Quote:
Originally Posted by timetowom
Well I guess I'm not smart enough for 3rd grade math. Why is what I say wrong?
Ok, one guy backs 2 people in a deal where profits are split 50/50 after makeup. He has to drop one due to financial issues. The backer rates both players similar skill levels with similar ROIs, thus having equal chances of cashing/winning.
Backers bankroll before an upcoming WPT event is 500k
John is 100k in make up
Bob just cashed in an event and is now make up free
Which player to drop?
Well, lets assume each player will cash for 110k in the next 10k that they player.
The backer will get all 110k from John as that's his makeup figure (100k plus 10k buy in)
The backer will get 60k from Bob (50k for half the profits plus his 10k stake back).
110k>60k, thus meaning the player in makeup is of greater value to a backer.
If the backer keeps John, the backers bankroll is now 600k (500k starting, minus 10k for WPT buy in, plus 110k from Johns cash=600k)
If the backer keeps Bob, the backers bankroll is now 550k (500k starting, minus 10k for WPT buy in, plus 60k from John cash=550k)
You cant add in the money lost as you say because it's gone. It's all about what future value the horse brings the backer, and when two players have equal skill the backer is always better keeping the player in makeup bc that player will have to pay the backer a higher % of future cashes.
Just look at it in terms of the backers bankroll- which player will grow the backers bankroll more if they cash in an event. Obviously keeping John will do so since the difference in the backers bankroll would be 600k as compared to 550k with Bob.
Hope that helps you understand.