OpEd: Hoarding RPs is More Wasteful than "Wasting" Them
OpEd: Hoarding RPs is More Wasteful than "Wasting" Them
AN ARGUMENT AGAINST THE 1% of the 1%!!
Background: When David (Kipke to the SLN layman) told me about the league and various strategies, he mentioned that Nav ran his SLOR team like a hedge fund. He constantly pushed the cap and paid the luxury tax (they had different hard cap rules) and consistently ran RP deficits (they could go negative). While our SLN rules don’t necessarily allow for this aggressive style of team management, I do think there are a few lessons here that we can unpack.
I am a CPA by trade (even though I hate accounting plz get me out), worked in various accounting/corporate finance roles for close to 10 years and just finished year 1 of a 2 year full time MBA program. So im constantly hearing the business school buzz words / lingo / bullshit and thought it would be fun to take David’s off the cuff comparison of “managing a team like a hedge fund” one step further. On a micro level, I wanted to break down a team into a business that has a balance sheet and give some food for thought why I think hoarding RPs is a pretty dumb game strategy. You may notice that I am constantly at the bottom quarter of the league in RPs and pretty much have been since you fucks stopped voting me for GMOTY (miss those RPs) / had players camp eligible below the age of 34 (RIP 1996 Suns). I wanted to write this article to provoke thought and discussion about RP management. I would love to hear someone lay out an argument for sitting on a mountain of RP at any given time.
Accounting 101 and translating to SLN:
A quick accounting 101 for everyone who is talented enough to work in any other field and is blessed to not know anything about this subject. Each company has a balance sheet composed of Assets, Liabilities, and Equity. The guiding principle in accounting is very simple:
ASSETS = LIABILITIES + EQUITY
I will define each of these 3:
Assets - generally good shit, stuff you have and own, a comprehensive list of everything that adds value to your organization. Like a balance sheet, I will list these in order of liquidity:
- RPs
- First round draft picks
- Second round draft picks (we would probably need to audit JWoo’s books to ensure these type of assets aren’t overstated)
- Players (obviously some of these might be considered liabilities on the court but all players are considered assets for the purpose of this exercise)
Liabilities - generally bad shit, stuff you need to pay to afford all your assets
- Player salary on your books
- Future salary due in coming years
- Upcoming player camps you will have to pay for (probably wouldn’t be listed on an actual BS but we are getting a bit technical and I think it helps illustrate the overarching RP point)
Equity - a bit harder to conceptualize but there are two ways of viewing equity
1.) Book equity - how much capital shareholders put into the business + retained earnings (how much money you have made or lost in prior years)
This definition of equity doesn’t do us any good for my RP point so I thought I would use market equity as my working definition
2.) Market equity - in real life, market equity is defined as the present value of expected future cash flows and it is essentially what the market is trading the company’s stock at any time. Obviously we don’t have variable cash flows, our return is in WINS. So let’s define market equity as the value of expected wins.
Grounding us back to our basic principle:
Assets = Liabilities + Equity
In other words, all the value/resources your organization (picks, RPs, players) = your cap sheet and upcoming RC spend + expected future wins
I think this is logical. We all operate with the same cap constraints so no team can run a huge deficit and take on debt. If a team has a lot of good shit, they have more equity in the form of expected future wins than a team that only has mediocre shit. The goal of the game is to WIN GAMES. Either now or in the future. In other words, the goal of the game is to maximize EQUITY.
SO WHAT IS MY POINT AND HOW DOES THIS HAVE ANYTHING TO DO WITH RP MANAGEMENT?
As stated above, RPs are essentially equivalent to cash in the real world. Businesses deploy cash to invest in projects that hopefully provide more value than they cost, in order to increase equity. Just like in SLN, we strategically use RP to add value to our organizations. Whether this is in the form of reward camps, RFA tags, or trades – RPs serve the exact same purpose as cash in the real world.
However, companies rarely sit on massive amounts of cash. In fact, you can make the argument that sitting on cash is a waste of resources because it could be deployed in ways to invest in the business and return value. What if a company is mature and there aren’t any positive return projects to invest in at the moment? Well that company would at the bare minimum invest in short term cash equivalents that kick off small percentages of interest like money market accounts, commercial paper, treasury bills, etc.
In SLN, we don’t earn interest on RPs. Sitting on a mountain of cash does not add any equity to your company if you don’t deploy it. Having 9,000+ RPs is adding approximately zero future expected wins to your organization. It is downright wasteful and irresponsible. Sure, if you are budgeting for a super camp, RFA tag, etc. I understand hanging on to a couple thousand RPs. But 10,000+??? What is the purpose. Some may call me wasteful for super camping Andre Roberson, I’d argue that was more fiscally responsible than sitting on a mountain of RPs that do not add any equity to my team. Considering the various outcomes of an Andre Roberson SC, I could in turn trade him post super camp for more valuable assets than I acquired him (frenzy ineligible Solomon Jones). Or maybe he pops and is a super useful defensive stopper that adds expected future wins to my organization in equity. Or perhaps he busts and nothing comes out of it and I used 3,200 RPs in a way that did not add equity. I would argue this is the same result as sitting on them.Thus when considering the outcomes, the expected value that an Andre Roberson SC adds to my franchise is more than sitting on them waiting for a rainy day. We get 3000ish RPs each season just by being an active member of the league, the RPs replenish annually unlike cash!
Not spending RPs is literally like having a money tree in your backyard and not using that money to buy anything. Sure it might make you feel good to look out back and admire how many bills are on that tree, but if you don’t use the cash, that money tree is the same as a lemon tree that doesn’t have any lemons!
Background: When David (Kipke to the SLN layman) told me about the league and various strategies, he mentioned that Nav ran his SLOR team like a hedge fund. He constantly pushed the cap and paid the luxury tax (they had different hard cap rules) and consistently ran RP deficits (they could go negative). While our SLN rules don’t necessarily allow for this aggressive style of team management, I do think there are a few lessons here that we can unpack.
I am a CPA by trade (even though I hate accounting plz get me out), worked in various accounting/corporate finance roles for close to 10 years and just finished year 1 of a 2 year full time MBA program. So im constantly hearing the business school buzz words / lingo / bullshit and thought it would be fun to take David’s off the cuff comparison of “managing a team like a hedge fund” one step further. On a micro level, I wanted to break down a team into a business that has a balance sheet and give some food for thought why I think hoarding RPs is a pretty dumb game strategy. You may notice that I am constantly at the bottom quarter of the league in RPs and pretty much have been since you fucks stopped voting me for GMOTY (miss those RPs) / had players camp eligible below the age of 34 (RIP 1996 Suns). I wanted to write this article to provoke thought and discussion about RP management. I would love to hear someone lay out an argument for sitting on a mountain of RP at any given time.
Accounting 101 and translating to SLN:
A quick accounting 101 for everyone who is talented enough to work in any other field and is blessed to not know anything about this subject. Each company has a balance sheet composed of Assets, Liabilities, and Equity. The guiding principle in accounting is very simple:
ASSETS = LIABILITIES + EQUITY
I will define each of these 3:
Assets - generally good shit, stuff you have and own, a comprehensive list of everything that adds value to your organization. Like a balance sheet, I will list these in order of liquidity:
- RPs
- First round draft picks
- Second round draft picks (we would probably need to audit JWoo’s books to ensure these type of assets aren’t overstated)
- Players (obviously some of these might be considered liabilities on the court but all players are considered assets for the purpose of this exercise)
Liabilities - generally bad shit, stuff you need to pay to afford all your assets
- Player salary on your books
- Future salary due in coming years
- Upcoming player camps you will have to pay for (probably wouldn’t be listed on an actual BS but we are getting a bit technical and I think it helps illustrate the overarching RP point)
Equity - a bit harder to conceptualize but there are two ways of viewing equity
1.) Book equity - how much capital shareholders put into the business + retained earnings (how much money you have made or lost in prior years)
This definition of equity doesn’t do us any good for my RP point so I thought I would use market equity as my working definition
2.) Market equity - in real life, market equity is defined as the present value of expected future cash flows and it is essentially what the market is trading the company’s stock at any time. Obviously we don’t have variable cash flows, our return is in WINS. So let’s define market equity as the value of expected wins.
Grounding us back to our basic principle:
Assets = Liabilities + Equity
In other words, all the value/resources your organization (picks, RPs, players) = your cap sheet and upcoming RC spend + expected future wins
I think this is logical. We all operate with the same cap constraints so no team can run a huge deficit and take on debt. If a team has a lot of good shit, they have more equity in the form of expected future wins than a team that only has mediocre shit. The goal of the game is to WIN GAMES. Either now or in the future. In other words, the goal of the game is to maximize EQUITY.
SO WHAT IS MY POINT AND HOW DOES THIS HAVE ANYTHING TO DO WITH RP MANAGEMENT?
As stated above, RPs are essentially equivalent to cash in the real world. Businesses deploy cash to invest in projects that hopefully provide more value than they cost, in order to increase equity. Just like in SLN, we strategically use RP to add value to our organizations. Whether this is in the form of reward camps, RFA tags, or trades – RPs serve the exact same purpose as cash in the real world.
However, companies rarely sit on massive amounts of cash. In fact, you can make the argument that sitting on cash is a waste of resources because it could be deployed in ways to invest in the business and return value. What if a company is mature and there aren’t any positive return projects to invest in at the moment? Well that company would at the bare minimum invest in short term cash equivalents that kick off small percentages of interest like money market accounts, commercial paper, treasury bills, etc.
In SLN, we don’t earn interest on RPs. Sitting on a mountain of cash does not add any equity to your company if you don’t deploy it. Having 9,000+ RPs is adding approximately zero future expected wins to your organization. It is downright wasteful and irresponsible. Sure, if you are budgeting for a super camp, RFA tag, etc. I understand hanging on to a couple thousand RPs. But 10,000+??? What is the purpose. Some may call me wasteful for super camping Andre Roberson, I’d argue that was more fiscally responsible than sitting on a mountain of RPs that do not add any equity to my team. Considering the various outcomes of an Andre Roberson SC, I could in turn trade him post super camp for more valuable assets than I acquired him (frenzy ineligible Solomon Jones). Or maybe he pops and is a super useful defensive stopper that adds expected future wins to my organization in equity. Or perhaps he busts and nothing comes out of it and I used 3,200 RPs in a way that did not add equity. I would argue this is the same result as sitting on them.Thus when considering the outcomes, the expected value that an Andre Roberson SC adds to my franchise is more than sitting on them waiting for a rainy day. We get 3000ish RPs each season just by being an active member of the league, the RPs replenish annually unlike cash!
Not spending RPs is literally like having a money tree in your backyard and not using that money to buy anything. Sure it might make you feel good to look out back and admire how many bills are on that tree, but if you don’t use the cash, that money tree is the same as a lemon tree that doesn’t have any lemons!
I wouldn't mind seeing a Milton v. Keynes debate between Weston and Tyler
"It's great to see the Celtics doing well again, 'cause that was so much fun in my day to go to the Boston Garden and get spit at, get things thrown at you and talk about your mom. It sounds like dinner at Kenny Smith's house."
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SWAMP STEVEN
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- Posts: 511
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TALK THAT MACRO SHIT
*DJ DRAMA VOICE* OH YOU HEARD THE RUMORS [GANGSTA GRIZZILLZ] IT’S A MOTHERFUCKIN SWAMPSTORY!
*lighter flick* Never talk to the cops I don’t speak piglatin / I turned the Nets into the motherfuckin Swamp Dragons
*lighter flick* Never talk to the cops I don’t speak piglatin / I turned the Nets into the motherfuckin Swamp Dragons
Dope article! Spending RP has positive externalities folks!!! Do it!!!
Started to read assets = liabilities + equity and bailed
I too know your pain Tyler, sigh
I too know your pain Tyler, sigh
Santa Cruz Warriors NDL Champs: 2008, 2012, 2014
Amazing article! I love shunning the rich. They think holding their money helps when instead you should be cultivating an economy! Tax the rich RP!!
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Happy and sad that you wrote this
Happy because it needed to be said
Sad because this (un)common knowledge is keeping us from ratings inflation!!
Anyone who isn’t spending 6400 RPs a year on camps, and has big reserves, is leaving $ on the table
Happy because it needed to be said
Sad because this (un)common knowledge is keeping us from ratings inflation!!
Anyone who isn’t spending 6400 RPs a year on camps, and has big reserves, is leaving $ on the table
here i was thinking that money trees is the perfect place for shade (that's just how I feel)
yeah but then you can't reply "i don't need rp" when someone is asking you to trade them a fringe FRP quality player
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