Post by Tim_GiantsGM on Nov 9, 2015 17:57:57 GMT -5
Some GM's have expressed concern about budget fluctuations associated with teams that are attempting to rebuild. Will budgets be reduced year after year? Will budget reductions prohibit a team from building a strong team?
Let's investigate results for a couple of examples of teams that were attempting to rebuild. Note that when selecting teams that could provide insight into this topic I focused on won-lost records, not owner priority. In fact, in this league owners had one of three priorities: winning, profit, and balanced.
1. Cincinnati Reds - a team located in an average market that is owned by a demanding economizer who exhibits normal involvement and stresses a balanced approach. I believe this team is an excellent example of a GM who did a fine job of managing profitability but his efforts were not translated into wins. The team seemed to be in rebuilding mode for the entire decade.
My take:
Throughout the entire decade CIN lost more than they won. In nine of the ten seasons CIN won between 71 and 79 games and in one season they won 65. Yet in each of the ten seasons the team generated a profit. An upward or downward trend in either wins or profits was not evident.
In five seasons the owner granted budget increases and in five seasons he reduced the budget. In every instance an increase or a decrease was for $8m or less. Following the season in which the team won only 65 games the owner assessed an $8m reduction.
Despite a decade of futility in terms of wins, the budget was reduced by a net of $4m from the beginning of the '30 season to the end of the '39 season. Even though the owner is a demanding economizer, it seems that he rewarded the GM for being financially responsible and generating a profit each season by maintaining a relatively stable budget with which the GM could function and attempt to build a winning team.
2. Houston Astros - a small market team with an owner who is a demanding economizer, takes a hands-off approach, and emphasizes profit. I believe that this is a good example of a team that worked through a rebuilding process and built a reasonably strong team that twice made the playoffs.
My take:
At the beginning of the decade HOU was in bad shape. In the two season prior to '30, HOU had won 70 and 62 games while incurring a net loss during each season. After winning 63 games and again incurring a net loss in '30, the owner slashed the budget by $13m to $85m.
From '31 through '33 the team continued to struggle, but the team improved in terms of wins each season. The team also generated a net profit in two of the seasons. In the third, the net loss was less than $1m. The owner responded by increasing the budget by a net of $6m over the three-year period. It seems that the owner was especially pleased with the $19m net profit generated in '31 - remember that the owner's priority is profit.
From '34 through '39 the team registered a winning record in five of the six seasons, twice earned a playoff berth, and turned a profit greater than $20m on five occasions. After each season in which the team earned a net profit, the owner rewarded the GM with a sizable budget increase. Interestingly, after the season in which the team won only 72 games, a drop of 14 from the prior season, but generated a profit, the owner still granted a $10m budget increase. And in '38, after the team won 11 fewer games than the prior season and incurred a relatively minor loss, the owner did not change the budget.
During the decade, HOU began with a very weak team and then built a team that was fairly successful during the latter six seasons reaching the playoffs twice. The team earned profits, most of them significant, in seven seasons and incurred relatively small losses in the remaining three seasons. The owner rewarded performance over time by increasing the budget in most years. As a result, the small market team ended the decade with a budget that was $40m greater than it was entering the '30 season, an increase of 41%.
Observations
The above two examples are just two of many, but I believe illustrate a couple of things you may find helpful. I could present additional examples, but too many may be too overwhelming. For now, following are a couple of observations.
First, teams with won-lost records that are consistently below .500 appear to be able to continue to work with a relatively stable budget from year to year as long as they generate profits in most years. In general, the most significant budget decreases seem to occur after teams win significantly fewer games than in the prior season AND incur net losses. The probability of an extreme budget reduction seems to be substantially increased if a team incurs a significant loss (i.e., $20m or more) or if a negative trend exists - wins and/or profits.
Second, owners of teams with poor records sometimes grant budget increases, especially if the teams show improvement and earn a net profit while doing so.
General Comments
The analyses I have shared to date are helping me understand how the game logic works. I hope you are finding them helpful.
As I proceed, my feeling that the financials and internal logic are strong enough for leagues to operate with a minimum of external rules and regulations is strengthening.
In general, it seems that GM's who build strong teams while generating profits are rewarded with increased budgets and GM's who have weak teams while also losing money are penalized via reduced budgets. Also, it seems that teams that remain in rebuild mode for extended periods can continue to operate with relatively stable budgets (i.e., small increases or decreases from year to year) as long as they turn profits in most years.
True, many additional factors influence budget increases and decreases. Over time I plan to use the neutral, AI driven test bed to pursue additional analysis.
On Deck
I plan to expand the database and collect history in two areas - ending cash balance and available budget dollars. Also, I think examining results segmented by market size and one or more owner characteristics may yield useful information.
If you have specific areas you would like me to investigate, please let me know.
Let's investigate results for a couple of examples of teams that were attempting to rebuild. Note that when selecting teams that could provide insight into this topic I focused on won-lost records, not owner priority. In fact, in this league owners had one of three priorities: winning, profit, and balanced.
1. Cincinnati Reds - a team located in an average market that is owned by a demanding economizer who exhibits normal involvement and stresses a balanced approach. I believe this team is an excellent example of a GM who did a fine job of managing profitability but his efforts were not translated into wins. The team seemed to be in rebuilding mode for the entire decade.
My take:
Throughout the entire decade CIN lost more than they won. In nine of the ten seasons CIN won between 71 and 79 games and in one season they won 65. Yet in each of the ten seasons the team generated a profit. An upward or downward trend in either wins or profits was not evident.
In five seasons the owner granted budget increases and in five seasons he reduced the budget. In every instance an increase or a decrease was for $8m or less. Following the season in which the team won only 65 games the owner assessed an $8m reduction.
Despite a decade of futility in terms of wins, the budget was reduced by a net of $4m from the beginning of the '30 season to the end of the '39 season. Even though the owner is a demanding economizer, it seems that he rewarded the GM for being financially responsible and generating a profit each season by maintaining a relatively stable budget with which the GM could function and attempt to build a winning team.
2. Houston Astros - a small market team with an owner who is a demanding economizer, takes a hands-off approach, and emphasizes profit. I believe that this is a good example of a team that worked through a rebuilding process and built a reasonably strong team that twice made the playoffs.
My take:
At the beginning of the decade HOU was in bad shape. In the two season prior to '30, HOU had won 70 and 62 games while incurring a net loss during each season. After winning 63 games and again incurring a net loss in '30, the owner slashed the budget by $13m to $85m.
From '31 through '33 the team continued to struggle, but the team improved in terms of wins each season. The team also generated a net profit in two of the seasons. In the third, the net loss was less than $1m. The owner responded by increasing the budget by a net of $6m over the three-year period. It seems that the owner was especially pleased with the $19m net profit generated in '31 - remember that the owner's priority is profit.
From '34 through '39 the team registered a winning record in five of the six seasons, twice earned a playoff berth, and turned a profit greater than $20m on five occasions. After each season in which the team earned a net profit, the owner rewarded the GM with a sizable budget increase. Interestingly, after the season in which the team won only 72 games, a drop of 14 from the prior season, but generated a profit, the owner still granted a $10m budget increase. And in '38, after the team won 11 fewer games than the prior season and incurred a relatively minor loss, the owner did not change the budget.
During the decade, HOU began with a very weak team and then built a team that was fairly successful during the latter six seasons reaching the playoffs twice. The team earned profits, most of them significant, in seven seasons and incurred relatively small losses in the remaining three seasons. The owner rewarded performance over time by increasing the budget in most years. As a result, the small market team ended the decade with a budget that was $40m greater than it was entering the '30 season, an increase of 41%.
Observations
The above two examples are just two of many, but I believe illustrate a couple of things you may find helpful. I could present additional examples, but too many may be too overwhelming. For now, following are a couple of observations.
First, teams with won-lost records that are consistently below .500 appear to be able to continue to work with a relatively stable budget from year to year as long as they generate profits in most years. In general, the most significant budget decreases seem to occur after teams win significantly fewer games than in the prior season AND incur net losses. The probability of an extreme budget reduction seems to be substantially increased if a team incurs a significant loss (i.e., $20m or more) or if a negative trend exists - wins and/or profits.
Second, owners of teams with poor records sometimes grant budget increases, especially if the teams show improvement and earn a net profit while doing so.
General Comments
The analyses I have shared to date are helping me understand how the game logic works. I hope you are finding them helpful.
As I proceed, my feeling that the financials and internal logic are strong enough for leagues to operate with a minimum of external rules and regulations is strengthening.
In general, it seems that GM's who build strong teams while generating profits are rewarded with increased budgets and GM's who have weak teams while also losing money are penalized via reduced budgets. Also, it seems that teams that remain in rebuild mode for extended periods can continue to operate with relatively stable budgets (i.e., small increases or decreases from year to year) as long as they turn profits in most years.
True, many additional factors influence budget increases and decreases. Over time I plan to use the neutral, AI driven test bed to pursue additional analysis.
On Deck
I plan to expand the database and collect history in two areas - ending cash balance and available budget dollars. Also, I think examining results segmented by market size and one or more owner characteristics may yield useful information.
If you have specific areas you would like me to investigate, please let me know.