add some free agents to create valid minor league rosters and line ups. In order to release players, go to the free agent signing screen, highlight the player on your roster that you want to release, and then release him. Look at the bottom of the screen to determine which button to use. SETTING ROSTERS Before you play a game, each level of your franchise must have a set of valid lineups; otherwise you will not be allowed to proceed. This is not too difficult to deal with. Your MLB, AAA and AA teams will each need 25 players, and here is how I recommend setting your rosters: Position For each club Total C 2 6 1B 2 6 2B 2 6 3B 2 6 SS 2 6 OF 4 12 SP 5 15 RP 5 15 CL 1 3 TOTAL 25 75 There is some room to move with the infield positions, especially at first base. For example, you can hire a general infielder to cover more than one infield position and use that extra slot to have an extra pitcher or outfielder. This may be especially valuable if your team is an American League team and you want some extra pop in your line up for that DH position. Either way, following this general tactic will ensure that you will have enough players at every position to set valid lineups for each of your clubs. To set your line ups, select LINEUPS in your main franchise menu and toggle between each of your clubs, setting lineups as you go. One other reason why you will want a sufficient number of bench players is to give your regular starters a break once in a while, which I will discuss in the PLAYER FATIGUE section. Finally, it is good to have a nice, deep bench of specialty players, i.e. players who have top- notch speed or glove work so that you can also make defensive substitutions or put in a pinch runner when needed. If you are playing this game for the first time, then I suggest using the above table to set your rosters. After you have played a full season in franchise mode, then you should have a good idea of your own playing capabilities and your own roster needs. Therefore, if you feel that you can do with out an extra relief pitcher and you would rather have an extra out fielder, then you can make that decision before you start the next season. FREE AGENTS The free agent screen can be accessed through your main franchise menu. This is where you get to release players (buy out their contracts for the year), and pick up new free agents. This section is pretty self explanatory, but the one interesting feature here is that when you create a player, this is where he ends up. So, for example, if I wanted to make myself into a player, I could do that on the create-a-player screen and, once I am finished, that player can be found in the free agent screen of my franchise. Of course, the better the created player is, the more it will cost to sign him. Be careful with this though, and the reason for this is because your team has a salary budget(you can turn this off in the options screen before you set up your franchise which makes this part moot, but budgets make the game more realistic). When you attempt to sign players, the amount of money that you have available for salaries begins to decrease. You can see this in the signing screen. The difference between your salary budget and your payroll is the amount of money you have left for signing players. You should also keep an eye on your salary budget because it may hinder you from making trades. If for example, you have a available salary budget of $5,000,000, you will be unable to trade for a player that has a salary of $6,000,000 because his salary will exceed your available salary budget. HIRING A STAFF There are two types of personnel (other than players) that you can hire as part of your franchise, and these are coaches and scouts. First and foremost, the team’s manager is important to your franchise to the degree that his strategy affects the way your team performs when you simulate games. Your manager does not matter all that much if you plan on playing all or most of season yourself. He has four categories by which he is measured: Aggressiveness, leadership, offense and defense. I am not quite sure what the leadership and aggressiveness stats affect, but offense and defense are pretty self explanatory. The higher the offense stat, the more your coach will focus his players on scoring runs. The higher the defense stat, the more he will focus his players on keeping opposing runs off the board. The pitching, batting and development coaches are by far the most important personnel that you can hire. They are even more important if you plan on spending a lot of money on training because these coaches will give you the biggest bang for your training dollar. Each of these coaches has four distinct ways in which they benefit the growth of your players. *Pitching Coach* - Control – Makes sure that the pitch ends up where you want it. - Velocity – Allows your pitcher to throw a lot harder. - Mechanics – I’m not quite sure what mechanics does, but I believe - that it has something to do with preventing injuries - Pick-off – Makes it easier to pick off opposing base runners. ***UPDATE***(Lee Sharp pointed out to me that developing a pitcher's mechanics also helps in improving a pitcher's control as well as velocity.) *Batting Coach* - Power - Increases home run hitting power. - Contact - Cuts down on strike outs and increases the chance of a base hit. - Base Running – Allows base runners to steal bases more easily, round bases faster and generally become smarter base runners - Discipline – This really only comes into play when simulating games and it affects your team’s ability to lay off bad pitches and wait for a pitch to drive. *Development Coach* - Fielding – Increases player’s defensive abilities. - Pitching – Increases pitcher’s general pitching ability - Batting – Increases hitter’s general hitting ability - Base running – Same as above. The rule here is simple: Get the best coaches that you possibly can. Allow me to finish this section by saying a few words about scouts. They are worthless. My strategy here is to replace all of my current scouts with the cheapest and lamest scouts that I can find. I know that this is quite a departure from my recommendations for MLB 2006, but I have found that the information that scouts gather to be useless in the end. What scouts do is go around the world and give you information about amateur players that you may want to draft in the amateur draft at the end of the year. In MLB 2006, whenever I got to the amateur draft, the players that I had scouted had just as much information about them as players that I did not scout. Also, many of the players that seemed talented when I scouted them, turned out to be lousy when I was able to see their abilities in the draft. In some cases, it seemed that they turned out worse than other players that I scouted who I thought were untalented. Therefore, just forget about scouts. Pick the cheapest scouts possible to save money, and just use them to scout potential draft picks. TRAINING AND REHABILITATION BUDGETS In my opinion, training is one of the most important aspects of keeping your team and your players on the winning edge. Without training, your players will, of course, start to get grumpy with you, but more importantly, their skills will begin to deteriorate over time. With a good amount of training, your player’s skills will increase. This is especially valuable when you have a team of young players or some young talent that you want to develop over several years. Training is also very expensive if you decide to maximize your training budget. There are a total of 16 categories in which you can increase your player’s skills. *Pitching* - Stamina – Pitcher can pitch deeper into the game. - Movement – Breaking pitches will break harder and fastballs will have more movement - Pitch Development – Increases the overall quality of each one of a player’s pitches. - Control – Increases the chances that a pitch will end up right where you want it. *Defense* - Speed – Allows you to get to the ball quicker. Crucial for outfielders. - Glove – Decreases the chance that a line drive will bounce off of your player’s glove and increases the chance of snagging the ball. - Accuracy – Increases your throwing accuracy. This is crucial for your youngest AA players who tend to be horrible at simply making a throw to first base. - Arm strength – Makes sure that your throw gets to the target quicker. *Offense* All of the categories here (power, contact, base running and plate discipline) are identical to the categories of the hitting coach. *Conditioning* - Strength – Improves general abilities like hitting power, the MPH on your pitches, arm strength, etc. - Stamina – Your players will tire less quickly. - Agility – Increases your “first step speed” that allows you to track down fly balls, get a good jump on a stolen base or get to that ground ball into the hole of the infield. - Flexibility – Increases your player’s ability to do things like hit inside pitches squarely or jump against the wall to take a home run away from an opposing hitter. Those are all of the categories, and my conclusion is that you should maximize the budget each of these categories, with the possible exception of plate discipline. Now, this is going to be very expensive. There are a grand total of 16 categories, and you can spend up to $5,000,000 on each category for a grand total of $80,000,000 in total training costs. This means that you may be spending up to, approximately, $444,444 per day on training. Personally, I think that it is worth it. It may take a few years to for the results of your training efforts to come to fruition, but you will notice that your young players are turning into great ball players. In my personal example, the Seattle Mariners have a good mix of youth and veterans. I would like to hold on to young players like Felix Hernandez, Jeremy Reed, and Yuniesky Betancourt, so having a high training budget is key to making sure that they develop into great players. Having a high training budget will also keep some of my veterans like Richie Sexon, Adrian Beltre and Joel Pinero playing like All-Stars. Rehabilitation should be treated a little bit differently. This comes into effect when a player is injured and it is your rehab budget that will, in part, determine how quickly that player can return to the field. If you are planning on simulating every game, then having a maximized rehabilitation budget is crucial because you will run into injuries. If you are planning on playing most of the games yourself, then rehab is not such a big deal because it is very rare to suffer injuries in a game that you are actually playing. Therefore, if you are planning on simulating every game, then you should maximize your training budget. If you are going to be playing most of the games yourself, then I would set the rehabilitation budget at just a bit more than one third of the maximized rehab budget. There are four categories of rehabilitation that you can fund, and you can spend up to $2,000,000 on each category for a grand total of $8,000,000 worth of rehabilitation. I would set each category at about $338,000 for a grand total of about $1,350,000. If you remember from the EXPLANATION OF COST STRUCTURES section, we can spread this cost out over the period approximately 180 days which means that you will end up spending just $7,500 per day on rehab. What this does is keep the players happy and if a player gets a minor injury, he will be back in no time. TV CONTRACTS AND PRIMARY ADVERTISER Here you will have the opportunity to sign a television contract as well as rent space in your stadium to advertisers in order to earn some money. The catch is that you will not be earning the bulk of your contract until the end of the season. When you sign a contract, it will be for a period of 2-8 years for a fixed cash flow. When choosing a contract, the golden rule is that you should choose that shortest contract, not the biggest in terms of dollar value. There is a good reason for this which is that as you become a winning franchise, bigger and better deals will come along in the future. You don’t want to be locked into a deal for 6 years at $2,000,000 per year when you have a 3 year deal worth $5,000,000 per year waiting for you. A short deal will insure that when a better deal comes along, you have a better chance of nabbing it when your deal expires. The shortest deal that you can sign is for two years, and that is optimal. When it comes to primary advertisers, you will have several options as to which advertiser to choose. When you begin your new franchise, your choice of TV contracts, however, is limited. When I say limited, I mean that your only choice will be your home town local channel with a meager yearly cash flow of, usually, less than $1,000,000. This is when it is most critical to choose a short contract. If the contract demanded is longer than 3 years, then it is probably worth it to not sign a contract at all! This may sound crazy, but if you sign a four year contract at $750,000 per year, and then you are presented with an opportunity for a 2 year contract for $4,000,000 per year in the following year, then you will have sacrificed several million dollars by hanging on to your old contract. In that case, you would have been better off not signing a contract in the first year and then picking up the better contract in the second year. Also, just be aware that when you sign a contract with a TV station or a primary advertiser, there are stipulations that go along with that contract that you must fulfill in order to receive full payment. This means that your contract may require you to have a team batting average above a certain level, an ERA below a certain level, make the playoffs or have a certain level of attendance. You will be able to see what this requirement is before you sign the contract, but make sure that you keep it in mind before you sign. BILLBOARD ADVERTISERS This one is pretty obvious. When you sell billboard advertising, a certain company will pay you to advertise in your stadium. What the game allows you to do is sign short term advertising deals in your stadium for a fixed amount of time for a fixed number of dollars. Again, short deals are better because better deals may come along in the future. In general, the rate at which advertisers will pay you is directly a function of attendance. This means that it is a good idea to sign deals that expire in midseason. As attendance keeps rising, advertisers are willing to pay you more. Therefore, I think that the optimal length for a new franchise is to choose a deal that expires in the middle of 2006 or 2007. By that point (if you have been winning), your stadium should be 90-97% sold out each game and advertisers will be paying out a lot to advertise in your stadium. Once rates are high, then you can start locking in long term deals. LOANS AND BANKING This is one of the most crucial aspects of starting off your franchise on the right foot. There are several purchases that you can make at the start of the season. When choosing a loan, you want to do two things. First, choose a loan amount that fully covers the cost of all of the investments that you want to make. Secondly, now that you have figured out the appropriate amount for your loan, you need to choose a bank. The optimal choice is the bank that will loan you your desired amount and provides for the lowest monthly payment that you can get. There are two reasons for this. First, payments are made on the first day of each month. Since you are trying to keep your balance sheet high in the black as well as maximize your funds, keeping this payment as low as possible is crucial. The second reason is that you will be paying off this loan during the off season. This means that in addition to being charged for transportation and the revenue sharing tax, you will also be charged for loan payments made over the months of the off season. The shared revenue tax is a pretty crazy expense, so you don't want to make the situation worse by having huge loan payments accumulate over the off season. With this particular loan, you don't have to perpetually hold on to paying it off. In fact, it is good to pay off the balance of the loan a season or two from now, but I will get to that later. VENDORS AND FACILITIES Now that you know the rules about taking out a loan, you have to use that loan to purchase some assets. You can purchase whatever you like, but here are my suggestions for what to get. batting cage 2,000,000 face painting 100,000 playground 2,000,000 hot tub 5,000,000 ice cream guy x20 200,000 soda man x20 200,000 peanut guy x20 200,000 aerobic room 10,000,000 auto pitcher 5,000,000 spa room 6,000,000 massage room 4,000,000 --------------------------------- TOTAL 35,000,000 This should give you one unit of each asset, except for ice cream guy, soda man and peanut guy for which you should have a grand total of 30 units each. When you receive your loan, you will want to do two things. First you will want to buy those vendors that will create cash flow, like the hot tub and the playground, and such. Second, focus on those facilities that will help your players such as the auto pitcher and the aerobic room. Ultimately, if you take my full advice based on the above table, then the optimal loan amount is a $35,000,000, 15 year loan from Roll Bank at 7.9%. This should require a payment of just about $340,000 per month. That is the lowest per-month cost that you can get, and it is the least obnoxious when it comes to keeping your cash flow high. I should also mention that not all of you will begin your new franchise with a home game. About half of you will play your first home game a week or more after opening day. If this is the case, then wait until you begin your first home game to make this kind of a financial decision. There is no reason, whatsoever, to take out a loan to gain a certain amount of funds, and then see those funds dwindle by using them to pay for player salaries, staff salaries, training, rehab, etc. For those of you who will start your franchise on the road, wait until you are about to play your first home game to take this loan. This is important because when you buy a new vendor (like the hot tub, for example) you want that vendor to start producing cash flow right away, so you might as well wait until you can get some cash flow before you buy those vendors. TRANSPORTATION Read my lips! Do not EVER upgrade your transportation. This is the biggest waste of money in the game. You may be tempted to upgrade when you see your players whining and complaining that they have to ride on a cheap bus, but don't worry about it. Sure, riding on a bus is a negative for player morale, but you can more than make up for that by being a winning team. The rule here is that there is no substitute for victory. Your players will put up with having to ride on a bus just as long as your team is having a great year. There is another temptation that you should avoid. As the season progresses, you will notice that the cost of an upgrade keeps falling day by day. Don't be fooled. The reason why the cost of a transportation upgrade keeps falling is because transportation costs are automatically paid in full at the start of each year, and that billing pays for the entire year. Therefore, when you upgrade your transportation near the end of the season, you think that you are getting a great deal, but the cost is low because you are only leasing that mode of transportation for a few weeks, not a full season. The cut off date for transportation upgrades is about three weeks before the end of the regular season. By that point, you will be tempted by the very low cost of the upgrade. However, if you do it, then you will not be able to reverse it until the start of next season. When the off season ends and the regular season begins anew, you will be charged for that one year lease right off the bat. If you upgraded to a team jet just before the season ends, you will be hit with a bill of $200,000,000! You can get a refund by downgrading, but why bother? If your franchise has been wildly profitable, then you will certainly be hit with a massive shared revenue tax and you WILL start next season with a large negative balance sheet. I will get more into this later, but the tax has to be paid from your funds. The same rule applies to transportation costs. The amount of the transportation lease will be paid out of your funds. If your funds are not sufficient to cover your higher mode of transportation, then you will automatically be downgraded to a bus. Ultimately, the only real benefit of upgrading your transportation is that your players energy will not decline as fast and you will be able to play your starters more during the year with less days off for rest. The problem with is that you have to pay a pretty high cost for keeping your players refreshed with more luxurious transportation. Therefore, the only time where you might be justified in upgrading your transportation is when you literally don't have anything else to spend your money on. If you cannot profitably add more seats and vendors after several seasons, then go ahead and begin upgrading transportation. -------------------------------------------------------- In-Season Business Management -------------------------------------------------------- This section is the most vitally important part of maximizing your revenues throughout the season. Selling soda, beer, popcorn, caps, tickets, parking and such are going to be your main focus of making money. Here, I will discuss aspects of the day to day nature of running a franchise and give you the tools to maximize revenues. PLAYER FATIGUE As you move along through your franchise season, you may notice that your players suddenly don’t have as much pop in their bat, they are slower, and may even commit more errors. One explanation for this is that your players might simply be fatigued. When you play a game, you begin by picking your starting pitcher, and then adjusting your lineup. When adjusting your lineup, look just off to the side of the player’s names, and you will notice green bars of different lengths. Those green bars represent your player’s energy. When certain players play day after day, they get tired. Giving them a day off once in a while will keep their energy levels high as well as their performance. This is why it is so important to make sure that you have skilled bench players who can sub for you starters every once in a while. Generally, it is a good idea to let any given player to play for five days straight, and then rest him. PLAYER MORALE Player morale is a general level of the happiness of your players. If you have seen video trailers and some reviews of this game, then you know that a big deal is made, sometimes, about player morale. The truth is that player morale and the maintenance of morale is not a very big deal at all. If you have a player that is unhappy, but signed to a long term contract, then he has no choice but to play the game at your command. There are several variables that affect player morale, but the one factor that overrides all others is winning. If you are a winning franchise, then players will forgive just about anything, including having to travel across America in a bus. Winning a lot will eventually maximize your player’s happiness, and you can forget about most other aspects of morale building. There is only one reason why I would be concerned about the morale of certain players. If a star player is unhappy, then his team preference level will be low(you can view these stats by finding your player on the roster menu, pressing the circle button to bring up the player’s card, and then toggling through the player’s info). If his team preference level is low, he might demand extra compensation when you try and resign him. Other then that, you can always keep player morale high by winning, having reasonable training budgets, quality training and rehab facilities, and giving bench players sufficient playing time. PLAYER ADVERTISING One way to get more fans to come to your stadium is to advertise your players to your fans in order to tickle their baseball bone. The benefit of advertising is that it slowly, but steadily increases the support and loyalty of your fans. This in turn has a positive effect on attendance. Of course, when it comes to increasing attendance, there is no substitute for victory. Winning is the best way to increase attendance, but advertising will give your franchise a little extra push. When it comes to advertising players, you cannot directly choose whom you will advertise. Instead, you will choose a marketing strategy based on marketing your team's All-Stars, sluggers, rotation, fielders or rookies. From there, the game will assign a player who fits that description. You should start by setting the budget for advertising. This is a yearly budget, so I like to set the total budget to its maximum level, which comes to a grand total of $13,200,000 per year. I think that it is worth it. Keep in mind as well that once you begin the season, you can always change this amount, as well as the marketing strategy. If you have committed to a maximized advertising budget, then you should probably stick with it, but you should never stick with the same marketing strategy. This can be changed independently of the budget, so you should be mixing this up as the season moves along with different strategies and different players. TEAM ADVERTISING Team advertising is identical to that of player advertising except for one aspect that keeps team advertising more dynamic. With team advertising, you can adjust the message of your advertisements to be more in sync with your team’s situation. For example, you can begin the season with the “Start of the Season” message, and then change it a week or so into the season. If you have a winning streak going, then you can switch your advertising message to “Keep the Streak.” Some types of advertising have more of an impact than others which means that TV advertising is both the most expensive and the most effective. Keep this open for adjustment based on your team’s situation. Newspaper and magazine advertising are good for generic messages, but use TV and radio to adjust your message to your situation. PROMOTIONS The first thing that I want to say about promotions is this: don’t go nuts with numerous, big, expensive promotions as a means of raising attendance. That’s simply not the way to do it. It is more useful to think of promotions as an extension of team advertising. What I mean by that is that promotions can be used most cost effectively as a means of slowly building fan support over a long period as opposed to increasing support in small, but temporary bursts. With team advertising, you can adjust you message to send word to the public about your promotions with the “Upcoming Events” choice. This provides a bit of synergy to the effectiveness of your promotions. Although player morale and support is something that you should not worry about too much, fan support is crucial. One way of keeping fans happy is to constantly have them looking forward to your next promotion. There is also one more reason why doing a lot of big, expensive promotions is a bad idea. When it comes to total fan support, there are so many variables that determine fan support that the weight that promotions have in determining this support does not justify large costs. Some of these variables are things like wins, concession prices, ticket prices, your position in the standings, the time gap between promotions, and advertising spending among other things. With all of these taken into account, promotions alone cannot justify a ton of spending on promotions. Instead, you want to slowly, but steadily, raise fan support over the long run with a bunch of small, cheap promotions. The way to do this is to drop a small promotion in the middle of every home stand, and I must stress that it should be done IN THE MIDDLE OF THE HOME STAND. If you do it on the first day of the home stand, then you will mess up your tests for things like optimal ticket and concession prices when doing the STL method. The two cheapest promotions that you can do are the “Program Night” at $2 per unit and “Ball Night” at $3 per unit. I like to do a promotion of about 3,000 units for each home stand. The cost is small and your fans will always be looking forward to the next promotion. I have to make one very important note about free ticket promotions. The game lists the cost of this promotion as zero. Do not be fooled! The cost of this promotion is very real and, as ticket prices begin to rise, this could end up being one of the most expensive promotions that you can do. Although the game says that the cost is zero, you are in fact paying a cost for this promotion since you are forfeiting the revenue that you otherwise might have gained. Let me illustrate with a simple example. Suppose that you have a lemonade stand. Each cup that you sell costs you $0.25 worth of lemons, sugar, and ice, not to mention the paper cup. You are also charging $1.00 per cup of lemonade. Therefore, your expected profit per cup is $0.75. Your best friend stops by and you offer him/her a free cup. Did your give away cost you nothing? No, since you obviously had to pay for the ingredients that went into making that cup of lemonade. Then you might say "So the cost of my give away was $0.25." Wrong again. The true cost of giving away that cup was in fact $0.75. Since each cup earns you a profit of $0.75, you just forfeited $0.75 worth of profits! That is what you truly lost by giving away a cup of lemonade. The same principal applies to a free ticket give away. The cost of giving away tickets is the money that you COULD have earned by selling them. The more tickets that you decide to give away, the more expensive this promotion will be. When tickets are given away, I am not sure which tickets are being given away. They could be cheap seats or very expensive ones. Even if the game distributes the free tickets strictly according to price (cheapest seats given away first), then the remaining tickets will then be given away for the second cheapest, and then third cheapest and so on. This would mean that the cost of the give away will rise in an exponential trend. Here is a hypothetical, totally made up chart to illustrate what I mean: SEAT # OF SEATS PRICE COST RUNNING TOTAL Bleacher 1,000 5 5,000 5,000 LF View 1,500 6 9,000 14,000 RF View 1,500 7 10,500 24,500 LF General 10,000 8 80,000 104,500 RF General 10,000 8 80,000 184,500 IF Box 4,000 10 40,000 224,500 Home Plate 3,000 12 36,000 260,500 In this hypothetical example, you can see how the true cost of this promotion can build up. By giving away 4,000 tickets, you incurred a cost of $24,500 by giving away the tickets rather than selling them. The cost is then borne by you in the form of reduced profits when you forfeit the revenue from those tickets. This whole example is a great illustration of the economics concept of "opportunity cost". By the way, tickets are NOT given away in a "cheapest first" manner. The tickets given away are spread out over all of your seating section which means that this is indeed an expensive promotion. There is also another temptation that you should avoid which is the idea that free ticket give aways will increas attendance and therefore increase the number of hot dogs, beer, soda and such which might off-set the cost. This idea was originally sent to me by Chris C. and it was a challenging idea. I ended up giving him a long winded answer as to why that is not the case, but there is a much more simple, non-theoretical test which proves it with better results. Here is what I did. I simply started a new franchise with the Mariners, and I simulated the first game. The relevant numbers that I got were as follows: Net Income: -$217,817 Average Attendance: 23,422 Ticket Revenue: $619,786 These results are about normal, and doing multiple tests would reveal similar figures. Also, keep in mind that this was just for one game, so average attendance is equal to total attendance. Then, I decided to do a free ticket promotion of 20,000 total tickets. The following figures that I got surprised me in magnitude, but not in result. Net Income: -$292,705 Average Attendance: 29,018 Ticket Revenue: $460,129 As you can see, ticket revenue dropped sharply. Opportunity cost is obviously a factor here. However, the most interesting thing here is that Average attendance increased by only 5,600 instead of 20,000. This means that of the 20,000 tickets, 72% of them went to fans who were going to go to the game anyways, but they got in for free as opposed to paying for them. This means that the promotion attracted only an extra 5,600 fans who otherwise might not have gone. Did they buy more concessions than a smaller crowd would have. Yes, they did, but that does not come close to off-setting the cost. As you can see, ticket revenue fell by about $160,000, but net income fell by about $75,000. This means that those extra 5,600 fans translated into total profits of $85,000 worth of concession sales. However, when you subract from that the loss of ticket revenue, you get -$75,000 woth of net income. Even if you were to sponsor a smaller ticket give away, the results will be similar, but with less magnitude. One reader, Billy Zobel, made a very interesting observation about all of the other promotions in that opportunity cost does not apply to other give-aways like baseballs, programs and gloves. Suppose that I schedule a promotion of 2,000 baseballs with a cost of $3 per unit for a total cost of $6,000. On the day of that promotion, you will notice that your total sales of baseballs has not fallen at all. (To figure out the total number sold, take the average sold per game and multiply that by the total number of home games that you have played.) You would think that if people can get baseballs for free, then they would not buy them, but they do. Therefore, there is no opportunity cost to giving away goods like baseballs or programs which makes the cost of such a promotion of just a pure cash cost. The only reason to add an opportunity cost into your decision here would be if the quantity sold differed significantly from the average amount sold per game. If the average amount of sales per game is 500 units, but a promotion causes sales to drop by 200 units below the average for that day, then you can take that into account because it will increase your total cost. If, for some other reason, the amount sold for that day increases by 200 units above the average, then you will be collecting extra revenue, and you can deduct that from the cost of the promotion. Either way, opportunity cost will only come into play when the total amount sold for that day differs significantly from the long run average sold per game. On a side note, the only time where I personally was compelled to attend a Mariners game due to a promotion was during "Buhner Buzz Night" when the Mariners still played in the Kingdome and Jay Buhner was our star right fielder. Every fan who was willing to get his or her (and there were several women, oddly enough) head shaved in the parking lot got free tickets to the game. It was actually pretty fun, and it was quite funny to see the right field seats as a sea of bald people. George Costanza would have felt right at home. The upside is that I have not had to visit a barber in over 10 years. TICKET PRICES This should be done in two stages. First, use the STL method to test for the revenue maximizing price when you begin a brand new franchise. Second, after a few weeks and every test afterward, you will want to see how high you can raise the price before you see a significant drop in attendance. If you want to do an effective test, make sure that you followed my advice in the previous sections with regard to promotions, advertising, and such. Also, this should be DONE ON THE FIRST DAY OF A NEW HOME STAND. The reason is because if you are raising prices, you will also be increasing revenue. To maximize the total profits that you can take in, doing the test on the first day of a new home stand will make sure that extra revenue is collected for each game of your home stand. So, let’s give this a shot. When you begin a brand new franchise, the first stage of the test is to test for the ticket price that will yield the highest revenue to begin your franchise with. Now, simulate your first home game and check out how much each section yielded in terms of revenue. (you can find this information by choosing Business Management > Facilities > Stadium Updates > and toggle to the Seating screen with R1.) Now, load the game and try again, except this time, raise each ticket price by $1. Simulate the game and see if there is any significant change in the income generated. Load the game and keep repeating until you find the revenue maximizing price for each section. This will get you off on the right foot by maximizing your early cash flow which is low at this point, but it will rise from here on out. After a few weeks, your advertising, winning and promotions should be having some effect on the happiness of your fans, and more of them will start to come to the ball park which will make daily attendance levels rise. At this point, and from now on, we want to see how high we can raise the price of each ticket without affecting attendance. Don’t worry about finding the revenue maximizing price anymore since more fans in the stadium will mean that they will buy more soda, peanuts, jerseys and beer. Anyways, at some point during the season, you will want to STL for ticket price effects on attendance. To do this, take note of season section attendance which can be found on the seating screen mentioned above. Now simulate the next game and check out the change in attendance. Keep this new level in mind, because that is the result of our control test. Now load the game and raise each ticket price by $1. Simulate the next game and check your attendance figures again. If there was no drop in attendance for a specific section beyond normal variance (which might be + or – 50 people), then you know that you can raise that section price by $1 with out consequence. Keep doing this until you find out how high you can raise each section price without dropping attendance too much. If attendance drops significantly more than previous tests by raising price by one more dollar, then the price is too high and you should revert back to the last price that you tested for. It is VERY IMPORTANT that you test ticket prices before you test concession prices. The reason why is because when doing these STL tests, we want to test the result of changing one variable, and ONLY one variable. Since revenue gained from concession sales is both a function of price and attendance, we want to hold one of those variable constant, i.e. attendance. We can hold attendance relatively constant by testing ticket prices first by testing for only one variable(ticket price). Once attendance is held relatively constant, we can now test for concession prices while having only one variable to test. Finally, I should mention that in previous games, I was unable to maximize both ticket price and attendance. If I set the ticket price for any particular section to it's maximum level, then I found it almost impossible to sell out that section. Therefore, I think that it is OK to create a price ceiling of $1 or $2 below the maximum allowable price. You should not be sacrificing too much, and you can be assured that happy fans will gladly sell out the stadium at 100% capacity after your first full year. From there, you can easily check your attendance figures and be confident in being able to sell out any additional seats that you add. CONCESSION PRICES If you successfully tested for the revenue maximizing ticket price, then you should be getting the hang of how STL is working for you. Now, we want to adjust concession prices to see what price for each concession will yield the highest revenue for that concession. (you can find the data screen that you need by choosing Business Management > Facilities > Vendors and then using R1 to toggle to the Prices screen.) First, just make sure that you do a control test to see what happens under normal circumstances. Now load the game and increase the price of each concession by $1-2 and see what happens to your season income figure (season income is the figure that you want to look at. Ignore the Avg Profit figure). I must note that when it comes to expensive items like jerseys, gloves, signed bats and others, these goods are heavily inelastic (see Appendix 1) which means that you can raise the price much more than normal goods. For these types of goods, try raising prices by $5-10 at a time. Here is where you get introduced to those funny little arrows that indicate customer’s feelings about that price. A blue arrow pointing down means that customers think the price is a real bargain. A green arrow that points right means that the good is in a reasonable price range for the customer. A red arrow pointing up means that customers think that the good is very expensive. My advice is to ignore these arrows. Who cares if customers think that the price of a jersey is too high when you have chosen the price that earns you the most amount of money. Yes, this will cause fans to get a bit angry, but that’s OK. They will forgive you if you keep winning. Also, the fans will get used to the prices, and their attitudes will change for the better. A good that previously had a red arrow for its price may turn into a green arrow price in a month or two. Normally, I would let you all figure out the optimal prices for the start of the season for yourselves, but I though that it would be interesting if I gave you my list so that you can make comparisons. I should note that since I am playing with the Seattle Mariners who play their first game of the season at home, these prices may not be optimal for you if your team began its season with a one or two week road trip. Your performance will affect demand for goods, but you can use this list as a starting point and then test to see how much higher you can raise the price. Also, these prices are what I found to be optimal, but they may not be optimal for your club. I would test out the prices that I have listed and then see if tweaking the prices up or down a bit can yield better results. CONCESSION PRICE OVERHEAD/UNIT(in$) Soda 5 0.20 Hot dog 4 1.00 Hamburger 5 1.00 Fries 5 0.50 Ice cream 6 1.00 Peanuts 4 0.50 Pretzels 5 0.50 Nachos 6 1.00 Cotton candy 5 0.50 Bratwurst 7 1.00 Sports Drink 5 0.50 Beer 8 0.75 Caramel Corn 5 0.50 Jersey 75 20.00 Hat 24 10.00 Jacket 105 35.00 T-Shirt 24 7.00 Glove 87 35.00 Foam Finger 10 1.00 Pennant 9 1.00 Bobble Head 19 10.00 Bat 40 20.00 Signed Ball 73 30.00 Signed Bat 118 75.00 Ball 8 2.00 Cards 9 1.00 Poster 8 1.00 Program 6 1.00 Calendar 11 1.00 Mega Jump 7 0 Hot Tub 220 0 Play Ground 7 0 Throw MPH 7 0 Face Paint 7 0 Batting Cage 6 0 You should be able to test all of these prices again when you begin your next home stand. I must make a very important note here which is that most of your profits will be gained by doing these price increases for tickets, concessions as well as adding vendors. It is very critical to your financial health that you be diligent in testing to see whether prices are set at the revenue maximizing level. OVERHEAD So what is this thing that you seen in the pricing screen called overhead? Basically, overhead is how much money you have to pay in order to sell a single unit of a particular item. This means that when you sell a hot dog for $4, you have to pay an overhead charge of $1. This means that, in net terms, you will recieve $3 worth of profit. I generally use the term "maximizing revenue" as opposed to "maximizing profit" because the overhead rate in the previous section is fixed and it does not change with the number of vendors. Therefore, as you maximize revenue, you are automatically maximizing profit, so the two phrases can be used interchageably. By using the data from the pricing screen, you can compute all sorts of things. (Price - Overhead Rate) x (# Sold per Game) = Average Profit(less exact) (Total Profits) / (Total Sold) = Average Profit (more exact) (Season Overhead) / (Overhead per Game) = # of home games played (# of Home Games Played) x (# Sold Per Game) = Total Sold (Season Income) - (Season Overhead) = Total Profits (Overhead Per Game) / (# Sold Per Game) = Overhead Rate So, when you pay $1 to sell a $4 hot dog, where does that $1 get counted on the balance sheet? I gets counted under FACILITIES in the EXPENSE portion of the balance sheet. That is ultimately how overhead leads into the NET INCOME figure. The $4 gets counted under facilities in the income portion, and the $1 gets counted under facilities in the expense portion which increases net income by $3. Since some items have overhead rates of less than $1, like soda, you might wonder how the game accounts for fractions of a dollar when the balance sheet presents everything in terms of whole numbers. The game simply rounds off cents to(I believe), the nearest dollar. Also, the number that you sell of most concessions is pretty high, so that large number will traslate into whole-dollar costs. Finally, you can see why I stress being diligent with testing your concession prices. The higher the price, the larger the gap you create between overhead and price. Since overhead stays constant, you will be directly increasing net income when you increase prices. ADDING VENDORS Vendors are the ones who ultimately put all of the concessions that you sell into the hands of your fans. As you begin to win more and make your fans happier and happier, they will begin to fill more and more seats. And what to fans do when they come to your stadium? They walk around and buy stuff. However, you do not have enough vendors to sell your concessions, your fans will have to wait in line longer and longer which means that the demand for your goods is higher than the quantity that you are currently supplying. If you want to have nice income growth, then you will need to cater to the demand of your customers by increasing your supply capabilities. The less time your fans will spend waiting in line, the more time they will spend buying stuff. The first thing that I should mention about adding one of these new vendors is that each vendor has a built-in normal rate of return of 1% per home game. So what do I mean by this? If you go to the vendors screen, you will notice that the first vendor on the screen is the Super Food Stand at a cost of $5,000,000 per additional vendor. A 1% home game rate of return means that for each home game that you play, the addition of this vendor will provide you with an extra $50,000 ($5,000,000 x 0.01 = $50,000) worth of income per home game. Ultimately, the addition of a new vendor is the same as buying a perpetuity. A perpetuity is a type of financial asset (mostly sold in Great Britain) where if you lend a certain amount of money, the borrower will pay you a certain amount of interest every year forever. The value of a perpetuity can be calculated as PV = C / r where PV is the present value of the investment, C is the level of annual cash flow and r is the interest rate. So if we treat the addition of a new vendor as the purchase of a perpetuity, then the value of an additional Super Food Stand will be $5,000,000 = $50,000 / 0.01. Now that you know about how new vendors increase your cash flow. Before doing this of course, you should have already tested for ticket prices and concession prices. So, you should have a saved game right before the first game of a new home stand and you should be ready to test. Do a control test first, of course, to see what happens under normal circumstances. What you are looking for is that particular vendor’s SEASON INCOME which is listed on the vendors screen. Now that you know how much income that vendor will have generated after that game, load your game and add an additional vendor that you want to test. Simulate the game and see how much income has now been generated. If the generated income is the same as before you added the vendor, then supply is already meeting demand (the market has been almost perfectly cleared), and the addition of an extra vendor means that you are not increasing sales any more. Therefore, don’t buy it and move on to a different vendor. Do the same thing with another vendor and see what happens. Let’s use a Super Food Stand as an example. If you test for a new Super Food Stand, and you notice that the increase in income is $25,000, then DO NOT buy an extra vendor. The reason is because you will be overpaying for that additional cash flow. Since the game’s internal rate of return is 1% per home game, then you need to find a vendor that will provide you with at least that. In this case, that would be like spending $5,000,000 for an investment that is only worth $2,500,000 = $50,000 x 0.005. Therefore, it is not worth it to add an extra vendor at that point. Demand will increase in the future, however, and you should try again the next time you are ready. Suppose, however, that instead of yielding an extra $25,000, adding that extra Super Food Stand yielded an extra $50,000. If that had happened instead, then your return would be equal to the value of the investment. In that case, you should consider making that investment in a new vendor. However, there is one buy rule that trumps all others and should signal an automatic buying response. If that investment in a new Super Food Stand yields an amount greater than $50,000, such as $60,000, then you should absolutely buy it. The reason is, of course, that you would be spending $5,000,000 on an investment that is worth $6,000,000 = $60,000 / 0.01. In this case, an extra Super Food Stand would have a net present value of $1,000,000 (Net Present Value = [Present Value of the Investment] – [Purchase Price]). It is a real bargain in this case and you should buy. Of course, that $60,000 per home game will probably return to the normal level of $50,000 in a month or two, but in the mean time you get to take in the benefits of that extra revenue. Investing in new vendors should not stop at adding just one extra. If you can afford it, and if you are willing to do so, then buy two or three. Just make sure that if you want to make that investment, that the increase in income is equal to or greater than the 1% rate of return. For example, if I notice that adding one extra Super Food Stand adds $60,000 to the season income of Super Food, then I will buy it. If adding one more on top of that adds another $50,000 to my total ($60,000 + $50,000 = $110,000), then I will that one as well. However, if the third vendor that I add yields only $40,000, then I will not buy that one because that marginal investment has a lower rate of return than the standard 1% return. Now, here comes the interesting part which is choosing a basket of vendors based on the returns that you can get. As stated earlier, you should be taking note of how much extra revenue each additional vendor can potentially give you. Once you have made a crude spread sheet for yourself, you can determine extra revenue and the total cost of getting that revenue. Allow me to use this example from a test that I recently did. -total $ figures -all $ figures in thousands -A = year to date revenue before test -B = year to date revenue after control test -1,2,3... = revenue collected after adding additional vendors -x = no extra revenue VENDOR A B 1 2 3 4 Super Food 8939 9251 9315 9363 x x Food Flat 4194 4335 4367 4388 4410 4422 Snack Food 6241 6463 6495 6506 x x Drink Stand 4817 4997 5004 x x x Jersey 26262 27014 27133 x x x Based on the above return figures, I can break down the nubers into just increases in revenue due to an additional vendor. VENDOR A B 1 2 3 4 COST OF VENDOR Super Food - - 64 48 - - 5,000 Food Flat - - 32 21 22 12 2,000 Snack Food - - 32 11 - - 1,500 Drink Stand - - 7 - - - 1,000 Jersey - - 119 - - - 10,000 As you can see, I can get a positive net present value from 1 super food, 3 Food Flat, 1 Snack Food, and 1 Jerseys 'n Junk. Of course, it would be absurdly expensive to buy all of these at once, so you have to pick and choose which ones to get. At this point, I really did not want to spend more than $10,000,000 on additional vendors, so I compared my options and came up with three baskets of vendors to choose from. OPTION 1: Jersey 'n Junk (1) $10,000,000 investment for a return of $119,000 per day. 119,000 / 10,000,000 = 1.19% OPTION 2: Super Food(1), Food Flat(1), Snack Food(1) $8,500,000 investment for a return of $128,000 per day 128,000 / 8,500,000 = 1.51% OPTION 3: Food Flat(3), Snack Food(1) $7,500,000 investment for a return of $107,000 per day 107,000 / 7,500,000 = 1.43% As you can see, OPTION 2 gives me the best return when I take into account all of the investments that have a net present value. I would like to add just a few more things about adding new vendors now that you know the rules about adding them. First, if you see fans complaining that the lines are too long, then don’t simply take this as an indication that a new vendor has to be added. If your testing reveals that you are not getting a good rate of return on your investment, don’t buy the vendor. Your goal is to maximize profits, and that is what you should be concerned with. Second, as I mentioned before, the rate of return per home game is 1% of the vendors total cost. This means that the yearly rate of return is actually 82%! Since you will be playing a minimum of 82 games at home, you collect that cash flow for each game. So be careful when adding big and expensive vendors like a Jerseys & Junk which costs $10,000,000. If you add this vendor at the very end of the season, then you will not be able to realize much cash flow for the season. The best time to add the most expensive vendors is at the very start of the season so that you can capitalize on as much of that cash flow as possible. In the case of Jerseys & Junk, adding a vendor at that very start of the season should yield about $8,200,000 for the entire season ($10,000,000 = $100,000 / 0.01....$100,000 x 82 = $8,200,000.) Finally, you may notice that even though your tests reveal that you have added income to the SEASON INCOME figure in the vendors screen, that money may not show up right away on your balance sheet in terms of changes in NET INCOME. I don’t know why this is, but in my experience, that extra revenue will show up really soon, so don’t worry about that. PARKING PRICES This is a tough thing to price. The reason it is so tough is because I have found that testing for a profit maximizing price yields revenue figures that can fluctuate wildly. This makes it very hard to pin down an optimal price, so my suggestion is to use the highest “green price”. This means that you should increase the price of parking to point just before that green arrow turns into a red arrow. I wish that I could be more detailed about this, but there is too much variability to nail down the right price. ADDING SEATS After about two seasons, you will notice from your ticket price tests that attendance is getting up there and certain sections of your stadium are, or are close to, being sold out every single game. When that happens, it is time to let some more fans into your stadium by adding extra seats. To add new seats, go to the seating screen where you checked your ticket price tests. Press the X button and you will be able add additional seats. You will notice two things right off the bat. First, you can add seats in intervals of 10. Second, you will notice that each section of seating has different costs associated with it. Some are, of course, more expensive than others to add. Before you add seats, doing a simple control test is not enough. You should do about three or four control tests to make sure that when you play a game, the cumulative attendance for that section increases by the exact amount of the seating capacity. In other words, make sure that if a particular section has a total capacity of 2,500 seats, then you have to make sure that each and every seat is sold out. Check this a few times to be sure that this is the case. Once you have confirmed that a section is consistently selling out, then you can add some new seats. What you will be testing for is how many people will actually sit in your new seats. Therefore try adding 50 seats at a time when you test for increases in attendance. If those 50 seats are also sold out, try adding another 50. You should have the idea down by now. Of course with day to day attendance figures, there will be some variability that makes it hard to predict an exact number of seats that you should add. If for instance, adding 100 seats brings an additional 76 fans to that section, then sticking with an addition of 100 seats is a good idea since the rest of the seats will fill out in time. That is why I think that increases of 50 seats at a time is a good, conservative benchmark for this particular test and it allows for some variability. As a supplement to this section, I would highly recommend that you read the appendix section below on the subject of elasticity. The reason is because there is the possibility that you may be in the highly elastic range when you are adding seats. This basically means that if you drop the price by a small percentage, attendance could increase by a much larger percentage. If this is the case, then it would be worth it to start LOWERING the price of tickets to pack more fans in. Here is an example based on the model from the appendix. Suppose that you have a section that has a seating capacity of 3,000 seats, and that section is selling out every game at a price of $70. You add 500 seats, and those extra seats are filled with an additional 150 fans. Now suppose that I dropped the price by $2 and I notice that the lower price attracts an extra 250 fans to the game. The percentage change in quantity ( [3,400 – 3,150] / 3,150 = 7.9% )is divided by the percentage change in price ( [68 – 70] / 70 = -2.9% ), which yields an elasticity of -2.72 = (7.9% / -2.9%). Since the relationship between attendance and price is elastic, lowering the price of tickets will increase both attendance and revenue from that section. LOOSE ENDS Before you head into the off season, there will be a few things that you might want to take care of. First, if you have plenty of funds in the bank, you may want to consider paying off the balance of your loan before you finish your season. The reason for this is because you will have to make loan payments over the months of the off season. By the end of your second season, you should have plenty of available funds, and you should pay off that loan. Also, by the end of the season, the condition of your field, training and rehabilitation facilities will have deteriorated a little bit. You can fix this at the end of the season in the Stadium Updated screen, and the cost is rather minor. In fact, I like to do this twice. I like to do this at both the end of the season and at the beginning of the season. You may want to do this at the start of the season because these facilities will deteriorate during the off season. ----------------------------------------------------- OFF SEASON MANAGEMENT ----------------------------------------------------- I hope that you all had a very profitable and winning season, and now you should get ready to manage your team in the off season. Some of the aspects of the off season have remained the same, but a few improvements have been made to make the off season a bit more dynamic than the last game. SHARED REVENUE TAX Ah, the good old shared revenue tax. This certainly adds more realism to the business side to the game, but it can freak out a lot of players when they end the off season because they will start their next season and notice that their balance sheet shows a net income of $-60,000,000! When I saw that number after playing MLB 2005, I almost had a nervous breakdown! This can freak out players, but I am here to assure you that seeing such a large negative number on your balance sheet is really not a big deal. In fact, Appendix 2 is all about giving you a proof as to why it is no big deal, and I highly encourage you to check it out. First, let’s break down what the shared revenue tax is all about. When your season officially comes to an end, you will completely cease all of your business operations. From your balance sheet, you will see that you have earned a large amount of revenue. In order to “level the playing field”, the game (just like in real life) will levy a tax on the revenue that you have earned for your season. In fact, the game will do this to every team in the game. All of the tax revenue from each team goes into a giant pool. From there, the total taxes collected are divided equally among every team in the form of an equal rebate check. This means that the tax minus your rebate is the net tax that you have paid. Some teams that have earned very low revenue (I have a sneaky suspicion that this can be more accurately described as a SHARED PROFITS TAX) will actually come out ahead because their rebate checks will be higher than their tax expense. You on the other hand will probably be paying a very large net tax because you managed your business so well. Ultimately, the reason why your balance sheet will look so scary is because of a matter of timing. Suppose that you just finished the 2006 season, and you are about to jump over to the year 2007. Once the new year begins, you will be hit with the tax on January 1. So you just incurred an expense, but have you earned any revenue? Only a little because this is when your primary advertiser and television contract will keep their promise and pay you. You also are charged with two more expense during the off season. First, you will have to make loan payments over the off season, and those payments will be taken out of your funds every month. Also, you will have to pay for the full cost of your transportation lease. With all of those combined expenses and just a little bit of revenue, your balance sheet will show a large negative number. There are two main reasons to not worry about this. First, the funds that you begin your next season with would be the same regardless of when the shared revenue tax is paid (see Appendix 2). Second, your profits per game will be high enough (you should be earning between $2,500,000 and $3,000,000 per home game by that point) that you will be able to climb out of the red and into the black by around the All Star break. RESIGNING PLAYERS This is not only a great opportunity to lower your daily expenses, but you can also free up some additional payroll room in the RESIGN PLAYERS section. Instead of releasing players into the free agent pool and then attempting to sign the, you can simply renegotiate the contract of any player on your roster that is or is not under contract. Also, you will have already noticed that when your season ended you were granted an increase of x% in your maximum salary budget. This increase is directly linked to the success of the season that you have just finished. Winning the World Series will certainly grant you the biggest increase, but if you fail to make the playoffs, then you can expect a salary budget increase of about 1%. I do not know if winning off season awards like the MVP award or the Cy Young affects your budget increase, but it can’t hurt. Right now, your first priority should be to free up some salary budget room. To do this, take note of all of your players who you would like to keep for several seasons and are in the middle of their contract. Now, try to resign them to a contract that is heavily reconstructed in your favor. To do this, you should start by setting your offer at one year and the lowest salary possible. Now, adjust the length of your offered contract to whatever number of years the player finds acceptable. You can safely try out several contract lengths because no one in his right (except a pitiful AA player) mind will accept such a contract. Once you have found the optimal contract length, now you can raise the salary offered to find the absolute minimum salary that the player will accept. If you do this with the right players, you will notice that the amount of money that you have available for player salaries is increasing. The reason for this is because when you restructure a players contract, that player will accept a lower salary now in exchange for a higher salary later. Since the immediate effect is to lower the salary that you will be paying that player next year, the amount of money that you are allowed to spend on players will increase. This should illustrate the reason why you should do this first, and it is because you want to have as much money available for resigning your best players who have expired contracts as well as money available for signing free agents. Your second priority should be your best players who have expired contracts. These are the guys who you definitely do not want to risk to free agency. Now, you should do exactly what you did when resigning players in the middle of a contract. Set the contract length and salary to a minimum, find the optimal length and then the minimum salary that is acceptable to the player. At this point, you should have freed up some salary budget room as well as resigned your best players to long term contracts that have been reworked in your favor. Finally, I would like to make an IMPORTANT POINT HERE. Several readers have e-mailed me and wondered how to release players in the off season. As it turns out, you can't. The reason why they wanted to release players is because when they went on to signing free agents, they realized that they had no more room left on their rosters, and therefore were not able to sign any free agents. To avoid having this happen to you, just let go of those pitiful minor league players that are waiting for a contract. You can always end the off season and sign more pitiful players to fill out your roster later. Just MAKE SURE THAT YOU HAVE ENOUGH ROSTER SPACE before you move onto signing free agents. and drafted players. TRADING PLAYERS You will be surprised by just how easy it truly is to trade your minor league and bench players for All Stars. This is true all year round. In fact, I found it very easy to trade a minor league pitcher for Dontrelle Willis, Matt Lawton and Carl Everett for Adam Dunn, and another minor leaguer for Austin Kearns. There are a lot of trade opportunities out there that can be made this easily. This is one of the flaws in this game since the trade system is not very realistic. Then again, why not take advantage of it? Trading for players has a distinct advantage signing free agents in the sense that once you trade for a player, you can immediately restructure that player’s contract in your favor as you just did with players that are already under contract. Therefore, you should look around each team’s roster and try to find players that you like which you can trade for. However, you can only trade for a player that is currently under contract with another team. You cannot trade for a player that has no contract. Also, try out several combinations of players that you offer until you find a combination of players that the CPU will accept. AMATUER DRAFT This is really the only part in the game where your previous attempts at scouting will come into play. When the draft begins, all teams will select amateur players in an order based on their performance during the season. The worst teams will, of course, pick first and the best teams will pick last. When it is time for you to pick, you truly can pick any player that you want, but almost all of the players will have their ratings kept a secret from you since you did not scout them. If you want to check a player’s ratings, then you must have scouted that player previously. Those players that you have scouted will be indicated by an icon next to that player’s name. Ultimately, the entire draft goes for 5 rounds, and your position in each round is the same, and it is based on your performance during the season. When you began your franchise, you may have been given the goal that you need to draft an All Star potential player. This is actually not a very unreasonable goal. You can either leave it to chance and pick the player with the highest overall rating(the bar meter) which is not a very good idea, or you can check that player’s potential rating. To check his potential rating, highlight that player and press the O button and then the X button. From there, use R1 to toggle to the player’s rating screen. On the rating screen, you will see six different ratings along with a letter rating from A to F with A being the best. Both pitchers and hitters have OVERALL, FIELDING, and POTENTIAL ratings in common. In order to fulfill your goal, you want to find the player with the highest POTENTIAL rating. An A will almost certainly guarantee that the player will have All Star potential. Drafting a player that has a rating of B will give you a solid chance that he will be a potential All Star. A player with a rating of C has a slim to none chance of having All Star potential. You don’t necessarily need to have an early draft pick to nab such a player. In fact, you could possibly have the last pick in the first round and still draft an All-Star potential player. General attribute levels like power, fielding, and the quality of a pitchers individual pitches can be seen without scouting that player. Therefore, if you do not have to pick an All-Star potential player as a franchise goal, then picking on the basis of the player's actual attributes is perfectly acceptable. One reader, Clint P. sent me an e-mail where he mentions that for him, the draft ended in the fourth round and he was unable to draft more than 3 players total. This has never happened to me personally, but I do want to mention it if anyone else has had the same problem. I have two possible explanations for this. First, this could simply be a glitch. Second, it could be that the number of available players simply ran out. You may notice that when you are scouting players, there will be a lot of 16 and 17 year old players that can be scouted. These are high school players and they cannot be picked unitil they are 18(you may have noticed that when you try to create a player, the youngest age that you can set is 18). Players who are 19 years old are college players, but thay can be from either 2-year colleges or 4-year colleges. This means that these players will be available when they are 20 and 22 years old respectively. I suppose that if a large number of players are in the middle of high school or college, then they will not be draftable until they graduate. If that is the case, it may explain why a draft might not last a full five rounds. SIGNING FREE AGENTS This is one area of the game that has been almost totally revamped. Hopefully, you have freed up some of your salary budget and left some roster spaces open in preparation for signing a top free agent. After the amateur draft is over and you have signed your five draft picks, you will be ready to sign free agents. When you examine the players who have filed for free agency, you may notice the one thing that truly makes this phase of the game different from previous games. Now, you will be put on a timer. At the lower right corner of the screen, you will notice that there is a blue bar that is indicating how much time you have left for that day. Each day takes between 1 and 2 minutes to complete, and there are a grand total of 60 days in which you can sign free agents. This means that if there is a free agent player that you really want, then you had better act fast or else other teams may step in sign him in the first few days of the free agent signing period. When you spot a free agent that you want to sign, highlight that player and make him an offer. That player will not accept or reject at this point. Instead, he will consider your offer and will take a few days to mull it over. You can make offers to other players as well at the same time. There are a few indications as to how likely it is that your target free agent will sign with you. The first way you can tell is by checking the player’s interest meter. This can be seen when you select the high lighted player. The second way is to check to see if you are truly making the best offer. You can see this on the main free agent screen by looking at the icon in the best offer column. If your team is offering that player the best offer, then your team logo will appear in that column. If another team is making a better offer, then that team’s logo will appear there. Either way, the terms of that deal will appear in the right hand column. If another team is making the best offer, then looking at the terms of the deal will give you an idea of what you need to do in order to top that deal. Once you have picked your free agent targets, just sit back and see if your best offer is taken within a few days. HOW DID I DO IN SEASON 1? It's only fair that I put my net income where my mouth is, and let you all see some of the financial figures that I endedup with at the end of my very first season. I loaded my back up franchise file and wrote down the relevant information on what I did. Net Income: $94,330,941 Ending Funds : $121,330,941 Ticket Income: $118,353,634 Parking Income: $14,928,571 Vendor Income: $163,215,778 Shared Revenue Tax: $83,551,728 Shared Revenue Rebate: $25,836,771 Starting Funds for 2007: $61,417,718 Not too shabby. I'm sure there are a lot of you out there who did better since many teams have larger stadiums than Safeco Field. Anyways, Starting year two with about $40 million more in funds than I did in year one will give(and has given)me a lot of room to add seats and vendors. LAST WORDS That pretty much does it for the major aspects of how to run a franchise in MLB ’06: The Show. As I mentioned before, being very profitable in this game mostly has to do with diligently testing your prices to see whether they are at the profit maximizing level and making sure that you add vendors at strategic times. What this will do is keep your revenues rising in a slow and steady manner for several seasons. Most of your expenses like player and staff salaries, training budgets, advertising budgets and such will be held relatively constant over the same time period. This means that by being diligent, you can have some very good profits for several years to come. After several years, things like the bite from the shared revenue tax will be lessened (because other teams will become more profitable as well, granting you a larger rebate), revenue from TV and primary advertisers will increase because you will be able to lock in better deals, and your fan base will be loyal. You should now be very familiar with all of the options that this game has to offer in franchise mode, as well as strategies for being able to fully utilize those options. I hope that you all have enjoyed this game and that you found my guide to be helpful to you. ----------------------------------------------------- Appendix 1: Elasticity ----------------------------------------------------- This first appendix section is not necessary for you to know if you want to be successful at this game. It will, however give you a deeper understanding as to how I came up with the STL method and why this is the most effective tool for understanding how the price of concessions will affect total revenue. First, let’s start out with the basic economic model of a demand curve. From my crude (but brilliant) graph below, you have a visual illustration of how demand works. It’s pretty simple actually. On the vertical axis, P represents the price of a good. On the horizontal axis, Q represents the quantity of goods demanded. It is an economic law, but also common sense that says that the lower the price of a good, the higher the quantity demanded. Therefore, if you were to graph this relationship, you would get a graph similar to the one below. P | * | * | * | * | * | * | * | * | * |_____________________________Q However, maximized price does not mean maximized revenue. Because of the dynamic relationship between price and quantity demanded, total revenue changes in a dynamic fashion as well. This is where the concept of ELASTICITY comes in. The price elasticity of demand can be defined as the change in quantity demanded due to a 1% change in price. In other words, we know that when the price goes up, the quantity demanded will go down, but the question is “by how much?” Technically, elasticity is calculated by taking the percentage change in the quantity demanded and dividing that by the percentage change in the price. In the hypothetical demand schedule below, when the price falls from $11 to $10, that is equal to a price drop of approximately 9%. By dropping the price, the quantity demanded increases from 1 unit to 2 units, a 100% increase. 100% / -9% = -11.1. In other words, if the price increases by 1%, the quantity demanded will fall by 11.1% and visa versa. P Q TR %changeP %changeQ E 11 1 11 x x x 10 2 20 -9 100 -11.1 9 3 27 -10 50 -5 8 4 32 -11 33 -3 7 5 35 -12.5 25 -2 6 6 36 -14 20 -1.42 5 7 35 -16.6 16.6 -1 4 8 32 -20 14 -0.7 3 9 27 -25 12.5 -0.5 2 10 20 -33 11 -0.3 1 11 11 -50 10 -0.2 (note: some numbers may be a bit off due to rounding) Now, note where total revenue (TR) is maximized. It is maximized around the point where E = -1. What this means is that if price goes up by 1%, then quantity demanded falls by 1%. Those forces then perfectly offset each other because increasing or decreasing the price any further will force TR to fall. TR |______________ TR* | * | * | * | * | * | * | * | * | * | * | * | * | * | * | * | * | * | * | * |*____________|____________*___Q Q* elastic inelastic range |E| > 1 range |E| < 1 The above graph further illustrates this. In the inelastic range, a 1% increase in price causes a less than 1% decrease in quantity. Price is increasing faster than the drop in quantity, therefore revenue increases. In the context of the game, you will notice that when you are doing the STL method to do price tests for concessions, you are ultimately trying to find the point where the elasticity of each concession is as close to -1 as you can get. You should be able to maximize virtually all of your concession prices within your first franchise season. From there, the only way to increase concession revenue is to increase attendance or vendors, since price increases will no longer be a factor in increasing revenue. When it comes to tickets, your goal is to maximize attendance, not revenue, so you can alter the equation a little bit. Instead of saying “price elasticity of demand”, we can rename this type of elasticity as the “price elasticity of attendance”. The principal is exactly the same. If the price of tickets goes up, by how much will attendance fall? That is, in part, why I recommended that the STL method should be used in two stages. For the very first home game of your very first season, it is appropriate to choose the revenue maximizing price. After that, you should be increasing the ticket price to the point where there is no significant drop off in attendance. ----------------------------------------------------- Appendix 2: Accounting for the Shared Revenue Tax ----------------------------------------------------- As I mentioned before, you will be shocked by seeing your balance sheet so deep in the red due to having to pay the expense of the shared revenue tax. I also mentioned that this really is not as big a deal as it seems. It is more an issue of WHEN the tax is paid that makes the tax so shocking. In this appendix section, I would like to do a little accounting experiment to illustrate exactly what I am talking about. The first thing that I did was pick up my old copy of MLB 2006, and I simulated an entire season with the Boston Red Sox. I took out a loan, bought some missing vendors and raised prices a bit. I did three general price increases to roughly simulate what I might have done had I been a little more diligent. Anyways, my simulation ended with the Red Sox being eliminated in game 7 of the ALCS (by the Royals, if you can believe it). Here is was my financial status at the very end of the season: Beginning funds: 22,600,000 BALANCE SHEET INCOME 308,669,156 Facilities 263,589,156 Licensing/Ad Sales 9,180,000 Shared revenue 0 Loans 36,000,000 EXPENSES 269,799,423 Staff Salaries 7,426,581 Training/Rehab 24,056,095 Facilities 102,962,257 Marketing 7,836,742 Banking 37,063,410 Shared Revenue 0 Player Salaries 90,454,338 NET INCOME 38,869,733 Ending Funds 61,469,732 From there, I just simulated the entire off-season and let the CPU handle everything. When I officially started season two of my franchise, my balance sheet looked like this: Funds: 13,442,273 INCOME 28,420,288 Facilities 0 Licensing/Ad Sales 2,586,250 Shared Revenue 25,834,038 Loans 0 EXPENSES 75,847,748 Staff Salaries 0 Training/Rehab 0 Facilities 10,000,000 Marketing 0 Banking 0 Shared Revenue 65,847,748 Player Salaries 0 NET INCOME -47,427,460 This is a rather typical situation. Net income is a large negative number, and in addition to the shared revenue tax, the cost of the transportation lease was paid in full (the CPU upgraded, not me). Also, some income was earned in the form of TV revenue and advertisement revenue, as well as the shared revenue rebate. Also, notice that the CPU paid off the balance of my loan, so I did not have to make any loan payments over the off season. (*As a side note, note that I said a few times before that what net income represents is the amount of money that has been added to your funds to date. Ending the previous season with $61,469,732 in funds combined with $-47,427,460 should have yielded a starting balance of $14,042,272 for the 2006 season, which leaves almost exactly $600,000 in expenses unaccounted for.) Anyways, as you can see, since the game is using cash based accounting, the expense of the shared revenue tax will be recognized on January 1 of the new year. Since you have incurred a very large expense and have gained very little income, then of course your balance sheet (Geez, I hate referring to the above table as a balance sheet) will show a negative net income. Now, let’s try that little experiment. Here, we will see what happens if the shared revenue tax is recognized and paid when the World Series is officially over and all teams have ceased their business activity in 2005 as opposed to 2006: Beginning funds: 22,600,000 BALANCE SHEET INCOME 334,503,194 Facilities 263,589,156 Licensing/Ad Sales 9,180,000 Shared revenue 25,843,038 Loans 36,000,000 EXPENSES 335,647,171 Staff Salaries 7,426,581 Training/Rehab 24,056,095 Facilities 102,962,257 Marketing 7,836,742 Banking 37,063,410 Shared Revenue 65,847,748 Player Salaries 90,454,338 NET INCOME -1,143,977 Ending Funds 21,456,023 As you can see here, I added the expense of the shared revenue tax to the EXPENSES part of the balance sheet, and I added the rebate from the shared revenue tax to the INCOME portion. Everything else has remained constant. What this ultimately did was cause a small, negative net income of $-1,143,977. Since net income tells you how much money was added to your beginning funds, this negative net income lowers funds to $21,456,023. Now, let’s skip ahead to the start of the 2006 season based on these revised numbers. Funds: 13,442,273 INCOME 2,586,250 Facilities 0 Licensing/Ad Sales 2,586,250 Shared Revenue 0 Loans 0 EXPENSES 10,600,000 Staff Salaries 0 Training/Rehab 0 Facilities 10,000,000 Marketing 0 Banking 0 Shared Revenue 0 Player Salaries 0 *unaccounted expenses 600,000 NET INCOME -8,013,750 WOW! Isn’t that just amazing! I would have just as much funds in the bank no matter when the shared revenue tax is paid. (*Note that in the normal situation, $600,000 of expenses were unaccounted for, so I just added that expense in order to reconcile the two balance sheets.) As you can see, we ended the 2005 season with $21,456,023 worth of funds in the bank. Since net income tells you how much money has been added to your funds to-date, last season’s balance less the negative net income is: 13,442,273 = 21,456,023 – 8,013,750 In this game, would you rather climb out of a $47,000,000 hole or an $8,000,000 hole? Based on this example, I don’t see why anyone should care. That, ladies and gentlemen, is why you should not worry about seeing a large negative net income on your balance sheet when you begin your next franchise season. ----------------------------------------------------- Wish List for Future MLB games ----------------------------------------------------- If anyone from 989 Studios or SCEA happens to check out my FAQ, I would like to congratulate you all on a fine game, and I would like to add some suggestions for how to expand franchise mode a bit to make it more dynamic and complex. 1.) It would be cool if you could buy negotiating rights to free agents from other countries, much in the same way that the Seattle Mariners paid several million dollars to buy negotiating rights with Ichiro Suzuki. 2.) I would like it if you could also sign radio deals much in the same way that you sign TV deals. 3.) You should be able to sell team gear (or at least the licensing rights) to vendors across the country which would make the game more realistic in being able to generate income. The better you team, the more people around the country will want to buy your team gear. 4.) Change up the types of vendors, stadium advertisers a bit to make new games feel a bit fresher. 5.) Owners also have to deal with other things when it comes to maintaining a stadium such as adding bathrooms, security, clean up crews, etc. This would make you have to consider the comfort of fans more when making decisions. 6.) Make the shared revenue tax recognized and paid for in the year that the revenue is earned as opposed to the start of the next year. 7.) If your team has more than a certain number of players from a specific country like Japan, South Korea or the Dominican Republic, then you should be able to sell television rights to that country so that fans in those countries can see their countrymen play in the majors. 8.) It would be cool if some real life musical artists were able to sing The Star Spangled Banner for the game. It would be unique for a sports game to do this, and the player would have a chance to watch and listen to the national anthem sung by a real talent like Alicia Keyes. The better your team plays, the bigger the star you can hire. 9.) Having former players come back to their old team to throw out the ceremonial first pitch would be a nice touch for each stadium. For Mariners fans, how cool would it be to see Edgar Martinez in a baseball game once again? 10.) You should be able to make deals with different companies to supply your concessions. For example, you could have several soda companies (real or fictional) make bids to be the sole supplier of soda to your stadium. You could also have different breweries and food markets doing the same, giving you the chance to choose between local and national distributors. Each company could have different contract lengths, overhead rates, prices, etc, and that can be treated like minor stadium advertisers. Hey! Maybe they could be the ones advertising in your stadium. 11.) You should be able to put your funds in short or long term investments to gain some extra money. It would be cool if you could invest $10,000,000 of extra funds into a short term bond that you could earn interest on instead of waiting for the right time to add a vendor. 12.) Each stadium should have some really unique types of concessions that are synonymous with that city. For example, you should be able to sell Philly cheese steaks in Citizens Bank Park in Philadelphia and sell grilled salmon burgers at Safeco Field in Seattle. Each stadium should also have a few more common concessions such as pizza, bottled water, coffee mugs, key chains, etc. 13.) Some good music. 14.) It would be nice to build your own stadium from scratch. Give the player $800 million to construct every thing, add vendors, add seats, billboard space, etc. Hey, the PS3 ought to be powerful enough to handle that. ----------------------------------------------------- READER QUESTIONS ----------------------------------------------------- Whenever I receive an e-mail about MLB 200x games, some questions get asked more than others. Here, I want to save both of us some time and preemptively answer some of the most commonly asked questions. Also, if I get a good question from one of you here that I have not addressed in this FAQ, I’ll post is here. Q: Why isn’t (insert player name here) in the game? A: That player is probably in the game. Because of union and licensing issues, baseball games are not allowed to use the names of some players. Instead of deleting the players outright, MLB 2006: The Show gives fake names to players in order to get around the ban. For example, Barry Bonds falls under this rule. His name, photograph and stats are not allowed to be used in a video game. However, Bonds is in the game, but he just has a different name(Reggie Stocker). His attributes should still be there however, which means that if a player for the San Francisco Giants has massive hitting skills, but you don’t recognize the name, then that is Barry Bonds. Some players have been totally removed because of (probably) licensing issues and were not put into the game. Also, for those of you wondering where Roger Clemens is, he was removed because he was not on any MLB roster at the time the game was released, and his retirement was highly probable. Q: My game keeps freezing up on me and I can’t continue my franchise. How do I fix this? A: Honestly, I don’t know what to do about freezing. This was a big problem in MLB 2005 and MLB 2006, and I have never heard of a good solution to this problem. Sorry. Q: Could you please write a FAQ for MLB 2005? I’ve tried your profit building methods and they worked for me in MLB 2006, but they don‘t work now. A: Actually, they do work. Most of my guide is based on what I learned from MLB 2005. Like I said in the intro, a lot of sections to this FAQ are simply copy/pasted to this guide from my MLB 2006 FAQ. The reason for this is because, for most aspects of the game, there is no difference between MLB 2006:TS and the 2006, 2005 versions. I assure you that I would not have done this if I was not sure that the same rules applied. They do apply because what I described is a METHOD. The method(STL) is based on the concept of trial and error. If you apply this to previous games, then it will work. Q: I have been able to earn a lot of money in The Show, but I am also a big fan of the Madden football games. Could you write a FAQ about maximizing profits for Madden football games? A: Madden football games do have a great franchise mode which is similar to that of the MLB games. However, the financial data from the Madden games is not detailed enough for me to make any significant conclusions about profit maximizing. Therefore, just try and use the STL method as best you can for those games.(As a side note, I wish that EA Sports would add some kind of financial aspect to the NCAA football games that it produces.) Q: Are you going to write a FAQ about career mode? A: As of early May, I decided to start taking notes and putting together the skeleton of a Career FAQ. This could take a long time since there is a lot of little details that I am trying to figure out, and I am not sure if I will get it done in a reasonable amount of time this year. I certainly want to write one for next year. Q: (from Keith G.)My question is, if I put the management on CPU control and just focus on the on the field stuff, will the CPU run my franchise into the ground or can it be trusted to make good decision regarding facilities, management, advertising, etc.? A: The CPU is OK at running a franchise, but not great. When it comes to adding vendors, raising prices and such, the CPU will act very conservatively, which means that you will probably end up with a sold profit by the end of the season, but not nearly as much as you could earn by doing everything manually. ----------------------------------------------------- CONTACT INFORMATION ----------------------------------------------------- If you have a new strategy for profit building, or if you find glitches, errors, suggestions, or anything else, just e-mail me at: email@example.com Let me just add a few notes here. 1.) First, the MLB series is notorious for freezing. Sometimes the game will simply freeze up at certain points which will not allow you to continue your franchise. Every indication says that the company fixed this problem, and I pray that it is true. If not, then there is really nothing that I can do since I never figured out how to deal with this problem before. 2.) I really do enjoy getting e-mail from people who read my FAQ. I do check my mail regularly, so if you do not receive a reply, it’s probably because there was an error in sending my reply, or your mail was never received, or it was accidentally identified as junk mail, or my server is down, or some weird reason. I do reply to all e-mails as long as you are not rude. If you are, then I just send your e-mail to circular file. So, if you don’t get a reply in two or three days, just try again. ----------------------------------------------------- MUSIC LIST ----------------------------------------------------- Originally, I did not want to do this, but the sound track to this game is so horrible, in my opinion, that I cannot burden the thought of so many players doing the STL method while being subjected to the music from this game. If I am spending time doing the STL method, then I put on some good music and I do not subject myslef to the cacophony of, so called, music that comes from this game. Therefore, I just hit the mute button and I put any one of these albums on: John Mayall: The Turning Point Dick Dale: The Best of Dick Dale and His Del-Tones Paul Simon: Graceland Ottmar Liebert: Nouveau Flamenco Ginger Baker: Unseen Rain The Ventures: Walk-Don't Run-The Best of the Ventures Mason Williams: The Phonograph Record The Lively Ones: Hang Five!!! Any comedy album by Bill Cosby :D For all you kids and parents out there, none of these albums have any dirty lyrics or cuss words, or anything like that. It's just great music that anyone can get into. I'm sure some of you will be tempted to write to me saying, "That album sucks" or "You should listen to such-and-such". These are just the albums that I like, so I put them out there. Please don't write to me with you music suggestions because I am not very adventurous when it comes to music. If you liked these albums, then that is great! ----------------------------------------------------- CREDITS AND THANKS ----------------------------------------------------- Thanks to SCEA and 989 studios for yet another great game as well as fixing so many of the bugs that plagued previous games. Thanks to gamefaqs.com for originally hosting this FAQ as well as all other sites who post this FAQ such as 1up.com , cheatplanet.com and gamesradar.com Thanks to Lee Sharp for sending me info about pitching mechanics. Thanks to ashawn1234 for telling me about being able to switch teams during franchise mode. Thanks to Billy Zobel for his observations about promotions. Thanks to Bryan Taylor for correcting me on the fact that the Phillies do not play in The Vet anymore but rather in Citizens Bank Park. Thanks to Clint Peinhardt for alerting me to a possible problem in the amatuer draft. ----------------------------------------------------- LEGAL STUFF ----------------------------------------------------- This may be not be reproduced under any circumstances except for personal, private use. It may not be placed on any web site or otherwise distributed publicly without advance written permission. Use of this guide on any other web site or as a part of any public display is strictly prohibited, and a violation of copyright. Copyright 2006 MR. Kim Dalton Rodieck.
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