moose
After reading your lengthy post, you seem to have confused potential winnings and equity, and also equity and markup. A BAP is based on the cost of entry, not potential winnings because the prize pool is generated from the buyins and therefore your equity in the tournament is equal to your buyin. Just because you plan to win a satellite and use the funds to enter a larger tourney may increase the potential winnings but it does not change the equity at all. Your chances of cashing overall remain the same. It would be the equivalent of OLG having variable pricing on LottoMax based on the size of the prize pool. You simply can not charge a higher price just because the potential winnings are higher. You may think that it provides added value but it does not.
Your markup represents that your chances of cashing is better than the rest of the field and therefore represents added value. Markup is not related to equity at all. If anything, your risk is higher because winning a satellite does not provide any cash out to the BAPers and depends on you subsequently cashing. Instead you propose to charge a premium as if your chances suddenly improve, just because you win a satellite ticket.
pkrfce9
moose;397864 wroteA BAP is based on the cost of entry, not potential winnings because the prize pool is generated from the buyins and therefore your equity in the tournament is equal to your buyin.
Don't forget to factor the rake into all this. Higher rake makes a game harder to beat.
moose;397864 wrote
Just because you plan to win a satellite and use the funds to enter a larger tourney may increase the potential winnings but it does not change the equity at all. Your chances of cashing overall remain the same.
Good point.
moose;397864 wrote
Your markup represents that your chances of cashing is better than the rest of the field and therefore represents added value.
I add the rake and markup together and try to see if this investment has a good chance to be profitable. Like if all I ever did was invest in these, would I show a profit over 10 years?
So boil it all down and your bap to the main seems like it has a reasonable chance to be profitable for investors with rake and markup being < 15% I think, coupled with the idea that you are a better than average player.
With your satellite bap I can't see this being long term profitable for investors. I don't know what the pros can charge for markup but I would be surprised if they could get this much. I look at the rake on the satellite and main, the staff gratuity and add in the markup to get an idea of the overall 'rake'. Then I try to determine if it can be profitable, given the player.
Anyway, you are a good tourney player and a better investment than others. Good luck.
compuease
Can't we all just get along!!
For the record, I disliked Moose's original post and Irunit's response but do agree in principle with Moose's and pkrfce's subsequent explanation, just not the way Moose originally made his point, it was a little harsh imo..
I don't recall anyone mocking you but the consensus at the table certainly was questionable re the way you structured the bap...
I agree you can charge whatever markup you want on an individual tournament and it's up to the individual investor to decide on value provided thereof, however marking up a satellite based on perceived winnings in the main is just not right. I have bapped satellite's before, no markup at all just to reduce variance, but cannot justify any more than your standard markup would be if you were buying directly into the main.
moose
Rake reduces everyone's equity. By entering a tournament that has 10% rake means you must feel you are already 10% better than the field. Adding markup reduces the BAPers equity and increases the player's. Having confidence in oneself is great but show a little humility.
Providing a BAP reduces your variance and benefits you. Charging a markup for people to provide that benefit is just greed and is not of added value unless you feel that somehow you are severely underestimating your chances of cashing over the field. Pros can charge a markup because they have a demonstratable track record of profitability. Providing a lengthy post about playing well and running bad as justification for your markup is just silly. Pros can afford to buy into a tournament directly too but do equity swaps and a sell action not out of the goodness of their hearts but to reduce their variance.
People like to participate in BAPs on this forum because they do support your dreams and are trying to help you get there. To claim otherwise and say that people spit on players with dreams is ridiculous. This isn't Mean Girls. There isn't a group out there out to get you and trying to drag you down.
I made the post because I felt you should know what a group of poker players, just as experienced, if not more than you were saying about your BAP. Mostly because I at least have the integrity to tell you to your face and also because if you do want people to help you in your dreams that you have to adjust your thinking.
compuease
To be honest I think that most of the bap's on here are more for the interest in following the progress via regular updates, twitter, etc not because anyone, either buyer or seller, are really gaining much else. That's the way it used to be but the trend in the last few years has changed, the updates are few and far between, if we get them at all. I would like to see people providing baps on here to try and provide better updates, write ups, etc. Some do excellent ones, we all know who they are, but some just give a result, if we're lucky..
pkrfce9
I like the points about supporting dreams and wanting to follow the updates, etc.
You really can't put a price on those with my economic model but they certainly have value.
This is a useful discussion.
Card Dead
Since I got dragged into this, my official opinion is as follows:
The effective rake to your investors is 33% (10% event rake + 23% MU). This means that you have to have an average cash out about $2000, 1 out of 3 times, for people to break even on your BAP.
Based on your post, you do not have the track record for people to break even on this model. Even players with much longer and stronger tournament careers do not charge this kind on MU. Look at DJS BAP - no extra MU for the $275 satty. Even if you feel you have a 60% chance of getting thru the satellites and a 30% chance of cashing in the mains, that only puts you at cashing 18% of the time.
So while I don't necessarily think you're trying to rip people off on purpose, it definitely seems like a case of overconfidence at the least, which is where most of the disbelief originated.
pkrfce9
I spoke to alex about this at some length yesterday. I can see his point that this is a cheap way for someone to have a chance at a big score. Kind of along the lines of buying a lottery ticket but a lot nicer odds.
I think if I was selling action on a satellite I could justify charging a mu since it would take a lot of my time and effort to get to 2 separate events to potentially make $$$ for my supporters. At this point I'm happy to have any support at all until I can show consistent results but that is another story.
Like alex said, if you are interested, that's his price because he doesn't really need to sell any of his satellite action. And that is fine. Take it or leave it. I don't think he's doing a hard sell on this.
The markup on his main event action seems very reasonable to me. From the way I saw him build his stack early on at Rama, the kid has a decent shot to do well.
Wetts1012
Here's the real investor problem in all of this:
If your roll is such that you have to BAP a satellite, your comfort level in the target event has an assumption of discomfort. This intuitively reduces your ROI. In this case you have 2 options.
1) BAP the satty and transfer the % purchased over to the target event. This is advantageous for the buyer, sure, but the seller is the one that can't manage full buyin.
2) BAP the satty and don't play the target event, selling the seat and paying out on the profit. This is less enticing as a buyer because my investment ceiling is capped.
What's been proposed has some logic behind it, but it's flawed and is a poor buyer environment.
pkrfce9
Card Dead;397940 wroteThe effective rake to your investors is 33% (10% event rake + 23% MU). This means that you have to have an average cash out about $2000, 1 out of 3 times, for people to break even on your BAP.
I question this math too. What about rake on the satellite? I thought the whole thing was higher but I haven't dug into this.
Card Dead
pkrfce9;397943 wroteI question this math too. What about rake on the satellite? I thought the whole thing was higher but I haven't dug into this.
You only pay rake once - on the satty. The rake on the ME is included in your satty winnings. Rake on both super sattys and MEs is 10%, not including staff gratuities.
Bfillmaff
OK I'll post for sake of discussion.
The rake is 1.1 and the markup is 1.5. Together it is 1.65
Math: $1237 = $750 x 1.65
The equity (ignoring skill) is based on the amount of $ going into the prize pool, which is $750. That number includes:
-the chance of busting the sat
-the chance of winning the sat, but not cashing in the main
-the chance of winning the sat, and cashing in the main.
You are correct in thinking that by winning the satellite you increase your equity - but the investors equity also includes this potential, and will grow with it equally. Likewise, if you bust the satellite, the investors share is lost. In the advertised BAP, if you do bust the satellite (which will happen a good 70%+ of the time) they come out behind having already pre-paid for the *perceived* additional equity you would have had in the main.
That means in the case of a 10% share, a BAP'ers $123.70 investment is worth only $75 in actual equity.
I didn't post this earlier because it's your BAP and I fully support your right to charge whatever the hell you want... (and if you can sell some at that price, even better!)... but you cannot expect us not to talk about it as those #'s are absolutely crazy. Any mocking or fun at your expense was simply good clean fun during a home game, and never intended as a call out by any means. That includes moose's post which is simply some expert level ball-busting, which I thought it was hilarious.
Sorry that it turned in to this, but I think it was just a misunderstanding. As comp says "can't we all just get along!!"
See you at the next home game.
Andrew
moose
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via Imgflip Meme Maker
Bfillmaff
I want royalties on that avatar moose. In the meantime, please study the below and figure out where you went wrong:
moose
That's awesome. BTW I think I bust yours more than anyones. Let me know where I am on the chart.
Bfillmaff
moose;397961 wroteThat's awesome. BTW I think I bust yours more than anyones. Let me know where I am on the chart.
moose
4th isn't bad
Card Dead
Hey [MENTION=11540]Bfillmaff[/MENTION], what happened to the flow chart?
It was the best part of this thread, which should, btw, be posted in the HOF! 😂
Bfillmaff
The memories... anybody heard from Alex?
*Can't remember... was this the chart?
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Card Dead
The one and only! Still makes me 😂.
I spoke to Alex a few times last year but have lost touch with him again since. He had a lot going on at that time, but we did agree to move forward in a friendly and cordial manner.