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Johnny C

Understanding Balance & Transfer Budgets from One Season to the Next

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Understanding Balance & Transfer Budgets From One Season to the Next

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Introduction

Like many others on here, I have had several questions & concerns about what happens to a team's Balance and Transfer Budget from one season to the next.

Unfortunately (1) the SM Help section doesn't address this and (2) there have been contradictory messages on this topic from not only multiple SM Devs, but also with the SM Community Support volunteers.

Anyway, I did some digging, and the following is what I have figured out from firsthand experience with my various teams. Please keep in mind that I don't know the exact equations that SM use in determining the Balance/Transfer Budget, but the following are the basic principles that they work with.

Two Things That You Need to Understand Before Reading This Guide

1. I am leaving chairman cash infusions, prize money, season tickets, etc... OUT of the equation. Forget about them for the time being.

2. Also, keep in mind that at the beginning of the season, your Chairman sees your Transfer Budget as a percentage (0-100%) of your Balance. Never more than 100%. Thus, at the beginning of a new season your Transfer Budget will never be greater than your Balance. I will explain this more later.

There are Only 3 Different Balance & Transfer Budget Scenarios That You Can End a Season With

SCENARIO 1. Balance is GREATER THAN your Transfer Budget

Ex: Balance £10.0M / Transfer Budget £5.0M

SCENARIO 2. Balance is LESS THAN your Transfer Budget

Ex: Balance £5.0M / Transfer Budget £16.0M

SCENARIO 3. Balance is NEGATIVE.

Ex 1: Balance -£2.0M / Transfer Budget £10.0M

Ex 2: Balance -£22.0M / Transfer Budget £10.0M

The Following are What Will Happen to Your Balance and Transfer Budget at the Beginning of the Next Season for Each of Those 3 Scenarios:

SCENARIO 1. Balance is GREATER THAN your Transfer Budget

Then you will start the new season with roughly the same amount of Balance and Transfer Budget that you ended the previous season. (That is of course before SM begin their voodoo with the figures.)

Example:
You end the season with a Balance of £10.0M and a Transfer Budget of £5.0M. At the beginning of the new season (before taking into account chairman cash infusions, season ticket sales, prize money, etc...) your Balance will be somewhere around £10.0M and your Transfer Budget will be around £5.0M.... Roughly the same as you ended the previous season with. After this, SM begin to include (or not) chairman cash infusions, etc...

SCENARIO 2. Balance is LESS THAN your Transfer Budget

At the start of a new season, your Transfer Budget will decrease to at least what your Balance is.

Example:
You end the season with a Balance of £5.0M and a Transfer Budget of £16.0M. Again, not considering chairman cash infusion, prize money, season tickets, etc... your Balance will be somewhere around £5.0M and your Transfer Budget will be £5.0M
or less
.

That's right...unfortunately you lose the difference between the £16.0M Transfer Budget and the £5.0M Balance.

So if it's late in the season and there is not anyone on the transfer market that you are just dying to buy, wait until the beginning of the next season to sell your money spinners, because if you sell them near the end of the season you could find yourself in this Scenario and basically lose that Transfer Budget that you just gained through their sales. Better to wait until the start of the next season to do those transfers.

SCENARIO 3. Your Balance is Negative.

Money will be taken from your Transfer Budget to pay off any negative Balance. If you don't have enough in your Transfer Budget to pay off your negative Balance, your team will begin the next season with a negative Balance.

Example:
You end the season with a Balance of - £2.0M and a Transfer Budget of £10.0M. At the beginning of the new season your Balance will be roughly £0.0M and your Transfer Budget will be roughly £0.0M.

Another Example:
You end the season with a Balance of -£22.0M and a Transfer Budget of £10.0M. You will begin the next season with a Balance of roughly -£12.0M and a Transfer Budget of £0.0M. Yes, you can begin a new season with a negative Balance.

Towards the End of a Season, You Need to Figure Out In Advance Which of the 3 Scenarios Your Team Will be In so That You Can Ask the Right Questions

For those managers that operate their teams with SCENARIO 1 - Balances that are GREATER THAN the Transfer Budgets, there shouldn't be that many new or hard fiscal questions that you need to really concern yourself with towards the end of the season.

However, for those managers that operate with SCENARIO 2 - Balances that are LESS THAN Transfer Budgets or SCENARIO 3 - Balances that are Negative, you really will face a lot of fiscal questions towards the end of a season.

Here are a Few of Those Questions

Here are questions some of you that fall into SCENARIO 2 or 3 might face:

If you are running a team with money spinners, do you sell them before the end of the season to pay off your negative Balance and improve the overall fiscal health of your team, OR do you go into the next season with a negative Balance and once the season begins then sell them and create a healthy Transfer Budget?

If I don't pay off my negative Balance this season, how many more seasons can I continue this, before I have to bite the bullet and pay it off?

Anyway, that's just one or two questions to which there is no absolute correct answer. It's up to the manager, depending upon what the Transfer Market looks like, what any potential prize money could look like, etc...

You are Saying to Yourself, "I Still Don't Fully Understand Why Cash Would Just Vanish if My Team Ends the Season With a Heap of Transfer Funds and a Positive Balance ?"

It is confusing. Maybe this helps...

If you have a positive Balance, but it is LESS THAN your Transfer Budget, it means that on a weekly basis, your team is running (or has run) at an operational loss.

Basically what this means is that every week your non-transfer related revenue (gate receipts, tv revenue, etc...) is LESS THAN your non-transfer related expenses (player wages, ground maintenance). Operationally, your team is bringing in less money than you have to pay out.

Here's an Example of Such a Scenario (where you have a positive Balance and a good amount of Transfer Budget, but somehow a chunk of that Transfer Budget vanishes at the beginning of the new season):

(Again, I am leaving chairman cash infusions, prize money, season tickets, etc... OUT of the equation)

Say you start the season with a Balance of £10.0M and a Transfer Budget of £10.0M.

  • Every week you bring in £1.0M in revenue from gate receipts, tv revenue, etc...
  • Also every week you have to pay out £1.5M in expenses from player wages, ground maintenance, etc...

At the end of the first week of the season you will have lost £0.5M due to operations (£1.0M in revenue MINUS £1.5M in expenses EQUALS an operational loss of £0.5M).

So at the end of the first week, your Balance will be £9.5M and your Transfer Budget will still be £10.0M.

You can see where this is going to lead to...

If everything on both sides of the equation stays the same (gate receipts, tv revenue, player wages, ground maintenance, etc...) then every week your team is going to operate at a £0.5M loss.

So @ the end of:

Week 1:
Balance £9.5M / Transfer Budget £10.0M

Week 2:
£9.0M / £10.0M

Week 3:
£8.5M / £10.0M

Week 4:
£8.0M / £10.0M

Week 5:
£7.5M / £10.0M

Week 6:
£7.0M / £10.0M

Week 7:
£6.5M / £10.0M

Week 8:
£6.0M / £10.0M

Week 9:
£5.5M / £10.0M

Week 10:
£5.0M / £10.0M

So after just 10 Weeks your Balance will be £5.0M and your Transfer Budget will still be £10.0M. That's right. After losing £0.5M in operations for 10 weeks your Balance will be down to £5.0M and your Transfer Budget will still be the same @ £10.0M.

Then say you decide to sell a player for £2.0M to generate some transfer related revenue. Both your Balance and your Transfer Budget will reflect the £2.0M in revenue that you gained from the sale of the player.

So your Balance after selling the player will be £7.0M

(the £5.0M that you had PLUS the £2.0M from selling the player)

And your Transfer Budget after selling the player will be £12.0M

(the £10.0M that you had PLUS the £2.0M from selling the player).

Then the season ends. You finish the season with a Balance of £7.0M and a Transfer Budget of £12.0M. Because the Balance is LESS THAN the Transfer Budget your team falls into SCENARIO 2 (described above).

The next season is about to start. Your Chairman sees your Transfer Budget as a percentage (0-100%) of your Balance. Never more than 100%. This is important to understand and I think the thing that SM has done a very poor job communicating to managers on here.

***** At the beginning of a new season, your Chairman WILL NEVER HAVE your Transfer Budget GREATER THAN your Balance regardless of what your Balance / Transfer Budget looked like at the end of the previous season.

Here's how the Chairman will address your Balance :

So the Chairman will see that you ended the previous season with a Balance of £7.0M and a Transfer Budget of £12.0M. Because you finished with a positive Balance, the Chairman will start you off for the next season with a Balance roughly the same @ £7.0M.

Here's how the Chairman will address your Transfer Budget :

After the Chairman addresses your Balance then he will figure out what your Transfer Budget will be. Since the Chairman sees your Transfer Budget at the beginning of a new season as a percentage (0-100%) of your Balance, he is going to take down your Transfer Balance at least to that of your Balance.

The Chairman has already determined that the Balance is going to be roughly £7.0M. And since at the beginning of a new season your Chairman WILL NEVER HAVE your Transfer Budget GREATER THAN your Balance, this means that the very most your new Transfer Balance will be is £7.0M (and likely less).

Yes...even though you ended the previous season with a Transfer Budget of £12.0M, your Chairman will set your new season's Transfer Budget at something that is equal or less than your new Balance of £7.0M.

That is exactly how you can (and will) lose a chunk of your Transfer Budget at the beginning of a new season, even if you ended the previous season with a heap of Transfer funds and a positive Balance.

The SM Devs Need to Address All of This in the SM Help Section

It is only right that SM correctly and thoroughly address this in the Help section and/or on the Forum. There are just way too many questions on this not to address it.

My 2 Cents - It's An Okay Fiscal System, BUT...

On it's own this is an okay system that is set-up by SM. There are some holes in it, which I may touch on at a later date, but fiscally it makes sense.

From an expense standpoint, it makes managers take their respective expenses into serious consideration, and should force any good manager to think about the fiscal consequences from one season to the next.

HOWEVER, where this begins to break down is when you start to put it in conjunction with the non-transfer related revenue generation (i.e. Gate Receipts).

The non-transfer related revenue is all that revenue that SM is solely in control of (i.e. Gate Receipts, Season Ticket Receipts, TV Revenue, etc...). If you run a BIG team, for example, CSKA Moskva, you have a stadium that can hold 84,745 spectators. However, since SM introduced the real-life attendances into the game, that BIG team only puts 12-16,000 people in the stadium per match regardless where you are in the standings. In order to run such a big team in Div 1 or Div 2 the manager is almost forced to have a team of money spinners just to compete. Then you are likely talking about a manager that has to run his team in SCENARIO 3 above....one where the manager is constantly in Negative Balance.

There is a v good thread that was started HERE about crippling attendances and how SM got that aspect of the game just dead wrong. But it's important to understand how all of that affects your finances.

If Your Balance is Constantly Negative Because of Crippling Attendances.... You are Not Alone

I just wanted to point out how on its own the Balance / Transfer Budget system that SM have implemented IMO on the whole makes sense; HOWEVER, when taken into consideration with other aspects of the game (i.e. crippling attendances), it's not always a positive. Maybe SM will finally realize after months and months of discussion about it that they need a better non-transfer related revenue system (i.e. attendances). But again, that discussion is going to be better addressed on the Crippling Attendances and Gate Receipts thread.

If You Have Some Questions or Comments On This

Anyway, if you have some fiscal questions about Balance / Transfer Budgets throw them on here....maybe I or others can be of help.

Also, maybe the SM Devs will want to finally post something comprehensive on all of this, too...

That's it!

:)

Hopefully this is helpful. Any feedback is appreciated.

Also, if you feel that I did not address something or did not provide clear enough examples, please let me know so I can improve this.

Johnny C

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Good one. I still don't fully understand why cash would just vanish if you end the season with a heap of transfer funds and a positive balance unless they consider it shareholders dividend. Tax? :confused::D

Good question... It's a little confusing to understand.

I just added an EXAMPLE to help people understand exactly how part of your Transfer Budget will go away even if you end the season with a positive Balance and bunch of Transfer funds.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Yeah, you've done well.

I'm pretty sure I've seen the vanishing cash issue apply to one of my teams recently so to hear an official explanation from SM about where that money goes would be interesting for all of us I imagine. :)

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Great thread Johnny and sufficient examples provided

I have a question though, what if my teams fall under scenario 3, whereby Balance is negative and Budget is sufficient to pay off the debt

For instance

Balance= -£1m

Budget= £20m

What happens at the end of season?

Will the Balance become £19m and Budget be £19m ?

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Good thread by Johnny... really helps us alot...

Btw, I have a tips for operating club finance that falls in the scenario 3...

If your club balance is negative and you still have a chunk of transfer budget available just before the end of a season. Try to use all the transfer budget to buy any sure risers or money spinners before your club move into the new season. This will put your club even heavily in debt however. And you will have negative balance and 0 transfer budget for the new season.

BUT, during the new season, wait for your money spinners to rise and sell them away. From the player sale, you will generate your transfer budget again for the next season to reinvest in other risers again. This can avoid your transfer budget being "robbed" away by your clubs. Before the new season ends, just do the same thing again and again for the following seasons. By doing this way, you can save your transfer budget and will also increase it season by season because you are investing on money spinners to raise your funds...

I hope you understand what I mean... Hope it helps... ;)

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Great thread Johnny and sufficient examples provided

I have a question though' date=' what if my teams fall under scenario 3, whereby Balance is negative and Budget is sufficient to pay off the debt

For instance

[b']Balance= -£1m

Budget= £20m[/b]

What happens at the end of season?

Will the Balance become £19m and Budget be £19m ?

Unfortunately that won't happen.

Your Chairman will use the money from your Transfer Budget to pay off the negative £1M Balance. So the Balance will just go to £0M. Nothing more.

Then the Chairman will figure out what your Transfer Budget will be. Remember that at the beginning of a new season the Chairman sees your Transfer Budget as a percentage (0-100%) of your Balance. Any percentage of £0M is equal to £0M.

So unfortunately your Balance will be £0M and your Transfer Budget will be £0M. I also described this in the first example in SCENARIO 3 on the first post.

Just so you know, I had similar situation just a few weeks ago. I had a few weeks left in the season with my CSKA Moskva in a WC. At the time, just like you, I had a negative Balance of £1M and a Transfer Budget of £20M.

However, the transfer market for my CSKA was opening up and I was considering buying a player. I wanted to buy the player, but the question I had to ask myself was "When do I buy this player?"

I had two options:

(1)
I could spend my £20M Transfer Budget on the player before the season ended
;
however
, that would mean that I would be starting the new season with a negative Balance of £21M (the negative £1M Balance that I had MINUS the £20M cost from buying the player) and a Transfer Budget of £0M (the £20M that I had MINUS the £20M cost from buying the player). Keep in mind, that if I didn't spend the £20M Transfer Budget on the player, I knew that I would have lost that £20M at the beginning of the new season, just as I described that you will above.

(2)
I could wait until the new season to try to acquire the player. However
, firstly I couldn't be sure if the player would still be available weeks from then when the new season started. Furthermore, not taking prize money or chairman cash infusion, etc... into account, I would have been starting the new season with a Balance of £0M and a Transfer Budget of £0M. With a zero Transfer Budget, I would have had nothing to buy the player with. This means that I would have to efficiently time the sales of existing players after the season started just to increase my Transfer Budget up to a level where I could purchase the player if he was still available.

In this case I chose the first option. I started the new season with a negative Balance of £21M and a Transfer Budget of £0M. However, I got my player. That said, now I have to climb out of a massive negative Balance hole.

ASIDE:

One question that many of you should be asking is "How the hell does a team get a negative Balance of £10M or £20M or even £30M in just one season?"

The answer is simple. Since SM introduced the real-life attendances into the game, in order to run a competitive team in Div 1 or Div 2 that in real-life sees low attendances, the manager is almost forced to have a team of money spinners just to compete. Then you are likely talking about a manager that has to run his team in SCENARIO 3 above....one where the manager is constantly in massive negative Balance.

Again, I suggest that you take a look at this on the Crippling Attendances and Gate Receipts thread. Hopefully SM will change their approach to this.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Good thread by Johnny... really helps us alot...

Btw' date=' I have a tips for operating club finance that falls in the scenario 3...

If your club balance is negative and you still have a chunk of transfer budget available just before the end of a season. Try to use all the transfer budget to buy any sure risers or money spinners before your club move into the new season. This will put your club even heavily in debt however. And you will have negative balance and 0 transfer budget for the new season.

BUT, during the new season, wait for your money spinners to rise and sell them away. From the player sale, you will generate your transfer budget again for the next season to reinvest in other risers again. This can avoid your transfer budget being "robbed" away by your clubs. Before the new season ends, just do the same thing again and again for the following seasons. By doing this way, you can save your transfer budget and will also increase it season by season because you are investing on money spinners to raise your funds...

I hope you understand what I mean... Hope it helps... ;)[/quote']

Excellent advice.

But just so everyone is aware, if you take this approach (as I did with my CSKA), you will start the next season with a massive negative Balance. But as RTK said, once you sell these risers during the next season, you will be able to pay off this negative Balance.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Thanks alot Johnny.

I was actually offloading players from my team just so that i could start the new season with a positive budget and balance.

Before this thread was made, i noticed that most of my teams had their balance and budget doubled due to the season tickets and by having positive balance and budget. Thanks for clearing up the confusion:)

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Great thread!

I have one question though, as after reading that I'm still not sure what to do in my current situation……..

I have a balance of 36.3m and a transfer budget of 33.3m and I'm not running at a loss each week. At present I can't buy the players I'm after until next season (3 transfers between clubs ruling).

If I end the season with the above balance/budget I'm guessing that even with prize money added in my chairman will leave the budget at 33.3m, as he will think "he has lots and doesn't need an injecton of cash". So would I be best off spending the money on other players before the end of the season and then with a transfer budget of close to zero at the end of the season, the chairman in theory may well then give me a cash injection for the new season.

Or does it not matter if you spend the transfer budget or not….i.e. if I end with 36.3m balance and 33.3m transfer budget will the chairman still possibly increase that transfer budget with a cash injection and or prize money?

Basically I'm just not sure if I'm best to spend before end of season (spend 33.3m and probably get more at start of next - cash injection) or leave the cash until next season (and likely only have 33.3m to spend - No further cash injection)

Hopefully someone can clear this up for me.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Another Example: You end the season with a Balance of -£22.0M and a Transfer Budget of £10.0M. You will begin the next season with a Balance of roughly -£12.0M and a Transfer Budget of £0.0M. Yes' date=' you can begin a new season with a negative Balance.[/Quote']

But this isn't right, is it? I thought if you end a season with -£22m Balance and £10m Transfer Budget then you start the next season with a -£22m Balance and £0m Transfer Budget, on the basis that the Transfer Budget isn't any actual money? I was so sure of this I even explained it to someone else in this thread a little while back:

http://forum.soccermanager.com/showthread.php?t=54019

Apologies anyhow don't mean to diss your hard work, just trying to clear this up that's all.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Sorry, don't think it matters anymore, just logged in and saw this message:

IMPORTANT NEWS: The chairman has decided to invest a further £682,664 into Manchester City. Your Chairman has decided to remove your Transfer Budget and instead allow you to spend all your available balance.

Looks like SM have abandoned the Transfer Budget, there's a thread on it here:

http://forum.soccermanager.com/showthread.php?t=54695

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

But this isn't right' date=' is it? I thought if you end a season with -£22m Balance and £10m Transfer Budget then you start the next season with a -£22m Balance and £0m Transfer Budget, on the basis that the Transfer Budget isn't any actual money? I was so sure of this I even explained it to someone else in this thread a little while back:

[url']http://forum.soccermanager.com/showthread.php?t=54019[/url]

You might want to check out what's going on here in this new development only a few minutes old :

Anyway, under the old system if you ended the season with a -£22m Balance and £10m Transfer Budget, you would have started the new season with roughly a -£12m Balance and £0m Transfer Budget.

Transfer Budget was "actual money". The way to think about the Balance/Transfer Budget system was that they were both profit/loss drivers for you team.

Balance was more or less 100% controlled solely by SM.

Transfer Budget was more or less 100% controlled solely by the manager.

Balance = Operational Income = Operational Revenue (gate receipts, tv revenue, chairman cash infusion, etc...) MINUS Operational Expenses (player wages, ground maintenance, etc...)

Transfer Budget = Transfer Revenue Received MINUS Transfer Revenue Paid Out

They were essentially 2 different ways of generating a profit and/or loss. One of the ways (Balance), SM basically generated the profit/loss and the other way (Transfer Budget) you the manager generated the profit/loss. Both were "actual money" though.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

Anyway' date=' under the old system if you ended the season with a -£22m Balance and £10m Transfer Budget, you would have started the new season with roughly a -£12m Balance and £0m Transfer Budget.[/b']

Transfer Budget was "actual money". The way to think about the Balance/Transfer Budget system was that they were both profit/loss drivers for you team.

Balance was more or less 100% controlled solely by SM.

Transfer Budget was more or less 100% controlled solely by the manager.

Balance = Operational Income = Operational Revenue (gate receipts, tv revenue, chairman cash infusion, etc...) MINUS Operational Expenses (player wages, ground maintenance, etc...)

Transfer Budget = Transfer Revenue Received MINUS Transfer Revenue Paid Out

They were essentially 2 different ways of generating a profit and/or loss. One of the ways (Balance), SM basically generated the profit/loss and the other way (Transfer Budget) you the manager generated the profit/loss. Both were "actual money" though.

But whenever I bought a player under the old system the Transfer Budget AND BALANCE decreased by the value of the player? And I ended last season with £20mil Balance and £45m Transfer Budget, new season started and I had (as expected) £20m Balance and £20m Transfer Budget (before SM changed it back to just £20m Balance). So surely this wasn't a case of last season's Transfer Budget being injected into the Balance (because then I'd have £65m), but rather a new Transfer Budget projected on the new season's Balance. You'll see what I mean if you read what I said here:

http://forum.soccermanager.com/showthread.php?t=54019

Obviously it doesn't matter much now, but I'm just pointing out I genuinely think (perhaps incorrectly) that what I said above is right.

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Re: Understanding Balance & Transfer Budgets from One Season to the Next

But whenever I bought a player under the old system the Transfer Budget AND BALANCE decreased by the value of the player? And I ended last season with £20mil Balance and £45m Transfer Budget' date=' new season started and I had (as expected) £20m Balance and £20m Transfer Budget (before SM changed it back to just £20m Balance). So surely this wasn't a case of last season's Transfer Budget being injected into the Balance (because then I'd have £65m), but rather a new Transfer Budget projected on the new season's Balance. You'll see what I mean if you read what I said here:

[url']http://forum.soccermanager.com/showthread.php?t=54019[/url]

Obviously it doesn't matter much now, but I'm just pointing out I genuinely think (perhaps incorrectly) that what I said above is right.

Yeah... It's a moot point now.

The scenario that you are describing is SCENARIO 2 from my initial post on this thread...where Balance is LESS THAN Transfer Budget

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