"MLB `07: The Show" Franchise Management FAQ By MR. K.D.Rodieck ----------------------------------------------------- TABLE OF CONTENTS ----------------------------------------------------- Version history Introduction Changes in MLB 07 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 YOU WILL HAVE A FIT IF YOU DO NOT DO THIS OFF SEASON MANAGEMENT Shared revenue tax Resigning players Trading players Amateur Draft Signing Free Agents Last Words OTHER STUFF Appendix 1: Elasticity Appendix 2: Accounting for the shared revenue tax Possible glitches Contact information Credits and thanks Legal stuff ----------------------------------------------------- Version History ----------------------------------------------------- v.1.00 - 03/01/07 -First version complete. v.1.01 - 03/02/07 -Removed game-play tips section v.1.02 - 03/14/07 -Added the "Infinite Money Glitch", the "Glitch Trades", and "The Amazing Disappearing Coaches" to the POSSIBLE GLITCHES section. -Made notes in other relevant sections in light of possible glitches. -Updated "Transportation" section in reference to NL teams. -Removed "general reader questions" section. ----------------------------------------------------- AUTHOR'S NOTE ----------------------------------------------------- I must make it clear that I do not own a copy of MLB `07: The Show for the PS2. The reason is because I am waiting for the PS3 version to come out, and that is the version that I would prefer to play. I rented the PS2 version at my local video store just so I could determine what differences there are between MLB `06: TS and MLB `07: TS for the PS2. After extensive testing and note taking, I determined that the games are essentially the same, but there are minor changes in the `07 version. Therefore, I copied and pasted my last FAQ for MLB `06: The Show and updated this FAQ point by point, so this guide is current. ----------------------------------------------------- INTRODUCTION ----------------------------------------------------- Welcome back baseball fans for another year of MLB video games. I have been a fan of this particular series for about four years now for one reason, and that is franchise mode. Most sports games have a franchise mode in one form or another, but the reason why I love the MLB series is because the financial side of this series is very deep. If you are new to this series from 989 studios and SCEA, then you will be shocked by how much you are able to micromanage almost every aspect of your business. You will be setting prices for tickets, food, and parking as well as adding vendors, seats, promotions and more. But that is only a fraction of all the different ways in which you will have to tend to your business as CEO of your own baseball team. This may be overwhelming for new players, and that is why this guide exists. Over the years of playing games from the MLB series, I have formulated a collection of rules and methods based on observation that allows a player to maximize profits for any given team. The amount of things that you need to do can seem staggering, but if you read about the strategies that I have laid out in this guide and take each item one by one, then you will do just fine and running the business side of your franchise will soon become second nature. If this is the first time you have played a game from this particular baseball series then just remember to be patient as you progress through your franchise and have fun. "$" If you are already familiar with my strategies from my last two FAQs, then there really is not much here that will be new to you. Therefore, for your benefit, I condensed all of the changes in financial strategy and franchise management into the section below, so you don't have to pour over this guide going over info that you already know. Just check out the section below and you will get most of the info that you need. Thank you all for checking out my guide, and I hope you will find it helpful. Play ball! ----------------------------------------------------- CHANGES IN MLB `07 FROM MLB `06 ----------------------------------------------------- For all of you who are already very familiar with this game and how franchise management works, here is a quick list of significant changes from last year's game. Some sections have been re-written, but they are the same in concept. MY STRATEGIES 1.) Changed my conclusion about how much money to devote to training. 2.) Changed my strategy regarding the hiring of scouts. 3.) Changed my strategy for taking out a loan which is directly based on changing my conclusion about training. IN GAME CHANGES 1.) Now, you can hire a 1B coach, a 3B coach and a farm director. See HIRING A STAFF ----------------------------------------------------- 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 on. ----------------------------------------------------- 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. Let me show you how. Suppose midway through the season you notice that you balance sheet shows a net income of $20,000,000 TOTAL REVENUE 45,000,000 TOTAL EXPENSES 25,000,000 NET INCOME 20,000,000 You play your next home game and you notice that your balance sheet shows the following. TOTAL REVENUE 48,000,000 TOTAL EXPENSES 26,000,000 NET INCOME 22,000,000 By comparing net income figures over a two day period, you can determine that for every home game you play in the short run, you are earning $2,000,000 in profits. This is the most useful way in which you can use the information on the balance sheet. 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 are 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, and 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. (Accountant Rant part II: Vendors and seats are not expenses, they are assets. In real life, buying more seats means that one asset (cash) goes down and another asset (seats) goes up. In reality, this transaction just changes the composition of held assets. *sigh* I've going to drive myself nuts if I keep doing this!) This information by pressing the O button while in the franchise menu screen. In my opinion, your funds (i.e. retained earnings) 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. Therefore, if I started the year with $30,000,000 worth of funds and then my balance sheet shows a net income of $40,000,000 at the All-Star break, then my funds will be equal to $70,000,000. ----------------------------------------------------- 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 decisions. 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 or ticket prices should be done in bulk. In other words, test the prices of concessions by increasing all concession prices at the same time and checking the effect on each concession. If you did a test for one concession at a time, it would take you forever. The same is true for ticket prices. ----------------------------------------------------- ----------------------------------------------------- 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 2006 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 Tiger 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 an 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. EDITING PLAYERS Each organization will have a bunch of real life minor league prospects on its organization roster. Chances are that hot prospect for your favorite team may 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 view 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 option 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. Finally, this method of editing is far superior to using the create-a- player option because in order 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. Please note that Red Sox pitcher, Daisuke Matsuzaka IS in the game on the BoSox roster under the name Tate Baik, and his name CAN be edited. Barry Bonds is also in the game under the name Reggie Stocker, but his name CANNOT be edited. Go figure. RELEASING PLAYERS You are not really releasing a player. You are in fact buying out a portion of his contract. This means that you cannot cut costs by simply cutting players from your roster. Before you release a player into the free agent pool, the game will confirm your decision before you release him. If you do release a player, one thing that you will notice is that your funds do not decrease right away. Rather, the portion of the contract that is being bought out is paid out over the course of the year. This ultimately means that the per-day cost is rather low for releasing lousy minor league players. There is nothing wrong with releasing players to make roster room, but cost cutting is not a justification because you will not only have to keep paying for your released player but also the new player that you hire. 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, so here is a basic set up that you might want to consider. 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 another thing to keep in mind when you are setting up your rosters, and that is that your players will get fatigued playing every day, so you will need some solid bench players to give your every day players a day off once in a while. In this sense, AL teams have an advantage because players who are filling the DH spot will not fatigue as fast as position players. This means that you can have two sluggers for one position and have one player DH for a while and one play in the field. From there, if one player gets tired, have him DH and put your regular DH in the field. Another strategy is to have a utility out fielder play each out field position over three days. For example, if my regular out field consists of Raul Ibanez, Ichiro Suzuki and Jose Guillen, then I might try to get a guy like Corey Patterson to be my fourth out fielder. I let my regular out field play for three days in a row, and then I have Patterson fill in for Ibanez one day. The next day, Ibanez goes back to left field, and Patterson fills in for Suzuki, and then for Guillen the next day. Wait another three days, and repeat. This should keep your out fielder's energy levels rather high throughout the season. There are all sorts of different thing that you could try, so play around with your rosters a bit and see what works. 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), 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 an 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 as well as the first base coach and third base coach are important to your franchise to the degree that their strategy affects the way your team performs when you simulate games. They does not matter all that much if you plan on playing all or most of season yourself. With regard to the manager, 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 farm director 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* 1.) Control - Makes sure that the pitch ends up where you want it. 2.) Velocity - Allows your pitcher to throw a lot harder. 3.) Mechanics - A reader of my FAQ from last year pointed out that mechanics helps reduce injury as well as increase velocity and control. 4.) Pick-off - Makes it easier to pick off opposing base runners. *Batting Coach* 1.) Power - Increases home run hitting power. 2.) Contact - Cuts down on strike outs and increases the chance of a base hit. 3.) Base Running - Allows base runners to steal bases more easily, round bases faster and generally become smarter base runners 4.) 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. *1B Coach and 3B Coach* 1.) Leadership - ? Unsure. (If anyone has an idea, please let me know) 2.) Aggressiveness - Coach will not be afraid to have the runner take an extra base if he sees the opportunity. 3.) Awareness - Will look for opportunities to exploit in order to take an extra base. 4.) Knowledge - He is aware of how quick the pitcher is to the plate or how strong of an arm the out fielder has, etc. *Farm Director* 1.) Fielding - Increases player's defensive abilities. 2.) Pitching - Increases pitcher's general pitching ability 3.) Batting - Increases hitter's general hitting ability 4.) Base running - Same as above. The rule here is simple: Get the best coaches that you possibly can. This is especially true for the farm director if you want your minor league prospects to grow. In my last FAQ for MLB `06: The Show, I wrote that scouts were utterly worthless and that you should just get the cheapest and lamest scouts that you can just to save money. I have changed my mind about this and my observations led me to a new strategy here. To the best of my knowledge, when you release a scout in favor of a new scout, you do not have to buy out the old scout's contract in the same way that you have to do when you release a player. This allows you to change scouts without long term financial cost. When you begin a new franchise and begin scouting players, there are tons of players to scout, and you have almost no information about them. In my own opinion, the best strategy is to begin your franchise by hiring the best scouts that you possibly can and assign them to appropriate parts of the world. This means that if your scout specializes in starters and infielders then assign him to a region where there is an abundance of promising starters and infielders as opposed to relievers and outfielders. Once you have scouted all the players that you want in that region, then fire your scout and hire a lame, cheap scout. Why? Because good scouts can scout more players at one time and those players get scouted faster. Once you have a bunch of players already scouted, then your lame scout can begin scouting lower rated players whom you probably won't end up drafting anyways. Of those players that you have scouted, some of them will be drafted, and new players will pop up. It won't be a whole lot, and your lame scout can easily scout them in a reasonable amount of time. In summary, hire the best scouts to scout as many players as possible and then fire them to save money. --------------------- ***GLITCH WARINING*** --------------------- Hiring coaches should be the LAST thing you do in pre-season business. Refer to the POSSIBLE GLITCHES section for more information. TRAINING AND REHABILITATION BUDGETS Training and rehabilitation are ways to spend money to make sure that your players keep their skills sharp and their bodies free of injury. The big drawback here is that both of these can be pretty darn expensive. For instance, if you totally maximize your training budget, then this will cost you $80,000,000 by then end of the year! That is a lot of money. First, let's take a look at training. The following is a list of all of the different training categories. *Pitching* 1.) Stamina - Pitcher can pitch deeper into the game. 2.) Movement - Breaking pitches will break harder and fastballs will have more movement 3.) Pitch Development - Increases the overall quality of each one of a player's pitches. 4.) Control - Increases the chances that a pitch will end up right where you want it. *Defense* 1.) Speed - Allows you to get to the ball quicker. This is crucial for outfielders. 2.) Glove - Decreases the chance that a line drive will bounce off of your player's glove and increases the chance of snagging the ball. 3.) 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. 4.) Arm strength - Makes sure that your throw gets to the target quicker. *Offense* All of the categories here (power, contact, base running and plate vision) are identical to the categories of the hitting coach. *Conditioning* 1.) Strength - Improves general abilities like hitting power, the MPH on your pitches, arm strength, etc. 2.) Stamina - Your players will tire less quickly. 3.) 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. 4.) 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. Now you certainly can maximize your total training budget, but is it worth it? In my previous FAQ for MLB `06: The Show, I advocated a maximized training budget which was expensive, and it seemed to be paying off. However, I wanted to see what the long term affects of training were over a period of several years. To my disappointment, I observed that although a 100% training budget created better results than a 51% budget; the difference in how much better the players ended up was not great enough to justify an extra $60,000,000. There seems to be a matter of diminishing returns with regard to training. In other words, the first $10,000,000 that you invest in training will have a tremendous benefit above spending nothing on training. An additional $10,000,000 will increase the overall effectiveness of your training, but not by as much as the first $10,000,000. Do you see what's happening here? For each additional $10,000,000 added to total training, the overall benefit of training increases, but the marginal effectiveness goes down. Economically speaking, a maximized training budget cannot be justified. Also, the cost of training your players gets PROGRESSIVELY MOSRE EXPENSIVE. This of course begs the question: How much should be spent. Unless there is an interested econometrics student out there who would like to use the data to figure out where the marginal benefit of training is equal to marginal cost, then I just have to use the general rule that the total training budget should be set at just under $20,000,000, or about a quarter of the maximum amount. This should keep your players happy, their skills will continue to grow, and you will have saved $60,000,000 over a maximized budget. Nice! Now, how much should be spent for each training area? I would dump about $1,134,904 into each category. I am using this number because you may notice that when you put that amount into the budget for any particular category, you will notice that the message from the trainer in the lower right corner changes indicating that he (and presumably the players) have an above average level of happiness with your training budget. Of course, this is not an iron clad rule regarding your training budget. If you want to spend more to make your players faster or better home run hitters, there is nothing wrong with that. I'm just advocating this budget because it seems to be the most economical. Just remember that the cost of training grows exponentially which does create diminishing marginal returns per dollar spent. A final word about training budgets here. If you become a massively profitable franchise, then why not add more to the training budget? There are some other things that you can spend money on, but keep additional training in mind. When you begin your franchise, a maximized training budget is not worth it. But, a few years later? It's your call. 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 rehabilitation 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 a little over $500,000 for a grand total of about $2,000,000. 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 over $11,000 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 2-6 years for a fixed cash flow. When choosing a contract, the golden rule is that you should choose the 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 next year. 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 about $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. Once the year is finished, and you have completed the requirement of the advertiser or TV station, you will be paid the full amount of the contract on January 1 of the next year, not the current year. 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 2007 or 2008. By that point (if you have been winning), your stadium should be almost 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. Of course, keep in mind that when you sign a deal that expires in the middle of 2007, the amount of cash that you get will be HALF of the annual amount. 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, an amount and a time frame for payment. There are two strategies here as to where to go. First, you can go with the lowest monthly payment strategy. The benefit of this strategy is that by keeping the monthly payments as low as possible, you will keep your cash flow high throughout the season which means that at any given time, you will have greater flexibility to add more vendors which is ultimately how you get goods into the hands of your fans who, in turn, put more money in your pocket. Also, this means that as your franchise becomes more successful year after year, the yearly amount of loan payments that you make will begin to greatly decrease as a percentage of your total expenses. Keep in mind though that you will have to make these payments over the off-season as well. Over the months of January through the first of April, total loan payments can add up to an amount between one and two million dollars. Within a few years, that may not seem like much considering how much money you will eventually be making, but that loan expense can effectively nullify the income earned from a primary advertiser of TV station. So keep that in mind. Second, you can go with the one-year, high monthly payment method. This means that you are looking for the bank that will loan you your desired amount, but the bank will want the entire loan paid back within one year. The advantages and disadvantages of this strategy are exactly the opposite of the low monthly payment strategy. With this strategy, you are paying high monthly payments which reduce your flexibility to add more vendors. On the other hand if you pay off the entire loan by the end of the year, you will not have to make loan payments ever again, and you can fully realize all future rewards. If you are a beginner, then I would strongly suggest the first strategy. However, if you are a veteran of the MLB series and you know what to expect, then you might want to consider the second strategy. 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. If you decide to go with the low-monthly-payment-method (recommended for beginners) then the optimal $35,000,000 loan comes from Roll Bank for a period of 15 years which obligates you to a monthly payment of $332,461. If you decide to go with the one-year, high-monthly-payment plan, then go with a $35,000,000 loan from Piggy Bank at $2,980,247 per month. 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 take out a loan. 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. Therefore, just wait until your first home stand to take that loan. TRANSPORTATION Read my lips! Do not EVER upgrade your transportation...unless you play as an NL team. 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, 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. I would make an exception to this if you play as a team from the NL. If you play as an AL team, then you have the luxury of the DH, and players at the DH position will have their energy decline more slowly than position players. NL teams have no such luxury, so it is not so unreasonable to upgrade to a coach flight. A team bus is pushing it, but anything beyond that is a total waste of money. Your team can make a ton of money during the season, but going from $10,000,000 per year to $50,000,000 per year is absolutely out of the question. Here is the list of transportation methods which you can purchase as well as the one year lease cost for each. TRANSPORT ONE YEAR LEASE COST Bus 1,000,000 Coach Flight 5,000,000 Team Bus 10,000,000 First Class Flight 50,000,000 Charter Flight 100,000,000 Team Jet 200,000,000 -------------------------------------------------------- -------------------------------------------------------- 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. 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. Finally, let me make an important note here about both player and team advertising. Does it make any sense to use advertising to draw fans to your stadium if you are selling out every game? Of course not, but I certainly would not recommend cutting your adverting budgets to zero. Advertising is something that keeps your fans interested and coming to the ball park. However, once you are selling out your stadium on a consistent basis, there should not be much problem by cutting your advertising budget by about one-fourth. You still need some advertising, just not as much. Depending on your team, play around with this and find out what works. 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. Now the question is how are the free tickets given away? Are they given away randomly or is there some structure? Well, it's a combination of both. The tickets that are given away are distributed among all of your seating sections. The more tickets that you decide to give away, the more expensive this promotion will be. Here is a hypothetical, totally made up chart to illustrate what I mean: SEAT # OF SEATS PRICE Bleacher 1,000 5 LF View 1,500 6 RF View 1,500 7 LF General 10,000 8 RF General 10,000 8 IF Box 4,000 10 Home Plate 3,000 12 Let's assume two things here. First, assume that the give away is a total of 4,000 tickets. Second, let's ignore some general variability and just assume that the free tickets are equally distributed among all seating sections. Now, if those 4,000 tickets are equally distributed among the seating sections, then the costs would work out as follows: SEAT # OF SEATS PRICE GIVEN AWAY OPP.COST Bleacher 1,000 5 571 2,855 LF View 1,500 6 571 3,426 RF View 1,500 7 571 3,997 LF General 10,000 8 571 4,568 RF General 10,000 8 571 4,568 IF Box 4,000 10 571 5,710 Home Plate 3,000 12 571 6,852 TOTAL $31,976 That comes to about $8 per ticket in my example, but it will be more in your game. Now there is an off setting factor here, so let me address that. One might think that by bringing in more fans with a free ticket giveaway, then more fans will come to the park and they will buy more hot dogs, beer, jerseys, and batting cage tickets among other things. That is certainly true, but the mistake is to think that by offering 4,000 tickets for free, then there will be an extra 4,000 people in your stadium. It does not work that way. Again, let me use a simple example to illustrate: Adam and Bob both live in Seattle and are both Mariner fans. Adam goes to lots of games every year while Bob prefers to watch the game at home, presumably because the beer is cheaper. On July 10, Felix Hernandez is going to face Johan Santana, and both Adam and Bob are very excited. Adam would have gone to the game anyways and paid money for the ticket. Bob, on the other hand would have watched the game at home, but since the Mariners announced that there was a ticket give away, Bob decides to actually go to the game. Do you see what happened here? Adam is the opportunity cost. He would have paid anyways, but the Mariners forfeited that revenue by giving the ticket away. Adam would have also bought a beer as well, but he would have bought it anyways regardless if he had paid for a ticket or not. As for Bob, he got into Safeco Field for free and bought a beer that otherwise would not have been bought. So, in this example, Bob is a financial gain to the Mariners because he bought a beer that would not have been sold had Bob not been there. Adam on the other hand is the opportunity cost. The Mariners suffered a loss because he would have bought a ticket but he got it for free instead. The beer that Adam bought should not figure into this because he would have been there anyways and bought that beer. Overall, it is a net loss for the Mariners when you compare the gain of the extra beer sold to the cost of the ticket given away. It's even more drastic because, as it turns out, for every Bob there are three Adams. Here is how I came to that conclusion. This is from my last FAQ for MLB `06: The Show. It's slightly outdated, but the principal still holds true in this game. 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 INCOME: 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 that 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 that 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. In other words, 14,400 fans got in for free as opposed to paying for tickets, and that caused a direct opportunity cost of $160,000. They bought their beer, soda, popcorn and other things as they would have done anyways, so they did not add additional concession revenue than normal. But since net income fell by $75,000 and not $160,000, that means that the difference was made up by the sale of additional goods and food. Changing the number of free tickets would change these figures in magnitude, but not in general result. A reader of my last FAQ made a very interesting observation. With regard to giving away baseballs, or programs and such, there is no opportunity cost at all. Under normal circumstances, you would think that of all the fans going to the game that day that were planning to buy a program that the total number of programs sold for that day would go down. (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.) If the principal of opportunity cost applied to other goods, then the number of programs sold for that day would go down. But if you check the sale figures, there is no drop is sales for some reason. 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. Ultimate conclusion, free ticket promotions are a rip off, so just give away 2000-3000 baseballs or programs as a promotion. 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. 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 its 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. 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. Blue arrows pointing down means those 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 those 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. It is very important for me to note that testing for the highest allowable ticket process and revenue maximizing concession prices is where the whopping majority of your profits will come from. I cannot stress how important these tests are because this is where your money is coming from. This may seem tedious, and it is. However, but be assured that you shouldn't have to do these tests for very long. By the All-Star game, 90% of your concessions will be selling at the maximum possible price, which means that you will be testing for only a handful of goods for the rest of the season, so this process gets less tedious very quickly and you will be spending only a fraction of the time doing tests as you did before. I also strongly recommend keeping an archive of when you do these tests so that if you want to start a franchise with the same team all over again, you won't have to spend all that time testing for prices again. 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 receive $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 interchangeably in this case. 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? It 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 translate 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, if 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. And consequently %5,000,000 = $50,000 / 0.01) worth of income per home game. 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 normal 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 ($2,500,000 = $25,000 / 0.01). 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 present 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 the example that I used in my last FAQ for MLB `06: The Show. -total $ figures -all $ figures in thousands -A = year to date revenue before any 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 numbers 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 vendor 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 Update 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. ----------------------------------------------------- YOU WILL HAVE A FIT IF YOU DO NOT DO THIS ----------------------------------------------------- I got a lot of great feed back from readers last year, but a number of them were asking me about odd glitches that happened during the off season. For example, people told me that they traded for a certain player and got someone completely different. MLB 2006 was notorious for freezing in the middle of the season which would not allow you to continue your franchise. Thankfully, MLB `06: The Show was pretty bug free, but almost all of the bugs and glitches that people reported to me happened during the off season management session. Therefore, I say this unto you... When you finish your last game of the season, CREATE A BACK UP FILE AND SAVE IT THERE! You should be keeping a back up file anyways incase something happens. In many games, such as Elder Scrolls IV, there are bugs and glitches that can cause you problems, but loading a back up file and doing a task over again can usually fix the problem. ----------------------------------------------------- ----------------------------------------------------- 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. Also, let me add that a few people e-mailed me about last year's game and mentioned that the off season did not start for them. This problem puzzled me, but I think I know why this may have happened. The off season does not start once the last game of the World Series is over. It starts on a specific day. Therefore, just simulate several days until you get there. It's a minor oversight, but it's worth mentioning. MAKE A BACK UP FILE BEFORE YOU DO IT. 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 (kind of 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. 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 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 2007 season, and you are about to jump over to the year 2008. Once the new season 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 expenses 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 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 them, 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 very small salary budget increase. 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 player's 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. As for all those garbage AA and AAA players with expired contracts, just let them become free agents. Don't even think about resigning them. Why? Because you will need sufficient room on your roster to allow for any potential free agents that you want to sign as well as your draft picks. TRADING PLAYERS Trading for players is a way to get new players on your team that is financially superior to signing free agents. Why? Because it is essentially a salary swap. The other team will accept paying your player's salary and you agree to accept their player's salary. Remember from the EXPLANATION OF COST STRUCTURES section about what happens when you upgrade from one coach to another? The same principal applies here. Also, once the trade is complete, you can restructure the contract of your new player immediately and sign him to a long term contract. I am certainly not suggesting that free agency is a rip off or that it is bad business. Not one bit. However, if there is a player that you really want, and he is not a free agent, this is the time to get him and sign him. Try a whole bunch of player combinations to see what works. 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 if you did not scout them. If you want to check a player's ratings, then you must have scouted that player previously. 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 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. SIGNING FREE AGENTS Hopefully, you have freed up some of your salary budget in preparation for signing a top free agent. After the amateur draft is over and you have signed your five draft picks (or as many as you cared to sign), you will be ready to sign free agents. When you examine the players who have filed for free agency, you may notice that 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 that you are making an offer to. 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. LAST WORDS That pretty much does it for the major aspects of how to run a franchise in MLB '07: 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 range inelastic range |E| > 1 |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. What I did was simulate an entire season with the Mariners and I let the CPU handle all business decisions. The M's lost to the Yankees in four games during the ALCS, and my business operations ceased there. Here is what I ended up with at the end of the year: Beginning funds: 20,000,000 BALANCE SHEET INCOME 275,849,077 Facilities 225,849,077 Licensing/Ad Sales 0 Shared revenue 0 Loans 50,000,000 EXPENSES 233,437,396 Staff Salaries 18,406,323 Training/Rehab 21,269,143 Facilities 84,309,540 Marketing 14,718,640 Banking 50,329,166 Shared Revenue 0 Player Salaries 44,404.584 NET INCOME 42,411,681 Ending Funds 62,411,681 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: 30,394,225 INCOME 31,539,444 Facilities 0 Licensing/Ad Sales 550,000 Shared Revenue 30,989,444 Loans 0 EXPENSES 63,556,900 Staff Salaries 0 Training/Rehab 0 Facilities 10,000,000 Marketing 0 Banking 0 Shared Revenue 53,556,900 Player Salaries 0 NET INCOME -32,017,456 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. 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 2007 as opposed to 2008: Beginning funds: 20,000,000 BALANCE SHEET INCOME 306,838,521 Facilities 225,849,077 Licensing/Ad Sales 0 Shared revenue 30,989,444 Loans 50,000,000 EXPENSES 286,994,296 Staff Salaries 18,406,323 Training/Rehab 21,269,143 Facilities 84,309,540 Marketing 14,718,640 Banking 50,329,166 Shared Revenue 53,556,900 Player Salaries 44,404,584 NET INCOME 19,844,255 Ending Funds 39,844,225 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 would have done was create a total net income of $19,844,255 which when added to my starting funds comes to a total of $39,844,225 that I would have ended the year with. Now, let's skip ahead to the start of the 2008 season based on these revised numbers. Funds: 30,394,225 INCOME 550,000 Facilities 0 Licensing/Ad Sales 550,000 Shared Revenue 0 Loans 0 EXPENSES 10,000,000 Staff Salaries 0 Training/Rehab 0 Facilities 10,000,000 Marketing 0 Banking 0 Shared Revenue 0 Player Salaries 0 NET INCOME -$9,450,000 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. As you can see, we ended the 2007 season with $39,844,225 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: 30,394,225 = 39,844,225 - 9,450,000 In this game, would you rather climb out of a $32,017,456 hole or a $9,450,000 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. ----------------------------------------------------- POSSIBLE GLITCHES ----------------------------------------------------- If anyone comes across a glitch that can affect franchise mode, just let me know and I will try to make that knowledge more public here. Keep in mind that these are possible glitches and it is difficult to test to see if they are true or not. 1.) THE INFINITE MONEY GLITCH Here is a great one that came from kdutch98 on the gamefaqs.com message board. I tested it out, and it does work. Here is what he wrote: "when you click on a game to play it, select your pitcher, then when you get to the lineup screen, exit out all the way back to the calender. Check your finances. You will earn ticket revenues, and I believe concession money for the game that you havent played yet. You can do this as many times as you want to. Its an easy way to bring up your average attendance, and earn a boatload of money, to get you out of debt." 2.) GLITCH TRADES One e-mailer informed me that a glitch from last year's game is back. During the off-season, there is a possibility that a player of yours may end up getting traded even though you did not make such a trade. This seems to happen when the off season ends and you begin a new season. If this happens then either load your backup file (you did make a back up save just before the off-season began didn't you?) or try and reverse the trade with another trade. 3.) THE AMAZING DISAPPEARING COACHES I have heard some a few people who have e-mailed me about a glitch where the stats of your coaching staff will be wiped out for some reason. This seems similar to a problem that I noticed in MLB 2006. In that game, if you were told that one of your teams does not have valid line ups, you had the option of "Auto-Fixing" the problem, and it was the auto-fix that seemed to cause the problem. If this is the same glitch, then you can probably avoid it by manually setting valid line ups and rotations for each one of your teams before you even play your first game. Also, when doing all of your pre-season stuff, try making the hiring of new coaches your very last order of business. Hopefully, this should help you avoid the problem. ----------------------------------------------------- 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. (Besides the rule that the name of the game should always be added to the subject line so that I do not mark it as spam.) 1.) Let me say again, I do not own this game. This FAQ is based on my last article for MLB `06: The Show. I rented this game so that I could compare `07 to `06. I tried to be as thorough as possible to make sure that this guide is as accurate as possible. If there is anything that I missed, please let me know. This also means that I will not remember all of the details about profiles, unlocking cheats and other minor details. 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. Therefore, if you don't get a reply in one or two days, just try again. ----------------------------------------------------- CREDITS AND THANKS ----------------------------------------------------- Thanks to SCEA and 989 studios for yet another. Thanks to gamefaqs.com for originally hosting this FAQ as well as all other sites who post this FAQ. Thanks to kdutch98 for discovering the infinite money glitch. ----------------------------------------------------- LEGAL STUFF ----------------------------------------------------- This FAQ was originally submitted to gamefaqs.com. The following sites have posted my previous FAQs, and they are also granted advanced written permission to post this FAQ without any other written permission: 1up.com neoseeker.com gamesradar.com cheatplanet.com supercheats.com Any updates to this FAQ will be posted at gamefaqs.com. It is the responsibility of any site that hosts this FAQ to make sure that the FAQ that you have is the most recent one. If another site other than those mentioned above want to post this FAQ, then just ask. The rules below apply. 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 2007 MR. Kim Dalton Rodieck.
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