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Doesn't this contradict with the attempt to get somewhat fixed transfer prices?

Patje > To get fixed transfer prices, there has to be a positive cash flow to the economy excluding transfers, since there is a minimum of 3% agent fee for every transfer made. As a result (using made up numbers), if $100M worth of transfers occurs in a season and every single transfer was at the 3% agent fee, the global money supply would shrink by $3M. Thus, if player/staff salaries and merch/TV/gate/cup revenues were exactly balanced, there would be a monetary contraction for the season and overall deflationary pressure in the market.

Charles or Forrest > I guess my concern with the self-adjusting system is, are you targeting it primarily at the player market, or overall cash flows? From my admittedly limited point of view, the players that I've been selling and researching to buy have almost universally exceeded their TPE in the past two weeks. Considering the announced Season 11 changes from an economist's perspective, this makes sense to me, as my reading of the current and pending changes is that large & continuing investments in arena size have been deprecated. As there are only three main investment areas for a club (arena, staff, and players), any sudden decrease in demand for one investment will, by necessity, be offset by an increase somewhere else.

So, hypothetically, let's say that the announced changes cause a player-investment boom, and transfer prices are, on average, up 15% for any given quality level of player throughout the season and at season end. Is the auto-tuning mechanism going to see that inflationary pressure and constrict the money supply to compensate? Is it going to only look at cash-on-hand balance sheets and revenue streams and tune the money supply for the targeted profit excluding transfers?

Would you consider periodically releasing some macro-level economic statistics about the game, to give players a better sense of where things have been and where things are going, as a way to foster trust in the BB central bank, in order to give credibility and stability to the economic system?

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 9/22/2009 8:44:31 PM

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.