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Joined: Jun 18, 2003 Posts: 19941 Location: Coeur dAlene, ID
Posted: Tue Dec 30, 2003 4:19 pm Post subject: HFTC Financial Model
Luxury Tax Plan
Taxation will be based on "Total Player Expenditure" (TPE) in the course of a season. This will be the figure displayed in the game at the end of a season in the "Front Office" screen under the heading "Player Expenses to Date". This figure includes salaries/contracts released or waived, in addition to normal player salaries.
A season's TPE will be subject to the following tax rates.
TPE less than $50m - no tax TPE $50m to $75m - tax of 25% charged on TPE between $50m and $75m TPE $75m to $100m - tax of 50% charged on TPE between $75m and $100m. TPE $100m + - tax of 100% charged on TPE over $100m.
NOTE: TPE will be taxed at the above rates, in the above bands.
However, a team will not start paying tax until it goes above average TPE. Once over that average (wherever it is), a team will pay tax on all TPE over $50m, regardless of the average 'trigger point'.
For example:
If the average TPE at the end of the season is $54.15m, all teams with a TPE over $54.15m will pay tax according to the above schedule on all TPE over $50m (not just on the TPE over $54.15m). If a team's TPE is $54.2m, they will pay 25% of $4.2m = $1.05m. A team with a TPE of $54.1m will pay nothing. If the average is below $50m, only teams spending above $50m will pay tax.
As the exact League average TPE will not be known until the end of the season, this makes it extremely difficult for a team to deliberately aim to come in just under the trigger point, avoiding tax. As the average should remain in the $50m to $58m range for the forseeable future, the maximum liability of 'just' getting into the tax-paying range should at most be $2m.
There will be no strict "salary cap". A team may spend (TPE) as much or as little as they like (more sensibly, as much as they can afford).
Luxury Tax Redistribution will be broken down thus:
The lowest Income team (32nd ranked) will receive 15% of tax raised. The 31st ranked (Income) will each receive 12.5% of tax raised. The 30th, 29th and 28th ranked (Income) will each receive 10% of tax raised. The 27th, 26th, 25th and 24th ranked (Income) will each receive 7.5% of tax raised. The 23rd, 22nd, 21st and 20th ranked (Income) will each receive 3.125% of tax raised.
A report will be permanently available and regularly updated, showing all GM's their projected/anticipated financial situation (TPE, tax liability, cashflow, potential tax income etc.). Note that the 'Average TPE Tax trigger point' is not precisely predictable until the very end of the season. Once this information is provided, it is the responsibility of the GM to exercise prudent financial management of their team. Taxation paid at the end of the season will be allowed to send a team into debt. There will be no 'capping' of debt.
Cash Cap and Redistribution
The cash cap will be raised from $15m to $25m, to enable teams to generate greater cash reserves to take advantage of the increased Investment Opportunities set out below.
At the end of a season, following calculation, subtraction and distribution of the Luxury Tax, the cash cap will be enforced. Cash raised by this capping will be distributed as follows:
The split will be determined at the time the finances are calculated. It will be adjusted to make sure the teams with a market size of "Small" or lower ("Almost Nonexistent" and "Tiny") get roughly 30% more funds then teams of market size "Below Average".
The size of the cash cap. qualifying market size of teams and the % allocated will be reviewed annually, to attempt to maintain the basic principle of the cash capping redistribution, which is to support approximately 10 teams (bottom third of league, in terms of market size).
The structuring of the cash cap and investment opportunities encourages forward planning and good financial management. Almost all opportunities to spend money are at the beginning of a season, while cash is capped at the end of the season. Hoarding money and spending it late in the season to avoid capping is not possible. The latest opportunity to increase spending is the trade deadline, by increasing payroll.
Therefore, a GM will need to have a plan at the very beginning of a season on how best to spend their money, whether they need to increase or decrease payroll, and what priorities they have for the coming season.
Broadcasting Revenue Adjustment
A team's total TV Broadcasting Revenue (National TV Deal + Local TV Deal) will be calculated at the beginning of each season on the following basis.
These criteria are designed to reduce, but not eliminate, the differences in TV income and link a portion of the income to performance, market size and fan loyalty.
TV Revenue = (wins/5) + ((market+loyalty)/2) + $5m base + adjusted base.
Where 'adjusted base' is $4m in 2007, $3m in 2008, $2m in 2009, $1m in 2010, zero thereafter.
Stadium Expansion & Renovation
All stadium renovations must be approved by the commissioner.
Renovations may only take place during the off season and the commissioner must be given complete details, which must be approved, before the start of the season. Stadium renovations will be completed immediately.
The initial construction cost for any renovation project will be $1M. Renovations must be fully paid before they may be started.
Additional seats may be added at the following rates:
Stadium Capacity upto 50,000 = $1M per 1000 seats. Stadium Capacity 50,001 to 60,000 = $2M per 1000 seats. Stadium Capacity 60,001 to 70,000 = $4M per 1000 seats.
Stadium maximum capacity of 70,000. A maximum of 5000 seats may be added in one year. If a renovation takes capacity from one capacity/cost bracket to another, the cost will be calculated precisely for the seating involved. For instance, expanding from 57,500 to 62,500 seats will cost 2500 seats @ $2m/1000, and 2500 seats @ $4m/1000, a total cost of $15m.
Ballpark Factors may be modified as follows:
Factor moves closer to 100 = $250,000 per point Factor moved farther from 100 = $350,000 per point
Max/Min factor values = 75/145. A maximum of 5 points in any one Factor per year may be adjusted.
Permanent roof = $20,000,000 (+15 Fan Interest at time of installation) Retractable roof = $25,000,000 (+20 Fan Interest at time of installation) Fan interest can not be boosted beyond 90 by the building of a roof.
Adjusting fence heights = $100,000 per foot of adjustment per wall (Max/Min = 5/25).
Adjusting fence lengths = $350,000 per 5ft per wall (Min 5ft per year, Max 15ft per year)
For an extra $5m, roofs may be purchased on a two year contract with a one half downpayment and the remaining half paid through a 1yr contract. Roof is complete when the contract is complete. During the first year the team will suffer a 5 FI pt decrease. The 5 points will be regained + the roof bonus FI when the roof is complete.
Stadium renovation must be paid in cash immediately upon agreement (minus the roof exception). Stadium renovation payment may not send a team into debt.
New Stadium Building
New Stadium construction must be approved by the commissioner during the offseason. A new Stadium shall have a base cost of $60,000,000, will seat 50,000 and will not have a roof. Additional seats and roof may be added at the costs shown in the Stadium Expansion and Renovation section. Stadium factors must be within these boundaries.
All AVG/HR factors must between 95-105 All walls must be between 8-12
LF Line 320-340 LF 340-360 LC 365-390 C 380-420 RC 365-390 RF 340-360 RF Line 320-340
Factors outside these boundaries are allowed, but will cost the normal rate.
A name for the new stadium may be selected by the GM, subject to approval by the Commissioner. The team may move into the new stadium at the beginning of the next year.
To pay for the stadium, a 'dummy player' will be added to the team?s roster with a contract and duration that will match the stadium cost. The length of the contract will be agreed upon between the GM and the commissioner. A New Stadium 'dummy player' contract shall not contribute to TPE and will be deducted from the in-game figures before the calculation of Luxury Tax liabilities.
For example: To build a new $60M stadium, a player named ?New Stadium? with a $6M/10year contract, or a $12M/5 year contract is added to the team roster. The ?New Stadium? player may not be removed from the team until the contract expires.
New Stadiums may not be modified for a minimum of 5 years. No subsequent New Stadium may be built by the team for 15 years. Upon the stadium?s opening, the team will receive a 15-point boost in fan interest.
If, after construction has started, the GM decides to terminate construction the ?New Stadium? player will remain on the team roster for the remainder of the season plus one additional season. After that point, the remainder of the contract will be terminated at no further cost.
Franchise Relocation
A GM may petition the commissioner for the right to relocate their team. Legitimate reasons will be expected to involve poor market size and fan loyalty and a convincing argument for relocation. Significant historical franchises will be highly unlikely to be permitted to relocate, to protect the interests and integrity of the league. If agreed by the Comissioner, relocation must be approved by a two-thirds majority of currently active GMs.
Relocation permission may only be given during the off season. The commissioner will provide a list of cities that are available for relocation, which may be restricted to fit with the overall geographical structure of divisions. The list will show the Market Base and Fan Loyalty. (All stadiums start at 50 Fan Interest).
If relocation approval is granted, a New Stadium will be designed and built according to the appropriate guidelines and costs above. Relocation will take a year in addition to the year for building of a new stadium; i.e. 2 years to complete.
Relocation may not be terminated once started.
A team starting a relocation process will suffer a 25 point drop in fan interest at the beginning of the next season following the successful application, i.e. at the beginning of their last season in their original location. This reflects the current fan base anger with the team leaving.
Marketing Campaign Plan
Teams will be able to invest in 'Marketing Campaigns' to increase fan interest and potentially fan loyalty. This will be permitted pre-season and at any time upto the end of May. A team may only conduct one marketing campaign per season.
Marketing campaigns have the following costs and effects:
$5m: Additional FI = 5 + 5% x (90-current) $10m: Additional FI = 6 + 10% x (90-current) $15m: Additional FI = 6 + 15% x (90-current) $20m: Additional FI = 7 + 20% x (90-current) $25m: Additional FI = 7 + 25% x (90-current) + notch of Fan Loyalty.
This formula ensures that low-interest teams get a higher return than already high-interest teams, per $.
The maximum gain possible (with current FI = 0, $25m campaign) is 30 FI points. The minimum gain (at current FI = 80, $25m campaign) is 10 FI points.
Fan interest can not be boosted higher than 90 via a marketing campaign.
Marketing Campaigns must be paid for in cash which is deducted immediately. A team may not go into debt to fund a marketing campaign. _________________ Barry Larkin and Edgar Martinez - HFTC HOFers in my heart!
Last edited by DaveHorn on Thu Sep 11, 2008 5:32 am, edited 5 times in total
Joined: Jun 18, 2003 Posts: 19941 Location: Coeur dAlene, ID
Posted: Thu Sep 11, 2008 5:33 am Post subject:
The following change was made to the capped cash distribution
The split will be determined at the time the finances are calculated. It will be adjusted to make sure the teams with a market size of "Small" or lower ("Almost Nonexistent" and "Tiny") get roughly 30% more funds then teams of market size "Below Average". _________________ Barry Larkin and Edgar Martinez - HFTC HOFers in my heart!
Joined: Jun 18, 2003 Posts: 19941 Location: Coeur dAlene, ID
Posted: Tue Dec 02, 2008 5:11 pm Post subject:
This change from 2024 was never stuck in the rules. Putting it here for now, wil get it pasted above later.
Next, I introduced the concept of a capped cash cap. Capped cash is capped at $10m. With extra money going to marketing campaigns that are stuck at the lowest level campaign and have their effectiveness cut in half. Money for marketing campaigns only go in at $5m increments. Left over money stays in the capped cash fund. So if a team was capped $16m. $5m goes into the marketing campaign, and $11m goes into the capped cash funds. You can see these changes in cells AB, AC, and AD.
The FI boost is 1/2 the effectiveness of the regular FI formula. _________________ Barry Larkin and Edgar Martinez - HFTC HOFers in my heart!
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