BuzzerBeater Forums

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.