The Invitational tournament has started and is currently mid-way through the game with year 15 results completed.
While some of the industries are rather competitive, there has been some, how shall I put it, “interesting” results in a few of them. In one industry, every team was losing money except one, and that team was in first place with only 40 cents per share. In other words, the industry as a whole had a negative EPS and ROE.
Many common mistakes abound such as overbidding on celebrities and over-expanding with poor credit. It’s rather sad when the banks and celebrities are making more income from the shoe companies than they are earning for themselves. Have these students learned nothing from their classes in economics, accounting, and finance?
Overbidding for celebrities is the most frequent cause for a team to immediately drop to last place in the following year. Celebrities aren’t actually worth very much to any team in the first half of the game, where everyone has similar capacity with relatively low demand and production capacity. Celebrity bids should be based on their actual marketing value to the company over the term of the contract, not based on outbidding other teams.
Students seem to overestimate the value of celebrities for some reason. There have been many Grand Champions who have won the game without “winning” a single celebrity, such as when other teams are overbidding for the whole game. Paying more than a celebrity is worth doesn’t help a team win in any way whatsoever. If you don’t know how to figure what a celebrity is worth to your company, then DON’T BID.