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PowerPlay Magazine

Exploring Staff: Financial Burden or Necessity?

Toegevoegd: 12.01.2012 00:30:47 | Categorie: Magazine - Informatie

Exploring Staff: Financial Burden or Necessity?

Staff members have long been known to have high salaries. While studies have been done illustrating that these high salaries come because of the enormous impact they can have on the operating level of a facility, I want to probe a little bit deeper - into the areas were many people question whether those staff are even necessary. This is a lengthy article, so by all means if a section on one type of staff doesn't intrerest you I encourage you to skip to a section that does.

Managers
Some people in PPM have decided to not carry any managers during the season. You should consider this if your HR department is high enough that you're happy with your scouting rate and you're happy with your scouting status. At this stage of the game, especially in hockey with experienced clubs, it is nothing for a team to be able to scout near 100% without any managerial influence and on top of that have some 700+ players (and staff) scouted in the game already. If this is the case, you can easily justify selling/firing your managers to save on daily expenses. However, managers have a significant influence come sponsor deals time.

Purchasing managers off the market a few days before sponsor deals can be a great money saving enterprise. You'll save the cost of their salary over the course of the 100+ days that you don't need marketing skill. However, with this option becoming more and more popular, the price to buy these marketing specialists on the market can be quite high. In recent days I've been watching the sale of marketing specialists and it is nothing for a marketing manager to sell for over 10M while having a skill of 80+ for marketing. Those with short contract lengths go for even more. So how much should you spend? Is it cheaper to keep a manager all year at that point? Let's look at some numbers.

Staff salaries vary by league level. Their salary is calculated based on their current skill at the time of contract renewal. In the first division, this salary is given by 0.1*(Att1^3 + Att2^3). In the second division it is slightly lower where the salary is 0.095*(Att1^3 + Att2^3) and so on. Due to this, the optimal build for any staff member is 1:1. If both attributes re equal, the daily salary per OR will be the lowest.

Let's say you are a division 1 team and you're looking into the idea of whether you should carry managers or not. You have two managers, the first is a 80/80 manager and the other is a 60/60 manager. The salaries of these two managers would be $102,400 and $43,200 respectfully. Which means over the course of the season you'll be paying them out 11.5M and 4.8M respectively. First off, wow! That extra 40OR means the manager's salary is nearly triple that of his partner's. Is it worth training them to that much skill? That depends on your facility level, I'll emphasise this later in the custodian section. On the other hand, if you don't care so much about the scouting efficiency you can train your players outside of the ideal 1:1 ratio. Thus instead of the aforementioned managers you may have a 30/100 and 20/100 manager. They'd run you $102,700 and $100,800 per day respectively for a total seasonal payout of 11.5M and 11.3M. Here, you'll get a much better marketing efficiency out of your 30/100 manager than your 80/80 manager at the same price just losing out on scouting efficiency. Thus, how you build your staff is completely up to you and depends how much emphasis you wish to place on the scouting ability.

Okay, so now you know how much it costs per season to keep your current staff members. Let's consider the last scenario, the 30/100 and 20/100 managers costing 22.8M/season. So by not carrying any managers you'll save 22.8M/season, simple enough. But come sponsor offer time you're going to want to have some good marketing managers since their seasonal cost, 22.8M, should be surpassed by what they'd get you for your sponsor offer over the course of the season. I am not sure on the exact figures here, which makes this section of the analysis purely speculation. We can extrapolate how much better it would be based on past studies conducted on staff impacts via scouting rates. Let's for simplicity sake say that having 100% efficiency gets you a fine 1.5M/week more than if you had 0% marketing efficiency. This would make you an extra 24M/season just making a small profit. Again, this is pure speculation. It could be more, it could be less. Fact is, the better your facilities, the more influence having strong staff will have. I can't say that everyone would get 1.5M/week with 100% efficiency. Someone with level 15 HR would get more out of 100 rated marketers than someone with level 5 HR (again, refer to custodian section for a clear illustration as to why this is true).

So now let's say you have 22.8M to spend on two marketing managers. What you'd want to look for are a few key points:

i) the highest marketing skill possible (for obvious reasons)

ii) a contract that expires shortly after the last day of sponsor offers

Point "ii" is one that is often overlooked, and can contribute to a large percentage of the overall process (as soon to be illustrated with purchased manager #2). When firing a staff member, or a player for that matter, you pay out 50% of their remaining contract value (salary * contract days). Thus by getting someone with a short contract will save you money when you fire them afterwards. If you choose to sell them this isn't an issue, but selling marketing managers at the start of a season is a risky endeavor.

So how much will 22.8M get you? That depends on how hot the market is. To be as fair as possible I went to the market and took the top two guys for sale that have 100 marketing ability. The first guy is selling for 12.7M and has a contract that is worth $106k for the 16 days remaining. At this point, there are 9 days remaining until the first offer, thus 12 days until the last offer. The next guy is a 10/100 manager with 2 days left on a $47k contract selling for 9.5M. Thus after the last offer he'll have 101 days left on a contract worth $100,100 per day (0.1*(10^3+100^3)). Say you bought these two guys, what would they get you?

First off, they'd get you the same offer as the two guys who are 30/100 and 20/100 that you've carried all season (hypothetically). So did you save money by buying these two staff members and not carrying your two managers (30/100, 20/100) for a full season? Let's see:

Manager Bought #1:
Sale Price: 12.7M
Remaining Contract Payout: 12*106,000=1.3M

Contract Termination Fee: 4*106,000/2=0.2M

Total Price: 14.2M

Manager Bought #2:

Sale Price: 9.5M

Remaining Contract Payout: 2*47,000 + 10*100,100=1.1M

Contract Termination Fee: 102*100,100/2=5.2M

Total Price: 15.8M

_________________________________________________

Overall Purchase Cost: 30.0M

Many would think they did quite well, only spending 22.2M on the purchases. However, at this point you've actually spent 7.2M more than you would have had you just carried your own marketing guys for a full season when you consider the hidden costs. Based on the expected salary and contract termination numbers of those two managers you shouldn't have exceeded 15.4M in transfer fees for the both of them combined. Thus, purchasing these managers was actually a losing venture.

My advice, crunch some numbers before hand and know your budget. If you don't have a level 12+ HR don't go after the 100 marketing guys, they won't be worth your money. If you do have a strong HR department, take the time and do the math. The market is a funny place. You could carry two managers all season then marketing guys sell for cheap and you've lost money. Or you could wait until the end of the season to buy managers and they're so expensive you've lost money. It's a risk either way. What are my personal thoughts? It may be best to carry your own marketing managers, the lower the scouting attribute the better. Buy them, during the early stages of the season, train up their marketing to 100 and then stop training them. If you can find two managers who are 5/100 that'll cost you 22.4M/year. Furthermore, I suspect the cost of marketing managers to rise each season unless people start keeping and training their own. If every year thousands of marketing managers are fired, they're gone for good. Fewer and fewer people are taking staff pulls and selling staff because there isn't great money in it in general. I suspect in the coming seasons manager prices could be even more expensive. Thus, I'd say keep two marketing specialists in your cupboard. They may sap you dry of funds over 105 days of the season, but the final week they'll earn their keep. On the other hand, who knows how much more cash they make you? I doubt anyone is about to volunteer to sign a sponsor deal with 0% efficiency so we can compare to someone of similar OTR, HR, league, position etc. but has 100% marketing. So just take this little rant with a grain of salt. It is what it is, one guy typing way too much about something we all share a common interest in, PPM.

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Lecturers

As stated in the managers section, staff are pricey and high paid staff should be reserved for high level facilities. You can easily control the salary of your staff by how much and how fast they train. It is very easy to have their salaries balloon out of control if you're not careful, creating a potential financial crisis. Lecturers and the Education Center are your control over how fast staff train. You can put a cap on their training via auto training if you have Pro Pack or do it manually if you do not. So how much money should you spend on training your staff? This is a question I feel all managers should ask themselves and everyone will have a different answer.

I asked myself awhile ago: Do you really need lecturers? Do you Scott? So I thought about it... Lecturers train your staff faster. They essentially increase the rate at which your daily expenses grow. Once you've reached a point where your staff are deemed adequate for your level of facilities, there is really no need to train them any further... especially since staff can be purchased on the market for cheap. It is nothing to find a staff member with 100 OR on the market for $10,000. If you want some elite staff you will have to pay more, perhaps way more depending on the type of staff member. In the end, you can save a lot of money by eliminating your lecturers and even decreasing the level of your education center.

Decreasing your education center from level 10 to level 5 will save you nearly 3M/season on facility expenses alone. On top of that your training will be reduced from 58% effectiveness* to 18% based off research conducted by Ciukitu and published earlier in a PPM Magazine article. Let's look at some crude numbers here. Say you have a level 7 education center. From my experience 0.15-0.2/day is a normal training rate in the absence of lecturers. Level 7 has a effectiveness rating of 31 and level 5 has an effectiveness rating* of 18 (*effectiveness rating is the scouting rate at each level of HR without any staff involved, it is assumed these values parallel in other facilities). Thus level 5 works at 58% that of level 7 (18/31). Thus you could expect to train around 0.09 points/day for staff with no lecturers. This difference would result in a change in 10 OR/season. Assuming you're training 1:1, 10 OR isn't that much, at least with low OR staff. But if your staff are around 100 OR (50/50) (an small/medium staff rating in hockey, high in soccer currently) that is the difference between $25,000/day at 50/50 and $33,275/day at 55/55. Take this for each staff member (14 total) and you're looking at an increase in daily expenses of $116,850/day or 13M over a season compared to if you dropped to level 5. This value is even higher if the staff being trained are higher than 50/50.

Now take lecturers into the mix. Say you had the same scenario before. Level 7 education center and then you had two 50/50 lecturers. Dropping down to level 5 and getting rid of both lecturers would save you 13M in lost training plus the 11M you would have paid them over a season. Thus, dropping to level 5 from level 7 and getting rid of two 50/50 lecturers would save you 24M in the first season alone. As your staff get better that number would only get higher. In the end it is up to you and how much you value staff. They are effective, very effective... when their abilities match the level of facilities they work in. In my mind, once your income equals your expenses, you can't grow as a team any further in terms of facilities and arena/stadium. Thus it seems only logical to keep expenses as low as possible to keep your profits as high as possible. Eventually you will reach an equilibrium where money in = money out... the key is to reach this point with your infrastructure as strong as possible.

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Custodians
Many people see the maintenance center and custodians as a waste of money. However, I can assure you that is not the case. There have been studies conducted and thanks to the level of detail in the guide it is pretty well known, if not known exactly, how expenses work in terms of infrastructure. I have had the privilege of being sent a spreadsheet that calculates your total expenses and how much your current level of maintenance center and custodians will save you. After playing around for a bit I found something shocking, while I was saving a tonne of money thanks to my maintenance center, my custodians were actually losing me money. I was paying them more in yearly salary than they were saving me over the course of a season. So I took to figuring out what the optimal staff abilities were. Turned out that for my level 13 and under facilities my peak maintenance efficiency considering their salaries was 35.2% efficiency. Likewise, my 10,900 seat arena needed a 49% efficiency for security service for peak savings. When I mention peak savings I am referring to the total money saved considering the staff members attributes and the salary allocated with those attributes.

So what about the maintenance center itself? Surely it must be worth the money invested. The answer, in short: yes, given enough time. Let's look at a few scenarios, firsrt without any custodians:

Scenario 1:
6x Level 10 Facilities
8x Large With Seats (600)
No Amenities
No Arena Upgrades

With level 1 Maintenance Center you will pay $441k/day in costs (49M/season). With level 5 $417k (47M/season) and with level 10 $361k (40M/season).
So with level 10 you'll save 9M/season compared to level 1 Maintenance Center. The cost to build up from level 1 to level 10 Maintenance Center is 34.5M! Which would mean it would be four seasons before you'd start paying off that upgrade from level 1 to level 10.

Scenario 2:
6x Level 13 Facilities

8x Double Floor Multifunctional (1500)

3 Amenities/Section
2 Arena Upgrades Each Type

With level 1 Maintenance Center you will pay $1.6M/day in costs (178M/season). With level 5 $1.5M (167M/season) and with level 10 $1.3M (140M/season).

So with level 10 you'll save 38M/season compared to level 1 Maintenance Center. The cost to build up from level 1 to level 10 Maintenance Center is 34.5M as stated before... this means that you'd be saving money in your first season alone with having level 10 Maintenance Facility. Already it is paying off to build your maintenance center up because the level of facilities and your arena are justifying it.

Scenario 3:
6x Level 15 Facilities

8x Triple Multifunctional (2500)
10 Amenities/Section
5 Arena Upgrades Each Type

With level 1 Maintenance Center you will pay $3.6M/day in costs (405M/season). With level 5 $3.4M (381M/season) and with level 10 $2.8M (316M/season). Take level 15 Maintenance Center and you're down to $2.0M/day which is $220M/season. It costs around 240M to build level 15 from level 1. This means after the first season those savings will be pure profit... Imagine getting a sponsor deal that is 14M/week higher than the year before! All of this is without the influence of staff. Consider staff and that 2.0M/day can go as low as $966k/day with 2x 100/100 (not including their salaries) but don't start buying 100/100 custodians just yet. It's not that easy. I've shown how a high level of facilities can easily justify a high level of maintenance center while lower level of facilities have a much longer time window for payout. Let's consider staff now and their associated salaries.

First, let's go through the three scenarios again this time with 2x 25/25 staff, 2x 60/60 staff and finally 2x 100/100 staff. The 2x 0/0 Staff refers to what your savings will be without any staff in each scenario. Then look at what happens when staff are added. If the staff savings are negative, having staff with that ability given that level of Maintenance and the rest of the scenario facilities + arena/amenities will actually lose you money compared to not having any staff at all. Perhaps it is best to look at an example:
Consider Scenario 1 level 5. The baseline savings is $24k/day. With two 25/25 staff you'll lose $2k/day and only save $22k/day, with 60/60 you'll lose $-76k/day and will be -$52k/day compared to level 1 and zero staff. With two 100/100 custodians you'll be -$383k/day below the level 1 no staff mark and thus -$359k/day below the level 5 no staff mark. All these overall savings values are illustrated in the brackets after the savings that include staff salaries. Please note, I'll bold the best possible savings for each level of maintenance center in each scenario and furthermore make the font blue for the overall best staff/maintenance center combination in each scenario.

Scenario 1:

6x Level 10 Facilities

8x Large With Seats (600)

No Amenities
No Arena Upgrades

2x 0/0 Staff:

Level 1: $0 + Staff Savings

Level 5: $24k/day + Staff Savings

Level 10: $80k/day + Staff Savings

2x 25/25 Staff Savings:

Level 1: -$5k/day

Level 5: -$2k/day (+$22k/day)

Level 10: $7k/day ($87k/day)

2x 60/60 Staff Savings:

Level 1: -$84k/day

Level 5: -$76k/day (-$52k/day)

Level 10: -$52k/day (-$45k/day)

2x 100/100 Staff Savings:

Level 1: -$396k/day

Level 5: -$383k/day (-$359k/day)

Level 10: -$343k/day ($-336k/day)

Scenario 2:

6x Level 13 Facilities

8x Double Floor Multifunctional (1500)
3 Amenities/Section
2 Arena Upgrades Each Type

2x 0/0 Staff Savings:

Level 1: $0/day + Staff Savings

Level 5: $91k/day + Staff Savings

Level 10: $338k/day + Staff Savings

2x 25/25 Staff Savings:

Level 1: -$3k/day

Level 5: $9k/day ($100k/day)

Level 10: $42k/day ($380k/day)

2x 60/60 Staff Savings:

Level 1: -$78k/day

Level 5: -$50k/day ($41k/day)

Level 10: $31k/day ($369k/day)

2x 100/100 Staff Savings:

Level 1: -$387k/day

Level 5: -$340k/day (-$249k/day)

Level 10: -$204k/day ($134k/day)

Scenario 3:

6x Level 15 Facilities

8x Triple Floor Multifunctional (2500)
10 Amenities/Section
5 Arena Upgrades Each Type

2x 0/0 Staff Savings:

Level 1: $0/day + Staff Savings

Level 5: $209k/day + Staff Savings

Level 10: $795k/day + Staff Savings

Level 15: $1,649k/day + Staff Savings

2x 25/25 Staff Savings:

Level 1: $1k/day

Level 5: $27k/day ($236k/day)

Level 10: $104k/day ($899k/day)

Level 15: $244k/day ($1,893k/day)

2x 60/60 Staff Savings:

Level 1: -$68k/day

Level 5: -$5k/day ($204k/day)

Level 10: $178k/day ($973k/day)

Level 15: $515k/day ($2,164k/day)

2x 100/100 Staff Savings:

Level 1: -$370k/day

Level 5: -$264k/day (-$55k/day)

Level 10: $40k/day ($835k/day)

Level 15: $602k/day ($2,251k/day)

Clearly, having the right skilled custodians for your level of facilities and arena/stadium is critical to saving money. There are some interesting results. For Scenario 1, no staff combination that I tested would make you money. If you had Level 1, 5 or even 10 Maintenance Center you were best to carry no staff, while having level 10 maintenance saved you the most. For Scenario 2, level 1 Maintenance Center would work best with no staff while level 5 and level 10 maintenance centers made you the most money with two 25/25 custodians (the overall best money was with 25/25 staff and level 10). Lastly, Scenario 3 (with everything maxed out) worked best with 25/25 staff at level 1 and 5, 60/60 staff at level 10 and 100/100 staff at level 15 (with the most money to be made with level 15 maintenance and 100/100 staff).

This clearly illustrates that high skill staff are only worth their while on high level facilities. You 100/100 coaches will train your players faster, sure. But with a level 12 training facility how much better are they than their 60/60 counterparts? If you follow the logic in the custodian analysis it may not be worth it.

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I think now I've written enough to cause sensory overload but I wanted to provide some money saving tips for all my fellow PPMers. Some of you won't need them as much because life is good, the cash is flowing. However, many of you are either in a financial crunch right now, or will be soon. I recommend understanding this article to help ease that financial crunch. In short, strong staff are essential when the facilities are there to match it. I wanted to show this with real numbers and finances. Feel free to message me or email me (scott.vanbommel[at]powerplaymanager.com) with any questions you may have. Thank you very much for reading and best wishes,

-Scott
(aka canucks357)

Auteur: Personen betrokken bij het PPM team

canucks357

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