Quote:
Originally Posted by OMGClayDol
if two equally skilled players sell to main even but one has to travel from iceland and one is just in Vegas doesn't mean investors should pay more for the Icelandic guy if their actual EV roi is the same.
This is true, but the flip side is that the Icelandic guy should be selling higher if their EV is the same. Investors are only one party in the transaction.
Let's say the Icelandic guy's travel expenses amount to 2500 and each player's ROI is 50% in the main event. If each player sells at 1.25 (an even split for investors and player) the Icelandic guy is now wasting a week of his life and the Vegas reg is making 2.5K.
In reality of course the split should not be 50/50 between horse and backer. Let's say, for sake of argument, a backer should take 10% of the profit from the tournament. The Icelandic guy is making 2.5K and the Vegas reg is making 5K, so the Vegas reg should sell at 1.45 and the investors pay $145 for $150 of equity per percent, and the Icelandic reg should sell at 1.475 and investors pay $147.50 for $150 of equity per percent.
The obvious problem here for the Icelandic horse is that the Vegas reg is a better deal, and if the marketplace was full of perfect information and unlimited action he would never get backed, but in reality it's not and both players would be good investments (disclaimer: I know nothing about how Icelandic tax laws work).
I don't know why everyone thinks that the cost of playing the tournament outside of the buy-in should borne by the horse and only the horse, and never priced into packages. That's absurd and unfair to the horse. What should actually happen is that players for whom the tournament is more expensive end up being less profitable in the tournament than another player of the same ROI. The Icelandic player is paying $12500 to enter a tournament that the Vegas player is paying $10000 to enter, so his practical ROI is worse, even if his edge over the field is the same.