A related thread started questioning whether it is worth playing tournaments due to high variance. One way to make tournaments better is to lower the variance by paying more spots and reducing pay at the top.
Tournaments used to be winner take all in the beginning, but as fields got bigger they began to pay more spots due to player demand, but unfortunately, the flattening at the top has not come down nearly enough to match the huge increase in field sizes.
Looking at this years main event at WSOP with 6598 players, a more reasonable top award would be in the $5 million range, not $8.5 million. And paying 12.5% of the field instead of 10% would help keep more player in action as well.
Here is how it could look:
WSOP Flatter
Actual Pay 1/8 Field % Difference
1 $8,527,982 $5,285,727 -38.02%
2 $5,292,889 $4,019,031 -24.07%
3 $3,797,558 $3,073,477 -19.07%
4 $2,850,494 $2,363,986 -17.07%
5 $2,154,616 $1,828,861 -15.12%
6 $1,640,461 $1,423,155 -13.25%
7 $1,257,790 $1,113,972 -11.43%
8 $971,252 $877,125 -9.69%
9 $754,798 $694,752 -7.96%
10-12 $590,442 $553,598 -6.24%
13-15 $465,159 $443,783 -4.60%
16-18 $369,026 $357,911 -3.01%
19-27 $294,601 $290,417 -1.42%
28-36 $236,921 $237,099 0.08%
37-45 $191,646 $194,766 1.63%
46-54 $156,293 $160,987 3.00%
55-63 $128,384 $133,899 4.30%
64-72 $106,056 $112,070 5.67%
73-81 $88,070 $94,394 7.18%
82-90 $73,805 $80,014 8.41%
91-99 $62,021 $68,259 10.06%
100-162 $52,718 $58,608 11.17%
163-234 $44,655 $50,648 13.42%
235-306 $38,453 $44,056 14.57%
307-378 $32,871 $38,574 17.35%
379-450 $28,530 $33,999 19.17%
451-522 $24,808 $30,166 21.60%
523-594 $21,707 $26,945 24.13%
595-666 $19,227 $24,231 26.03%
667-747 $0 $21,939 100.00%
748-825 $0 $20,000 100.00%
Some may think $5 million is "too little" to pay for 1st, but think of all the benefits:
You can afford to pay an extra 159 spots.
Only 27 spots pay less, 798 spots pay more. And odds of a player with an 80% ROI finishing in the top 27 is only once every 120 years or so.
A 10%+ drop in payout only affects 7 players, but a 10%+ increase in payouts affects 735 players.
A whopping 43.9% of the pool is paid to just 9 players out of 6598. Don't kid yourself, this is a lottery structured payout. That drops to 33.3% under the alternative payout. Still a large amount if you think about it.
The gap in pay from 1st to 2nd is unusually large at 1.61x that of 2nd place. All other gaps are usually in the 1.1-1.35 range. This should apply to 1st-2nd as well. The jumps in the alternative payout are generally in the 1.1-1.31 range including only a 1.31x gap from 1st to 2nd.
While the difference from 1st drops by $3.25 million, it only drops by $2.1 million after taxes. (based on USA tax code, single filer status) In fact, all taxes paid by the winners total $14.9 million vs $13.4 million under the alternative payout. This $1.5 million difference may not sound like much, but it amounts to an extra $2331 per player for the 666 players that originally cashed.
The average tax rate drops from 24.14% to 21.64%.(add in vig of 6% and inability of USA players to carry losses forward in losing years, and you can see why many tournament players are going broke)
The ROI for a good player does drop some, but not a whole lot. A player with an 80% ROI now has a 70% ROI. A player with a 41% ROI now has a 35% ROI. But this is offset by a huge decrease in variance. The current variance for the main event drops from 209.37 to 108.45 under the alternative payout.
To put this variance in prospective, the variance on many video poker games is around 25. The variance on blackjack is about 1.1, and if you consider the variance on NL cash games based on buyin amount, it seems to be between 0.4-1.0.
Bottom line, paying more spots and flatter payouts will help to keep more players in action than the current situation.