[hefalumps]

Hi everyone,

I'm about to move into my first "offseason" in OOTP9 after converting a league from OOTP 2007/8. I converted my OOTP8 league after awards were given out the previous year (and so the offseason was already underway), and so I haven't used OOTP9's new financial model in determining budget for the next season.

Right now I have a luxury tax of 20% and a soft cap of 120%. From what I understand, that means if my payroll is greater than 120% of the league average, I have to pay a luxury tax of 20% of my current earnings into the revenue sharing pool. Assuming I understand that correctly, that makes plenty of sense.

However, I still have a cash max set, since OOTP 2007/8's revenue sharing model just took any cash over the max and dumped it into the revenue sharing pool. Do I still need a cash max anymore, or does the new soft cap/luxury tax setting take care of it all?

Here's my exact example. I have the highest payroll in the league, so I'll be paying the tax. Here are my numbers:

Payroll: $13,871,256
Average: $8,780,861
Soft Cap: $10,537,033 (120% * Average)
Amount over Soft Cap: $3,334,223 (Payroll - Soft Cap)

Okay - now when I look at my season profit/loss, I've made $4,948,459 this year added to my $1,178,300 cash balance from last year (which is my cash max) and I have a current balance of $6,126,759. So...

Balance: $6,126,759
Luxury Tax: $1,225,352 (20% * Balance)
Remaining Cash for Next Year: $4,901,407

Now, it's my understanding that the luxury tax gets paid into a revenue sharing pool. Is that correct? Or does it basically just "disappear" or get paid to the league?

And since I still have a cash max set, what's going to happen to the $3 million I have over my cash max? Does that get sent to revenue sharing as well, so I'll basically only carry over whatever my cash max is set to?

I'm just looking to get a better understanding of the system before I proceed. Do both Luxury Tax payments and Cash Max overages get put into revenue sharing? Can anyone help?

Thanks!

[Ankit]

Shouldn't the Luxury Tax be on the Payroll amount over the Soft Cap -- $3,334,223; 20% of that equals $666,845.

[hefalumps]

Originally Posted by Ankit

Shouldn't the Luxury Tax be on the Payroll amount over the Soft Cap -- $3,334,223; 20% of that equals $666,845.

That's a great question - I don't know, and that's one of the things I was hoping to find out by posting my question. I'm hoping once battists returns from vacation he can clarify, because that section of the manual hasn't been updated yet. It has the new screenshots with the Luxury Tax and Soft Cap in there, but in the table that describes each of the options, Luxury Tax and Soft Cap are nowhere to be found.

If I don't hear back from anyone soon, I'll just do a full backup on my league and proceed to the Offseason and try to do the math myself to figure out how they worked.

[Riverdome]

Originally Posted by Ankit

Shouldn't the Luxury Tax be on the Payroll amount over the Soft Cap -- $3,334,223; 20% of that equals $666,845.

This is my understanding too.

[tysok]

Luxury tax set at 20% with cap of 120% would mean what you think. If you spend over 120% of league average, you pay 20% of the amount you spent over... so if you spent 1 dollar more than 120% of the league average you'd pay in 20 cents.

The cash max has no real purpose any longer, except to keep teams from having lots and lots and lots of money (not that AI teams keep it anyhow).
In the previous versions that was the "revenue sharing", anything over that max would be taken away and put into "revenue sharing" and be sent to teams that were in the red financially.
In this version, the money taken away disappears... the owner takes his girlfriend to a very expensive dinner... or buys a new Porsche... or whatever he desires. The money just goes away.

[hefalumps]

Originally Posted by tysok

Luxury tax set at 20% with cap of 120% would mean what you think. If you spend over 120% of league average, you pay 20% of the amount you spent over... so if you spent 1 dollar more than 120% of the league average you'd pay in 20 cents.

The cash max has no real purpose any longer, except to keep teams from having lots and lots and lots of money (not that AI teams keep it anyhow).
In the previous versions that was the "revenue sharing", anything over that max would be taken away and put into "revenue sharing" and be sent to teams that were in the red financially.
In this version, the money taken away disappears... the owner takes his girlfriend to a very expensive dinner... or buys a new Porsche... or whatever he desires. The money just goes away.

Thanks tysok - so if I understand you correctly - the luxury tax is now the new method of revenue sharing, and the cash max overage just disappears - we'll say it goes to MLB for league improvements or something.

That's kind of interesting. Is that how it works in real life? I thought the luxury tax that the Yankees had to pay annually was paid to MLB for an "industry growth fund" or something to that effect. I guess compensating the smaller market teams might be included in that fund though.

Thanks! Now that I understand how it works in OOTP 9, I think I'll tweak the cash max. I'll run through the numbers for every team in my league manually and figure out how much cash they all would have for next year without a cash max, and then determine if one should be set.

[tysok]

Originally Posted by hefalumps

Thanks tysok - so if I understand you correctly - the luxury tax is now the new method of revenue sharing, and the cash max overage just disappears - we'll say it goes to MLB for league improvements or something.

That's kind of interesting. Is that how it works in real life? I thought the luxury tax that the Yankees had to pay annually was paid to MLB for an "industry growth fund" or something to that effect. I guess compensating the smaller market teams might be included in that fund though.

Thanks! Now that I understand how it works in OOTP 9, I think I'll tweak the cash max. I'll run through the numbers for every team in my league manually and figure out how much cash they all would have for next year without a cash max, and then determine if one should be set.

In real life the luxury tax goes to MLB to "grow the game" or whatever... LGO continually points that out. In the game it's a revenue sharing model. With 120/20 you'll be shifting around small amounts of money... it won't be a big help or hinderance to any team... but they will get some. 100/50 would shift a lot of course, etc.

There's a second revenue sharing model in OOTP. Set percentage of income... where you can say 20% of all revenue from a team goes into the pool, then it's divided up evenly to every team in the league. That shifts a lot of cash around and can be a huge help to small teams.
The luxury tax revenue sharing sends money equally to the lower half of teams only (that half that spent the LEAST amount of money).

The set percentage of income model is the real life revenue sharing in MLB.

[Le Grande Orange]

Originally Posted by tysok

In real life the luxury tax goes to MLB to "grow the game" or whatever... LGO continually points that out.

Indeed, I think I have pointed that out in the past.

Originally Posted by tysok

The set percentage of income model is the real life revenue sharing in MLB.

Well, not exactly. The real MLB model is a bit more complicated (and has varied over the years), but OOTP's version is close enough. Plus it has the advantage of being simpler to use and understand.

[hefalumps]

Oh wow... I hadn't even noticed the drop down for the "set percentage of income" revenue sharing method and how it changed the percentage options. So now I've got a third method of keeping cash down!! Sheesh.

I guess I'll have to give this some thought and figure out which approach I want to take. Still not sure if I want the "cash max" as a backup or not.

The next logical question is... what do the rest of you guys use as the revenue sharing methods for your leagues?

[hefalumps]

I just did the math for my league - and having everyone put in 20% of their revenue and split that pool up among all the teams seems to be the best solution - any teams with a negative balance get pulled out of the gutter ever so slightly (instead of just being brought back to $0 using the old Cash Max method), and teams with very large payrolls/revenues get cut down to size a bit, while still maintaining a decent amount of cash for next year. This is nice, because with the old system, about two-thirds of the league came into the following year with the exact amount of the cash max as their starting balance, since so many teams had over that amount.

Using the luxury tax method didn't yield as good results. Assuming that money from the luxury tax pool only gets paid to the bottom spending half of the league, some teams that were in the red spent too much to qualify for the luxury tax benefit, or the benefit wasn't enough to get them out of the red. It hurt the big spenders more, but it didn't help the struggling teams as much, unless my assumptions about how OOTP allocates money from the luxury tax aren't correct.

One other question though - I've got OOTP setup to automatically import adjusted financial settings after each year, so it always imports a slightly higher cash max. Problem is, I think I want to get rid of the cash max altogether and set it to 0. If I set the cash max to $0 now, is OOTP just going to overwrite it when it imports the financial settings? I want to keep that enabled so salaries, ticket prices, etc. automatically change from year to year, but I'd like to keep control over cash max. I'm hoping I don't have to edit the financials.txt file to make the "cash max" column all zeroes in order to keep that from happening.

At some point I will back up my league and try all these different scenarios to see exactly what happens.

[Sweed]

Glad I took the time to check this tread out. I was aware of both sharing models but used the soft cap for my first season which netted the bottom teams
a little over a million a piece while my Cubs paid about 4.5 mil in luxury tax. The 1 mil is hardly a help to teams like Tampa Bay in my game with an almost nonexistent market and a $26 mil payroll. Or to the Reds in my division who can only maintain a $50 mil or so payroll while trying to compete with my $130 mil payroll.

With the percent of income, I'm trying %20, the results are much better. Tampa Bay will end up with about $9.4 mil in additional cash while Cincinnati will bring in an extra $8+ million. The cost to my Cubs will be an additional loss of approx $3.5 mil in taxes (total of about $8.5 mil compared to the $4.9 mil I paid under the soft cap system).

While it may not seem like a lot it will force me to choose more wisely on who to keep and who to let go. With the soft cap I was already in a position of making a couple of tough calls with a high payroll and veterans that are fan favorites coming up for renewal. Using the income model I will probably have to let one more go than I wanted to.

Like hefalumps I'm also now thinking that the cash max should go away. First with my team and a high payroll it's hard to generate a large profit so the cash pile grows very slowly. Especially if you're doling out $8 + mil a year in taxes. But being able to at least sock away some profits, knowing you can use them in future seasons, seems more reasonable now and not such a huge advantage for the human.

For the AI I think the no cash max would also help? I know it tends to spend the money it has but if it had an exceptional year while having a below average payroll it wouldn't be penalized but instead would retain the money for the next season. I'm thinking of a small market team with young talent either coming into arbitration years or being FA eligible. Now instead of being cash strapped the Tampa Bays of the world could use the cash reserve to keep these players. Thoughts?

[Curtis]

Okay, can someone check me on this? When I pitched the luxury tax idea to Markus, the idea was that teams with payrolls over the league average would pay, and teams with payrolls under the league average would receive a subsidy, but it would be a proportionate subsidy. It sounds as though the tax pool is being divided equally between the below average teams, which makes no sense. Let me run some numbers for you:

If the tax is 50% on the amount in excess of the average (100/50, which is the example I gave Markus), and there is a four team league with payrolls of 10, 40, 50 and 100 million dollars, the average would be $50,000,000. One team would pay the luxury tax (the $100,000,000 team would pay $25,000,000), and two teams would receive subsidies. In my proportionate example the $10,000,000 team would receive $20,000,000 and the $40,000,000 team would receive $5,000,000, which in each case is half the difference between their payroll and the league average.

If equal subsidies were disbursed each team would receive $12,500,000 AND THAT WOULD RAISE THE $40,000,000 team ABOVE the $50,000,000 team! The $50,000,000 team gets penalized for being average? No sense at all. Using the proportionate system all teams would maintain their relative ranking; no team would ever get left behind, and that would be true regardless of the percentages chosen.

(Using the same four teams and a 120/20 split, the $100,000,000 teams is still the only payer, contributing $8,000,000. The $10,000,000 team receives $7,000,000 of that and the $40,000,000 team receives the other $1,000,000. {$100,000,000 minus $60,000,000 equals $40,000,000. $45,000,000 minus $10,000,000 equals $35,000,000 and $45,000,000 minus $40,000,000 equals $5,000,000. $35,000,000 to $5,000,000 is a 7:1 ratio, so $7,000,000 to $1,000,000.}

By the way, the idea of the AI teams not being able to carry much money forward could be construed as deriving from that same PM in which I pitched the luxury tax. My actual comment was that the money received by the recipients should have to be spent to increase the following year's payroll, not carried as a balance or quietly slipped into the owner's wallet. The purpose of the luxury tax was to increase the level of competitiveness, not to enrich skinflints.

I suggested that any tax money received that was not used to increase payroll in the following year should be forfeited to the commissioner, but acknowledged that that could be very difficult to enforce on non-AI teams. My assumption was that he'd just not bother trying to implement that aspect. Enforcing it just on the AI teams seems an unsatisfactory compromise.

After going through all of that, I don't use the luxury tax in version 9 (which is why I wasn't aware of how it had been implemented). I use revenue sharing, which I have set at 50%. In a couple of my corporate minor leagues I set it at 100%.

[tysok]

Originally Posted by Curtis

Okay, can someone check me on this? When I pitched the luxury tax idea to Markus, the idea was that teams with payrolls over the league average would pay, and teams with payrolls under the league average would receive a subsidy, but it would be a proportionate subsidy. It sounds as though the tax pool is being divided equally between the below average teams, which makes no sense. Let me run some numbers for you:

You are correct. The money is split equally among the lower half of spenders. It was designed to be split as you've outlined, so more went to the lowest spending team and less went to the highest spending person in that lower half... but apparently it was too hard to do and Markus dropped that when he implemented it.

At the same time, it was also my intention that it wouldn't be a stand-alone revenue sharing system (it could be, but not necessarily) and that was dropped as well. I was all set to dagger the huge revenue huge spending Yankees until they were red and black pinstripes instead....

The budgets are increased to allow spending of the revenue sharing money (which wasn't the case last year). I believe - it's been a long while since I last played with the numbers - that teams look at how much they would have made if they'd spent their whole budget, then increased 50% of that excess. So they had a budget of 5 million, they made 5 million in normal revenue and received 5 million in revenue sharing... they would increase to 7.5 million budget. Sort of simplistic example, but I believe it works out about like that. If they're consistently at those numbers, they end up moving closer and closer to that 10 million mark.

[Curtis]

Thank you for he explanation, tysok.

[hefalumps]

Well I finally proceeded into my first offseason, and setup to use profit sharing via the percentage income method. I set it to 35% and it did exactly what I figured out in my spreadsheet.

However, what I noticed was that the financials.txt in OOTP9 has been modified since OOTP 2007. So the settings for my 1973 season that had been imported from OOTP 2007 were actually higher than the new settings for my 1974 season in OOTP 9. In other words, cash max, min salary, ticket prices, etc. all went DOWN instead of up when I proceeded to the next season. Blech.

So I'm restoring from backup and this time unchecking the "Automatically import financials" box before I proceed to the offseason. I'll manually bridge the gap between the OOTP 2007's 1973 and OOTP9's 1975, and then turn the automatic stuff back on for 1975. It would have been nice if this had been documented somewhere.

I still can't decide if I want to employ the cash max or not. Part of me wants to get rid of it - but I don't want some teams having $6M in cash and trying to spend all of it. But I'm curious - if I set it to $0 manually but still have "Import financial settings automatically" checked, won't it just override my $0 and force me to have a cash max anyway?

[tysok]

Originally Posted by hefalumps

Well I finally proceeded into my first offseason, and setup to use profit sharing via the percentage income method. I set it to 35% and it did exactly what I figured out in my spreadsheet.

However, what I noticed was that the financials.txt in OOTP9 has been modified since OOTP 2007. So the settings for my 1973 season that had been imported from OOTP 2007 were actually higher than the new settings for my 1974 season in OOTP 9. In other words, cash max, min salary, ticket prices, etc. all went DOWN instead of up when I proceeded to the next season. Blech.

So I'm restoring from backup and this time unchecking the "Automatically import financials" box before I proceed to the offseason. I'll manually bridge the gap between the OOTP 2007's 1973 and OOTP9's 1975, and then turn the automatic stuff back on for 1975. It would have been nice if this had been documented somewhere.

I still can't decide if I want to employ the cash max or not. Part of me wants to get rid of it - but I don't want some teams having $6M in cash and trying to spend all of it. But I'm curious - if I set it to $0 manually but still have "Import financial settings automatically" checked, won't it just override my $0 and force me to have a cash max anyway?

If you set it at 0 then it'll never let any teams have any cash, I think. I always set mine to 500 million dollars.

I believe if you have it importing historical finances it will force a cash max on you, yes. You could redo the financial file so every year had the same 500 million cash max, or 0 or whatever though.

[hefalumps]

Originally Posted by tysok

If you set it at 0 then it'll never let any teams have any cash, I think. I always set mine to 500 million dollars.

I believe if you have it importing historical finances it will force a cash max on you, yes. You could redo the financial file so every year had the same 500 million cash max, or 0 or whatever though.

I guess that might be what I have to do. I'm going to play one more year (1975) with the cash max and see what happens. If it looks like teams aren't able to afford FAs at their current asking price, I guess just like real life - I'll have to make financial adjustments as time goes on. I was hoping with OOTP9 I wouldn't have to micro-manage the finances of the entire league - but I guess if I want to make sure everything meets a sanity check, I have to.

Thanks!