Quote:
Originally Posted by rje8686
Considerations for STAKING MTT players
References:
Before you consider anything else this must be your primary concern. You don’t want someone running with your money and not playing! The player should be able to provide one or two solid references. Normally post count or date of joining 2+2 will give you a good indication BUT don’t use these facts alone!
Graphs / OPR:
The player should post either OPR links/screenshots or Cash game graphs to show they are a good investment. Anything over 100k hands in cash games is an excellent sample to see if they are a solid player. A sample of 500-1k for mtt’s is ok but the more the better. It’s much harder to correct calculate since MTT’s vary so much.
Key OPR Stats:
Average buy in (ABI)
Does the player have a ABI of $5 yet wants to be staked for $200 MTT’s? Most people who look for staking are doing so to play slightly higher than they are used to hence they need a staking to reduce variance and so they don’t invest too much risk on their current bankroll.
ROI (Return on Investment)
ROI = (Profit / (Prizes–Profit) x 100
The higher the better. If they are below 0% then obviously anything you invest in them (on average) is going to lose you money! These vary wildly but anything above 20% should give you a nice return on your investment with anything above 50% being excellent. Just think if you had this money in a bank you would only make 2-5% if you are lucky. Although the risk is higher the rewards can also be much much better if you select the right players.
A player who has an ROI one site as 60% and the same player has an ROI of 25% on another sites doesn’t mean they have an average ROI of (60+25)/2 = 42.5% Nor does it mean they have one of 60-25=40%.
You must first sum the prizes of both sites and do the same for profit. Then use the above formula to calculate the correct average ROI.
Remember this is NOT set in stone! Any player can have a ROI of 50% one day and suddenly win $200k in the Sunday Million and suddenly have an ROI of >200%.
In The Money (ITM)
Anything above around the 10-12% is normal again the higher the better. This is the percentage of time the player makes the money. Anything above 15% here is excellent.
Mark-up
Mark-up is often applied to stakes where the play feels they have a good ‘edge’ for numerous reasons. Often players with good OPR stats ROI’s of >40%+ will be adding mark-up to their stakes. People who are playing a lot of events maybe 20 tourneys in a series might also add mark-up as they are reducing the variance by playing more tournaments.
Take the example of Player A. He’s got a ton of references and has player over 5k MTTS’s with a return of 60% ROI with an ABI of $45. They want to take a shot at the WCOOP and have decided to play 20 events from $50-100. He has decided that due to his ROI and since he’s playing a lot of events then he should charge a premium on the shares.
Player A is selling at 1.2-1 (A 20% premium). You pay 1.2% of the stake and you get a 1% share of any winnings. In this example every stakeholder should (in the long run) make a 40% on their money (so if you invest $100 on average you should see a return of $140). Since Player A has an average ROI of 60% yet you have paid a 20% premium.
Player B is much better and has an ROI of 96%. He wants to charge 1.3-1 (30% premium). In this case each stake holder should see and average return of 66%. Whilst you may be paying more for each share in the first place however much you invest you are likely to get a higher return.
If you consider both of these the returns are going to be high variance (compared to banks) but if you do your homework you should get much higher returns than any bank will offer you.
Taxes
If you are staking a player for a live event where potential winnings are high it makes a big difference if the player has to pay taxes on the winnings. Find out before hand so you don’t get stung later on. Lots of countries are tax free and offer stakers additional incentive.
Summary
I hope this clears up some of the issues involded in Staking MTT Players. Ofcourse you might just have a good feeling, know the player or just want to gamble in which case good luck and hope you get a share of any profits!
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I'm nearly positive this math is bogus. Think about it. Imagine someone with a %60 ROI selling at 3 to 1. According to this math, if someone buys a share, his average return on investment will be %60 - %200 = -%140. THIS MAKES NO SENSE!!!! THE MAX ONE CAN LOSE IS THE ENTIRE INVESTMENT, not more that that, as this would imply.
The logic here is flawed because it's not the difference between the investment and return that matters, it's
THE RATIO between the investment and return that matters.
The real equation to calculate your average return is (AverageTotalReturn*ReturnRatio)
where the AverageTotalRetun is the amount the player will get back from the poker site i.e.
(investment amount * (1+ROI))
and the ReturnRatio is simply the odds he gives you.
So, for example, someone who buys $100 in shares at 1.2 to 1 from someone who has an average ROI of %60, the average return will be (100*(1+.6))*(1/1.2)
this is $133.333333333 etc. Not $140 as stated in the post. So your average profit will be %33 of your investment, not %40 of your investment.
In the same $100 investment case where the odds are 3 to 1 against you, your average return will be (100*(1+.6))*(1/3) = 53. Certainly more sensible than 100*(-%140) = -40. Once you place your investment, you can't lose more than that.
THIS POST SHOULD BE CORRECTED ASAP. IT'S GIVING OUT FALSE INFORMATION!
***EDIT*** I mispoke. An investor who reads this is not always going to get less in their investment than they expect. Sometimes, in the case of the 3 to 1 odds, they will actually be getting more than they expect. Regardless though, the post is giving out false information and should be corrected.
Last edited by aviynw; 12-21-2010 at 04:35 PM.