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I guess my concern with the self-adjusting system is, are you targeting it primarily at the player market, or overall cash flows?

From a point of view of the overall game economy, the player market is not a cash flow, but a transfer of wealth. A transfer is not creating money -- if anything, it's destroying money, via the 3-19% transfer fee.


Also, to make the long story short, inflationary pressures are something that's being created by an increasing money supply -- and given that BB has no borrowing or a system of commercial banks, the way money behaves in BB is different.

So for prices to rise by 15%, one of the following has to be true: either an increased amount of players remains unsold, or teams have deep pockets and have decided to spend some of their funds. Given that the game is organized in a way which penalizes savings, then any such price increase is strictly something to be solved by managers revising their training/sales behavior.

But there was a strong incentive to save, up until this season. We refer to it as arena building. Now with the "large arena penalties", however strong they really are, there appears to me to be a noticeable run-up in the transfer prices, which I would theorize should be expected if the system has suddenly introduced a sharp disincentive to arena building. As you've pointed out, the money has to go somewhere - staff, arena, or transferred around in loops in the player market and slowly drawn off through agent fees. If one leg of that tripod collapses, the other two will be greatly effected.

My primary concern is, what happens if some non-monetary factor, such as a change in the relative value of arena/staff, effects the transfer market? Is the auto-tuning mechanism set up to see a sudden transfer price inflation and say "oh, we must have too much money floating around, let's dial it back some"? If the auto-tuning mechanism is set that way, and if there is in fact (either now or in the future) a sharp non-monetary inflation in the transfer market, then the auto-tuning mechanism would actually INCREASE the volatility of transfer prices, by whipsawing the money supply back and forth trying to correct for external stimuli in the transfer market.

I can lay out a more specific hypothetical if you want, but I've tried to make my point as clearly as I can.

The run-up in transfer prices comes from the increased income overall, which is obviously caused by the new merchandise and TV contract money -- so it's intentional. It will level out eventually, since teams are now able to pay more salary, and will have to do so in order to be able to stay level with the competition.

I understand perfectly well where you're coming from. And given that BB is different from your regular run-of-the-mill economy by the fact that there is no lending, so controlling the money supply is relatively easy. In a well-calibrated BB economy, non-transfer-market spending should be pretty predictable, so there shouldn't be shocks of the type "transfer prices go up 15% across the board", i.e. monetary inflation should not occur.

Non-monetary inflation, as you suggest, should be pretty easy to predict based on the fact that some sort of a shock will be needed in order to cause a change in preference spending, and I am sure adjustments will be made, if necessary. At this point, the game is undergoing a consistent reform which includes changing how much salary teams will be able to pay for players, thereby affecting how far you want to train your players (an effect strengthened by the upcoming salary reform).

What I expect is that this will stimulate people to create elite, as opposed to very good player, and that these will trade at a premium, which will pretty much absorb the created cash excess. And don't forget that as the spread of skill level expands, the spread of marked prices should, as well.

Last edited by GM-kozlodoev at 09/22/2009 20:44:31

we don't need to look at transfer prices because we can look directly at the expenses and incomes of every team and see how much free money they have to spend on the transfer market. Ideally we have the economy setup so that the net amount of money in the BB universe stays relatively constant, and the total expenses in the BB economy are relatively constant, then the challenge is to be more economically efficent than your neighbor so that you can horde more of the available money supply and use that money to spend larger than your opponent amounts on things like staff/transfer markets etc.

Now we haven't come close to that equilibrium point yet, so things get complicated by the fact that costs are rising etc and teams need some cash reserves to pay for those rising costs. The point is we have put in all the mechanisms neccesary to control the money supply and keep prices in relative equilibrium once costs reach equilibrium, which they should coming up in the next few seasons.. especially after we implement the change to the salaries at the start of next season.

I guess I'm concerned that there are structural things in the current model that have the potential to create a self-reinforcing transfer price inflation, especially given the external shock of this season's arena changes and next season's changes in player salaries.

At the same time, I don't want to stand here on a soap-box shouting doomsday prophecies if those that have more complete data aren't concerned about it. If asked, I'll be happy to lay out my theory either on or off forums. Otherwise, I'll leave the topic be and wait to see how things play out like everyone else.

Please continue, I'm listening...

if this were true, it would be because we failed to acheive our stated missiion, which is to avoid this from happening.

if our current structure is so inadequate that we can't prevent this from happening we will change it.

In no circumstances will we sit back and let some such doomsday situation happen to the game we love.

we have made it very clear that we understand the problem, and are doing what we think is the right thing to control it.

I can understand if you misunderstand, or don't believe our policies are sufficent to prevent such a calamity, but I hope you believe that we are quite serious about preventing it and if it turns out that we are wrong that we will take action to correct course.

that being said, I'm happy to hear your arguments why you think our current policy is going to lead to this, but remember we made all of these things dynamic with tuning feedback so as to react to current economic conditions, we went from a "fed" that essentially had little control over monetary policy, to one whose monetary policy was directly tied in to monetary conditions.

Well, I certainly didn't mean to imply that you would sit idly by and let massive inflation ruin the game -- but I do see the following scenario as a concern and want to bring it to your attention if you haven't already considered it.

As I understand it, the game economy is set up with four basic money inputs, and five basic money outputs. The inputs are: arena revenue (gate receipts), tournament prizes (cup & BBB), TV revenue, and merchandise. The outputs are: player salaries, staff salaries, arena expansion, transfer market agent fees, and staff acquisition & firing costs. To simplify the analysis, let's net player salaries and staff salaries against the gross revenues, leaving net operating revenues. As stated in this thread and other places, net operating revenues should be positive most of the time. Thus, for money supply change to be zero, the net operating revenues should be exactly offset by the other three cost areas -- arena, player transfers, and staff transfers.

Transfer market inflation, then, can happen in one of two ways. First, net operating revenues could increase, which would raise the total amount of money available for each of the three outflows. Some (although possibly not all) of this money would be expected to go to the transfer market, where it echoes around until agent fees destroy enough to re-balance the money supply. There would be a magnifying effect of the money supply change (similar to the reserve ratio effect in a real-world bank), because agent fees are less than 100% of the transfer cost. For illustrative effect -- assume that global net operating revenues increase by $100M per season, and all of that money goes into the transfer market. Further, assume that the average agent fee paid on each transfer is 10%. As a result, for $100M in additional agent fees to occur, a total of $1,000M extra (or $1 billion in American terms) would be spent in the transfer market that season. This would be what I would term "monetary based inflation", and it seems that the auto-tuning mechanisms are designed to control for this, and I have faith that the BB team will be generally successful at keeping this stable.

The second way that transfer market inflation would occur is through a change in preferences, or a change in the ratio in which money outflows via arena, player transfers, and staff transfers. This is what I would term "non-monetary inflation", and it is my contention that the current system has several pillars that are already and will continue to actively encourage this. First, arena expansion is a one-time outlay--there is no maintenance cost of any sort for arenas in the game. Economically, I would expect this to mean that as teams become more established, their expenditures on arenas will decrease, especially now that there is an explicitly-defined soft-cap on arena size. In addition, there have been a number of announced and/or implemented changes that will further induce teams to reduce arena spending. As the money shifts out of arena spending, it must by nature go into either agent fees or staff acquisitions. Either movement will cause inflation in the effected market, and the volume of money will be magnified by the inverse of the average agent fee in the player transfer market.

My other concern is that your stated goal is to keep the gap between divisions from growing too large. In my opinion, this could exacerbate economic problems if non-monetary inflation occurs in the player transfer market.

Assume that you can easily divide players into "tiers" based on which league level they would be an average starter in. The top-most tier would be above average even in established D.Is, then you'd have D.I starters, then D.II starters, and so forth. Each tier would have an average price for players in that tier--for comparison sake, let's assume Tier 1 players average $5M transfer price, Tier 2 (D.I starters) $4M, Tier 3 $3M, Tier 4 $2M, and Tier 5 $1.5M, and so on. If general inflation of 50% occurs, we'd have new prices, such as Tier 1 for $7.5M, Tier 2 for $6M, Tier 3 for $4.5M, and so on. This has now RAISED the cost of replacing your starters as you promote, as the gap between tiers has grown by 50%. If the BB's operate under their mandate to allow promoted teams a reasonable chance to stay up, the expected response would be for them to increase the promotion bonus. This increase in bonuses then increases net operating revenue, which adds monetary inflation to the mix and begins to reinforce the inflationary cycle.

Economic damage could be done by the pendulum working the other way as well. Assume the BB's see the inflation in the transfer market and try to control it by reducing the money supply via the auto-tuning mechanisms. Depending on the way that information was dispersed to the players, this change may take a few weeks to "trickle down" to owners if owners don't realize immediately that their revenues are going to change (or have actually changed). The longer the delay is, the more likely that people will hoard money out of either fear or a need to fix the budget crisis created by the delay in owners figuring out the change in situation. This would then probably add a non-monetary deflationary pressure to the transfer market in addition to the monetary deflation, "whipsawing" the transfer market back the other way.

I'm sure that you'll do everything possible to prevent Armageddon, but I'm concerned that even a 2 season inflation followed by 2 seasons of correctionary deflation could be very detrimental to the BB economy. To that end, I would like to encourage some degree of increased transparency with respect to the macro numbers and how much the BB's are targeting transfer price inflation with their ongoing money policies. I think an arena maintenance cost might bear looking at too, in order to prevent a steady "preference shift" from arena investment to player investment, but that's the subject of another thread's debate.

well thank you for a very clear explanation of your position.

So I have a few thoughts. First one major inflow and outflow you forgot to mention. One is team creation and team retirement. This is generally a net outflow I believe, though I could be wrong.

In a related point, from a macro economic perspective most teams are developing, not established, so I'm not sure how large an effect the "establishing" effect of non monetary inflation is going to be.

Second, I think implicit in your theory of worrying is that the speed of the inflationary/deflationary pressures are faster and stronger than all the feedback mechanisms. Bubbles are dangerous, and if we allowed for massive buzzerbeater loans i could imagine one developing where people bet on the price of a player going up, and it goes up, and people keep somehow irrationally believing it will go up. In reality we don't have that situation, and we have sent the strong signal that we hope to keep prices relatively "constant" meaning a d1 starter should cost roughly the same when we reach equilibrium.

So, how to we determine what the speed of these inflationary and deflationary pressures are, and what the speed of the feedback mechanisms are, and whether we are likely to be in an unstable equilibrium (slow feedback) or a stable one?
I would say that it is not immediately obvious to me one way or the other, but that having mechanisms which are in place to react to these things is better than not having them. I'm not sure what transparency you want us to have with regard to monetary policy... I guess we could try to calculate the total amount of money in the banks of every division and report that as a number and then we could strive to keep that number similar over time... though with player salaries still increasing we are still in the regime where those numbers should be going up over time such that the effecitve player liquidity is similar.

I dont see how adding arena maintenance costs really address the problem as you outlined it. That would simply add an extra outlay, but wouldn't really affect the speed of the feedback, which is what your argument rested upon. It might have made sense if you phase it in just at the rate that you think arena investment will be phased out.. But lets be honest, some inflation is OK. We have inflation in our economy, its in some sense unavoidable when you have a growing economy. What is hurtful and unpleasant is when it happens too fast.. same with deflation... people want their money to be worth the same over the time scale that they are likely to spend all of the money they currently have. They will accept that 3 years from now they will be getting 10x as much and spending 10x as much, they just don't want it to be next week. We are aiming to make sure inflation/deflation happens as little as possible and as slowly as possible. It might be impossible to assure a perfect equilibrium, but our focus should be on keeping a steady level.