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What are you basing your numbers on? If you change trainer with 35,5k salary for 18k salary trainer, it would take 16 weeks to pay off.

I did a little math and created an excel app. There are a few assumptions thrown in with some algebra that I did. If you have a better method, I would be interested. If I remember correctly, some of my assumptions were:

-you are replacing the trainer with the same level and same specialist.
-you keep the trainer until his salary is equal to the guy you are replacing

(so if you want to keep him for a shorter or longer period, this method does not work)

-you keep the trainer until his salary is equal to the guy you are replacing

This was the key element I was looking in your calculation. My own calculation is based on paying off in 7 weeks (half a season) after the purchase. So switching to 20k salary trainer from 35,5k should not cost over 84300, 30k trainers signing bonus should be 9957 etc.
For example I changed my 53455 salary trainer for 37649 salary trainer and payed a small 23k signing bonus. That happened 7 weeks ago. I am making profit after 5 weeks, keeping the new trainer for a season profits me $192038 compared to my last trainer. I usually look for a new trainer after that time (he has reached 48703 salary by that time). Is it smart to try to get 18k salary trainer for 500k+, or 25k salary trainer for 350k+. My research shows it's not, but I'm always trying to keep an eye out for cheaper staff. Switches are easy with the doctors and pr-guys.
Ofcourse we are talking about speciality staff here.

This was the key element I was looking in your calculation. My own calculation is based on paying off in 7 weeks (half a season) after the purchase. So switching to 20k salary trainer from 35,5k should not cost over 84300, 30k trainers signing bonus should be 9957 etc.

You will have to explain to me how buying a trainer could "pay off" in 7 weeks. Especially if you are paying a large bonus to get him. For example, if you pay $350K in bonus, that's $50K a week (not including severance, etc). I just don't see how you can justify that when a trainer's salary only goes up 2% per week for a level 5.

Simple, my calc shows that your current lvl5 trainer must have a salary of 73750, if you then hire a 18k salary trainer for 350k it will pay off in 7 weeks.

2% per week for a level 5.

Additionally, to my knowledge lvl5 trainers salary increases by 2,5% not 2%.

Last edited by Kukoc at 10/15/2010 7:07:23 PM

Simple, my calc shows that your current lvl5 trainer must have a salary of 73750, if you then hire a 18k salary trainer for 350k it will pay off in 7 weeks.

Yeah I agree with this. On the 8th week, you would have saved (about) 54,750 compared to if you had kept the old trainer.

Additionally, to my knowledge lvl5 trainers salary increases by 2,5% not 2%.

It's 2%. I have a level 5 trainer. His salary is $ 25 594. Next week it'll be $ 26 105.

I stand corrected, I looked at my formula and I have it at 2%. I simply calculated that lvl 5= 0,5x5. Dumb me. Nevertheless the calculation was correct, as it was made with 2% salary increase.

Simple, my calc shows that your current lvl5 trainer must have a salary of 73750, if you then hire a 18k salary trainer for 350k it will pay off in 7 weeks.

If it only costs 350K in bonus to pick up a level 5 trainer with an 18K salary, you should be replacing him long before his salary hits $73750. That is the flaw in your logic.

Not a flaw in his logic, just a different criteron for evaluating the economic benefit of his purchase than what you're using. Further, I'd say his method is more "correct" than yours in that it's a clear, concise way to determine the value of the new staff member. His method could even be extended to handle any length of acceptable payback period via simple algebra. Assuming you replace with the same level (specialty doesn't really matter, but assume it's the same)

Let SC = this week's salary of the current staff member
Let SN = the listed salary of the new staff member (which will be next week's salary -- there is no increase on a staff member's first week with you)
Let L = the level of the staff member
Let W = the number of weeks since the new staff member was hired (0 will be the week you hire him)
Let X = the number of weeks you want your payback period to be

Then your weekly savings for the new staff member for the first week is:
SC*(1.0075+L*0.0025) - SN

And your weekly savings for the new staff member for the second week (W = 1) is:
SC*(1.0075+L*0.0025)^2 - SN*(1.0075+L*0.0025), or (1.0075+L*0.0025)^W * [SC*(1.0075+L*0.0025) - SN]

So, the total savings of the new staff member can be summarized as the sum, for W=0 to X, of (1.0075+L*0.0025)^W*[SC*(1.0075+L*0.0025)-SN].

With respect to this sum, [SC*(1.01+L*.0025) - SN] is a constant, so we can rewrite the sum as:
[SC*(1.0075+L*0.0025) - SN] * the sum for W=0 to X of (1.01+L*.0025)^W.

Now, since the factor (1.01+L*.0025) is greater than 1, the sum is going to explode without bound (albeit it fairly slowly in BuzzerBeater-time). But, since that piece is greater than 1, the total amount saved for any number of weeks X will be greater than:
X*[SC*(1.0075+L*0.0025) - SN]

Acquisition costs are the price paid (PP), and the current staff member's severance (SC). So, as long as the following holds:
X*[SC*(1.0075+L*0.0025) - SN] > PP + SC
then your new staff member will cause you to at least break-even over your desired financial time horizon.

Or, put more simply: You paid a rational price for your new staff member as long as the price paid plus the termination charge for your current staff member is less than the weekly savings for the new staff member multiplied by the number of weeks you desire for getting paid back on your money. So, in my case, if I have a 40k L5 trainer and I want to replace him with an 18k L5 trainer, and have a pay back of 1 season (14 weeks), my maximum "rational" price to pay would be 268k (22k * 14 - 40k). And in reality, it would be slightly higher than that, due to the increasing payback of the lower salary trainer (the 18k's salary will grow slower in absolute dollar terms than my current 40k salary -- over a 14 week payback, the real sum of the (1.0075+L*0.0025)^W series is about 16.3 for a level 5 trainer, which would put my fair value at just under 320k)

I don't know about all the formulas you just threw at me. I could send over mine and we could have a wonderful math off. But I would much rather leave all my math problems at work.

However, I can tell you that if you pay normally expect to pay a $350,000 bonus for an 18K trainer that you are losing money if you wait until his salary is $70K to replace him. My formula says in those conditions you should buy again when your trainer costs about $36,500. Let's see the difference in money if instead you wait until $70K.

I will ignore the original severance for now since it clouds things. I am also rounding Kukoc's and my salary down to make the numbers easier.

Scenario 1 - keep until $70K salary - about 56 weeks

-56 weeks salary=$2,149,914
-bonus=$350,000
-total=$2,499,914

Scenario 2 - replace when salary hits $35K - about 28 weeks

-28 weeks salary=$717,476
-bonus #1=$350,000
-severance=$35,000
-28 weeks salary=$717,476
-bonus #2=$350,000
-total=$2,169,952

Look at that - a savings of $330K over 56 weeks. That's almost $6,000 per week, not a fantastic amount. But if you multiply that over three different staff members...

You can't calculate this and take some willy-nilly date for when you want to break even.

Last edited by HeadPaperPusher at 10/15/2010 10:22:53 PM

I see you guys look at the salary of the OLD staff. I look at the salary of the new staff to see if it's an acceptable price.

I look at the salary of the old trainer, add up the total amount I would spend on him, say for 2-3 seasons (plus the 2% increase every week), if I didn't buy a new one. I then add up the salary of the new staff for the same amount of time (plus signing bonus, severance and 2% increase every week). I compare and see how long it will take me to get a +, meaning, save money. If it's within a season (or sometimes a bit more if the salary is low enough), I buy the new trainee.

I don't know, this really seems to be the simplest way. I would appreciate if anyone can point out any flaws in my method.

First off, you'd have to be talking a level 7 trainer to go from 18k to 70k in 56 weeks. Good luck with getting one of those for $350,000.

Second off, your scenario is all well and good, but you're not saving a level $6k per week.

- For the first 28 weeks of the two scenarios, you're the same.
- In the midst of the 28th week, the second scenario has a $385k outlay that puts it behind the first scenario.
- Over the remaining 28 weeks, the second scenario saves $17-20k per week.
- So the 2nd scenario makes you *WORSE OFF* than the first scenario from week 28 to week 45 -- over a full season that you've blown money down the tubes in order to chase a longer term return. If your team is set up so that you can deal with having $400k invested for a full season before you clear that money back and start actually banking profit, then yeah, replacing at $35k makes sense. But then that gets right back to the break-even analysis, which would say for the "do I pay $350k to replace my $35k L7 trainer with an $18k L7 trainer" decision -- yes, as long as you're willing to wait 17 weeks for payback otherwise hold the current trainer for longer.

Not every team is in a situation where they can look at money on a multiple-season position. If I blow $400k+ on a staff member now, that's money I can't use for a player to keep me from relegating or to make the playoffs or win some games in the playoffs. Maybe $400k isn't much, but when you multiply that by 3 staff members and consider that over 97% of the USA playerbase is in d.III or lower (adjust for your country, but only 80 players per country are in d.I or d.II), then yeah, the payback analysis is a perfectly valid method and probably more valid for the majority of situations.