WSOP interest paid seems too little - WSOP and Tournament Circut

ADBjester · 11-08-2009, 11:15 AM

As posted on PokerNews:

Quote:

Keeping the players in mind, Harrah's deposited the remaining prizepool of $15,847,250 into a risk-free interest-bearing account back on July 16, 2009 up until November 2, 2009. This was the total money left over in the prize pool after each member of the November Nine was paid out ninth-place money ($1,263,602). The remaining money accrued $1,321 in interest and the following amounts have been added to each place.

Does anyone else find the amount of $1,321 to be paltry compared to current interest rates and the time frame?

Money Market rates (as safe as they come) are hovering around 1.6% APY, or 0.13333% per month. The money was held for 3.5 months.

$15,847,000 * 0.13333 * 3.5 = $73,952.

That's a far cry from the $1,321 that Harrah's claims was paid in interest. Was Harrah's just THAT bad at choosing a "risk free investment", or is that number being mis-reported? Or, is there something else afoot?

Jester

PLOLOL · 11-08-2009, 12:38 PM

to find the interest rate :

1321/15847250*360/109 = 0.03%

Safe money market rates are far lower than 1,60%

They obv bought Tbills :

Sameerald · 11-08-2009, 01:57 PM

Quote:

Originally Posted by ADBjester

As posted on PokerNews:

Does anyone else find the amount of $1,321 to be paltry compared to current interest rates and the time frame?

Money Market rates (as safe as they come) are hovering around 1.6% APY, or 0.13333% per month. The money was held for 3.5 months.

$15,847,000 * 0.13333 * 3.5 = $73,952.

That's a far cry from the $1,321 that Harrah's claims was paid in interest. Was Harrah's just THAT bad at choosing a "risk free investment", or is that number being mis-reported? Or, is there something else afoot?

Jester

I agree with OP , Even if the interst rate was 1% and they held the cash for only 3 months it should be at least $39,618. There must be some sort of mistake.

hobokes · 11-09-2009, 12:22 AM

even if they had it in a 1.5% per annum account for 1/4 of a year....

thats still around $6k per player .... harrah's obv stealing interest

**Kevmath** · 11-09-2009, 09:48 AM

It was put into a treasury-only fund.

pig4bill · 11-09-2009, 09:36 PM

Minus Goldman's fees of course.

remmerde · 11-10-2009, 12:09 AM

Quote:

Originally Posted by ADBjester

That's a far cry from the $1,321 that Harrah's claims was paid in interest. Was Harrah's just THAT bad at choosing a "risk free investment", or is that number being mis-reported? Or, is there something else afoot?

Well, there's certainly ignorance afoot in this thread. A 3 month t-bill is the only instrument on the face of the earth that approaches being the described "risk free investment". And that's going to yield 3 or 4 basis points right now, just as PLOLOL tried to explain.

Why would Harrahs take any higher default risk than T-Bills? Just to make $30k? Commerial paper money market, corporate bonds all have higher default risk than US T-Bills, even with Obamanomics.

pig4bill · 11-14-2009, 04:32 AM

Money market funds have no more risk for that relatively small amount than T-bills have. The govt backstopped money market funds several months ago.

But Harrah's, in it's wisdom, decided to hire Goldman Sachs to decide the best place for the investment. And those experts of experts, those Gods of the markets, those smartest of the smart, chose T-bills. I'll bet their fees were more than the interest. But it was worth it! Nobody else could have come up with that solution!

RealMcCoy · 11-14-2009, 11:29 AM

Quote:

Originally Posted by pig4bill

Money market funds have no more risk for that relatively small amount than T-bills have. The govt backstopped money market funds several months ago.

But Harrah's, in it's wisdom, decided to hire Goldman Sachs to decide the best place for the investment. And those experts of experts, those Gods of the markets, those smartest of the smart, chose T-bills. I'll bet their fees were more than the interest. But it was worth it! Nobody else could have come up with that solution!

Just for the record I believe that temporaty guarantee which was initiated in Sept 2008 was allowed to lapse and is no longer in effect. So some degree of increased risk would have would have resulted.

From a pure business perspective Harrah's is certainly going to approach this issue with a major CYA mentality. They are at risk as an organization as a fiduciary of the funds and receive no financial benefit.

I doubt anyone but the Ex Bear Sterns man (Begleiter) gave the idea of interest rate return a second thought anyway. :-)

GLTA