Staking deals and markup. Discussion?

[Doobs]

Some of these numbers in the thread are wrong, including those in at least one of my posts.

I did some maths earlier and I think this is what stakeback means in a single tournament.

If the arrangement is 70/30 including stakeback in a tournament like the DTD £500er, the maths is as follows:

Here, roughly 10% of the field cash, if you cash you are pretty sure to get your entire stake back, so 10% of the prize fund is paying the stakeback.  Hence 90% of the prize fund is money in addition to stakeback.  

So in the long run expected return is (.1*100 + .9* 70) x expected cashes from horse = 73% of expected cashes from horse. This is equivalent to a mark up of around 37%.

Something I had never thought of before is that this changes in something like the sunday million where 15% of the field are paid.

15% of the field cash, if you cash you are pretty sure to get your entire stake back, so 15% of the prize fund is paying the stakeback.  Hence 85% of the prize fund is money in addition to stakeback.

So in the long run expected return is (.15*100 + .85* 70) x expected cashes from horse = 74.5% of expected cashes from horse. This is equivalent to a mark up of around 34%.

Where my maths falls over is what happens if you put up a long list of tournaments offering 70/30 after stakeback.  Here the stakeback is assumed to apply to the whole list.  A lot of the time the staker will get 100% of the prize money because the stakee will cash for less than the entire stake.  Without doing the maths I am guessing that the equivalent mark up here must be significantly less than the 34% above, possibly as low as 20% or so.

So when people said offering 70/30 after stakeback had the potential to mislead then I would have to agree with them, but probably not in the way they intended!

Please feel free to point out any errors in the above.

I think there is at least one more geek point on the above topic which I don't have time to do now.
 
Cheers

[SuuPRlim]

yh pads he is well out of line offering you $1k. Sounds a pretty sick deal for him I could grind and make 50% of everything I win over $8,000 or I could just pay $1,000 and make 100% of everything I make whilst my "friend" is $7,000 out of pocket.

if he can't afford to pay you more than $1,000 and still have a BR to play for himself, then how would have been able to finance his recent $8,000 downswing? Or is he looking for a deal where someone else takes the hit for his losing periods?

[smashedagain]

Can he not continue to play for you until he gets the win that gets him out of make up on the sites he is playing with you and at the same time grind his own money on the other sites.

What would you do in the situation were he played poorly on purpose to try and get deeper and deeper in make up to a point where you would not want to continue the deal and would end the agreement?

[SuuPRlim]

Can he not continue to play for you until he gets the win that gets him out of make up on the sites he is playing with you and at the same time grind his own money on the other sites.

this i spose could be something you could work on. problem is though he is just going to focus really hard on playing on his own money over grinding his MU down (which would reasonably be what anyone would do in such an arrangement)

Maybe pads you could say as long as he plays x hands for you p month he is free to play on a different site on his own money so he can make some cash whilst he is in MU?

[Simon Galloway]

Agree % profit chops whilst in makeup...

[GreekStein]

Agree % profit chops whilst in makeup...

[RED-DOG]

This thread has raised some great points. Lots of people who I respect a great deal offering opinions. I'd like to reply to some of them now from my perspective.

First of all, I should apologise to Dubai for my reaction to the OP. His point is valid and I shouldn't have taken exception to it. I'm prone to biting too quickly and I've been making an effort to change that. On this occasion I failed.

I've never really been rolled for the bigger tournaments, and I've almost always sold a percentage (Usually no more than 50%).

Until recently, I've always sold at even money. It never occurred to me to charge a markup. I just wanted to play a better structured comps for less outlay.

Recently, due to personal circumstances, It became important that I be extra careful about maintaining my 'life roll' and with that in mind, I decided that it would be irresponsible for me to be spending too much on poker. That's no problem for me, I can play small buy-in good structure comps on line, or not play at all. Either way, it's no biggie.

When the Monte Carlo at DTD came along, I had no intention of playing, but then I noticed that someone had sold 100% of themselves at 70/30 with stake back in another comp, and thought it seemed a good idea. I didn't know if anyone would want to buy a piece of me, but I though I would give it a go anyway. I never even gave a thought to the markup, or the value to those having a punt.

I played the MC and had a small cash. When I paid my stakers, they almost all requested an option to buy another piece if I did it again.

So that's how I started with the 70/30. I had no intention of trying to do anyone down. I just didn't think about it like that.

There were one or two other good points that I would like to address.

Someone said that the stakee needs to have some of his own money invested because maybe he wouldn't care or try hard enough if not. Well perhaps that might be true for some, but certainty not for me. I'm the worlds biggest nit, and there's no way I'm giving up my chance of a 30% share of a big cash lightly. What's more, I really really want to make a return for my backers. (Sending someone money is a great feeling).

Even with a 100% 70/30 deal, I still have an investment. Fuel, food & drink works out to ~ £60 / £70 over the two days, not to mention the 20+ hour grind. (Not complaining, just saying).

Someone else asked, 'If you binked, would continue you to ask for a 100% staking?' Well I know it's a minor point, but one that's important to me. I offered shares at 70/30. I don't like to think I asked anyone for anything.

Pedantry aside, if I binked a reasonable amount, then no, of course I wouldn't continue to sell 100%.  I would still feel obliged to offer a % to my stakers, but at a more favourable rate. (If there is a favourable rate, considering my ability).

I'm really torn about the idea of ever doing another 70/30. I've enjoyed them a lot and the rail is great fun if I manage to go deep. But In the grand scheme of things, poker tournaments are of minor importance. I would hate to take advantage of anyone, especially my friends.

[SuuPRlim]

continue to do it imo, you're a top guy and its a lot of fun to buy a piece and sweat you to victory! I know I didn't buy a piece - I tend not to buy too many pieces because I'm so clumsy sorting it and never see the threads in time. I think Dubai's point was more the 70/30 thing really should stay as what it is, nice people punting cheaply on other nice people and not turn into a fashion where people can play big comps for free all the time.

[MANTIS01]

This thread has raised some great points. Lots of people who I respect a great deal offering opinions. I'd like to reply to some of them now from my perspective.

First of all, I should apologise to Dubai for my reaction to the OP. His point is valid and I shouldn't have taken exception to it. I'm prone to biting too quickly and I've been making an effort to change that. On this occasion I failed.

I've never really been rolled for the bigger tournaments, and I've almost always sold a percentage (Usually no more than 50%).

Until recently, I've always sold at even money. It never occurred to me to charge a markup. I just wanted to play a better structured comps for less outlay.

Recently, due to personal circumstances, It became important that I be extra careful about maintaining my 'life roll' and with that in mind, I decided that it would be irresponsible for me to be spending too much on poker. That's no problem for me, I can play small buy-in good structure comps on line, or not play at all. Either way, it's no biggie.

When the Monte Carlo at DTD came along, I had no intention of playing, but then I noticed that someone had sold 100% of themselves at 70/30 with stake back in another comp, and thought it seemed a good idea. I didn't know if anyone would want to buy a piece of me, but I though I would give it a go anyway. I never even gave a thought to the markup, or the value to those having a punt.

I played the MC and had a small cash. When I paid my stakers, they almost all requested an option to buy another piece if I did it again.

So that's how I started with the 70/30. I had no intention of trying to do anyone down. I just didn't think about it like that.

There were one or two other good points that I would like to address.

Someone said that the stakee needs to have some of his own money invested because maybe he wouldn't care or try hard enough if not. Well perhaps that might be true for some, but certainty not for me. I'm the worlds biggest nit, and there's no way I'm giving up my chance of a 30% share of a big cash lightly. What's more, I really really want to make a return for my backers. (Sending someone money is a great feeling).

Even with a 100% 70/30 deal, I still have an investment. Fuel, food & drink works out to ~ £60 / £70 over the two days, not to mention the 20+ hour grind. (Not complaining, just saying).

Someone else asked, 'If you binked, would continue you to ask for a 100% staking?' Well I know it's a minor point, but one that's important to me. I offered shares at 70/30. I don't like to think I asked anyone for anything.

Pedantry aside, if I binked a reasonable amount, then no, of course I wouldn't continue to sell 100%.  I would still feel obliged to offer a % to my stakers, but at a more favourable rate. (If there is a favourable rate, considering my ability).

I'm really torn about the idea of ever doing another 70/30. I've enjoyed them a lot and the rail is great fun if I manage to go deep. But In the grand scheme of things, poker tournaments are of minor importance. I would hate to take advantage of anyone, especially my friends.

So you set up a hot cake stand and snap sold all your produce. Your customers said they wanted more hot cakes when you bake the next batch. But because a couple of guys walked past saying they didn't like the recipe you're thinking about closing the business. Can't believe you're in conflict about this. Trying to please everybody is a tougher business than selling cakes Tom.

[EvilPie]

So you set up a hot cake stand and snap sold all your produce. Your customers said they wanted more hot cakes when you bake the next batch. But because a couple of guys walked past saying they didn't like the recipe you're thinking about closing the business. Can't believe you're in conflict about this. Trying to please everybody is a tougher business than selling cakes Tom.

Not too sure about this analogy Mantis. Let's face it anybody can sell hot cakes.

This one was more to do with the seller rather than the product itself. It takes a special kind of person to sell out of horse shit sandwiches and that's what Tom has admirably achieved.

10% of April's batch please.

[tikay]

So you set up a hot cake stand and snap sold all your produce. Your customers said they wanted more hot cakes when you bake the next batch. But because a couple of guys walked past saying they didn't like the recipe you're thinking about closing the business. Can't believe you're in conflict about this. Trying to please everybody is a tougher business than selling cakes Tom.

Not too sure about this analogy Mantis. Let's face it anybody can sell hot cakes.

This one was more to do with the seller rather than the product itself. It takes a special kind of person to sell out of horse shit sandwiches and that's what Tom has admirably achieved.

10% of April's batch please.

Get in the queue, you never had any last time. Oh, wait.......

[MANTIS01]

So you set up a hot cake stand and snap sold all your produce. Your customers said they wanted more hot cakes when you bake the next batch. But because a couple of guys walked past saying they didn't like the recipe you're thinking about closing the business. Can't believe you're in conflict about this. Trying to please everybody is a tougher business than selling cakes Tom.

Not too sure about this analogy Mantis. Let's face it anybody can sell hot cakes.

This one was more to do with the seller rather than the product itself. It takes a special kind of person to sell out of horse shit sandwiches and that's what Tom has admirably achieved.

10% of April's batch please.

What yo talkin about EvilPie?? Analogy is perfect as usual.

Two hot cake stands side by side selling an identical product. Behind one stand is some fat bloke who looks like he just rolled out of bed and behind the other is a sexy girl with a nice smile. You fancy a cake as yo feeling peckish. The sexy girl hot cakes are 10p more. Same cakes, same recipe, same place, and the fat man sells +ev cakes and the sexy girl does not. So what? I'm buying hot girl cakes at a mark up every frickin time. In fact my analogy hit the nail on the head so well you rightly concluded that when buying something it's often the seller you buy into as often as the product.

[smashedagain]

I reckon the pretty girl could sell her cakes at 2.0 and still sell out.

[leethefish]

i was thinking i really wanted to play the ukipt Nottingham ,and as a one off thought i would put up a staking thread and  do it as 70/30 % copying tom ....don't know now am a bit put off!!

[smashedagain]

i was thinking i really wanted to play the ukipt Nottingham ,and as a one off thought i would put up a staking thread and  do it as 70/30 % copying tom ....don't know now am a bit put off!!

I would like to think that  you will sell out 100% for sure. People know I back  more for sentimental reasons than ROI and as long as I can give you cash in your hand and don't have to do moneybookers, bank transfer or Pokerstars then I will takE 10%  good luck