WSOP BACKER DEAL

[Greg (FossilMan)]

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And the deal that Moovyz got is fantastic and so good for him, it's amazing. And that has nothing to do with him, it would be a great deal for Negreanu, Greenstein, Brunson, you, me, anybody. Playing for half the win with no financial risk in only 1 event is a huge -EV deal for the backer.

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This implies that not even the best player in the world can expect to have an roi of over 100% in the long run. In an event as big as the WSOP ME, surely there must be several dozen players that are worth 2 to 3 times the buyin, and maybe a few that are worth a lot more. Saying any deal where the backer needs the player to have a 100% roi to break even is -ev seems wrong to me.

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No, it does not. There is a big difference between backing a player who has a 100% ROI over the long run, and backing the same player for 1 event.

Most tourneys pay about 10% of the field. To simplify things, let's discuss a 50 player field, paying 5 spots. Here is the pay schedule for Foxwoods if 50 enter a tourney. 45%, 25%, 15%, 10%, 5%. We'll ignore the vig, again for simplicity, but keep in mind that the deal will be worse for the backer with a vig included.

To get his 100% ROI, let's say this player you're backing will win this event twice every 50 tries, as well as place in each spot, 2nd-5th, twice each. If you enter him 50 times, his average result will be 10 money finishes, and his ROI will be exactly 100%. If you add up these wins and losses, and then split the total win, you'll both be ahead by about 25 entry fees.

But let's say that you and he settle up after each individual event. And let's put a price tag of $200 on each event. At that price, the prize pool is $10K, and if he finishes in the money, he will get paid $4500, $2500, $1500, $1000, or $500.

Twice he wins, getting paid $4500, for a profit of $4300, and you as the backer win $2150 twice, for a net of $4300. Twice he is 2nd, getting paid $2500, for a profit of $2300, and you as the backer win $1150 twice, for a net of $2300. Twice he is 3rd, getting paid $1500, for a profit of $1300, and you as the backer win $650 twice, for a net of $1300. Twice he is 4th, getting paid $1000, for a profit of $800, and you as the backer win $400 twice, for a net of $800. Twice he is 5th, getting paid $500, for a profit of $300, and you as the backer win $150 twice, for a net of $300.

Of the 50 times you entered him, he cashed 10 times, and won you a total of $9000. 40 times he failed to cash, and you lost $200 each time, or $8000 total. Oh wait, I'm wrong, you made a profit of $1000 for backing him 50 times, or $20 per attempt, while he made a profit of $9000, or $180 per attempt. Of course, if there had been a vig, let's say $20 per event, that would have cost an extra $1000. Some of that would have come out of the player's end on the 10 wins, but most of it would be paid by the backer, and now his $1000 profit is down to just about zero.

And this is a player with a 100% ROI if playing for himself. And it highlights the HUGE difference between backing a player for a cumulative total over a long series of events, and backing the same player for 1 event. In the above example, backing the player over 50 events with the total win being cumulative, made for a good investment for the backer, while backing the player for a series of individual events turned the investment into a tiny winner, at best.

And none of the above takes variance into account at all. I am sure that doing so would make this an even worse investment for the backer.

Later, Greg Raymer (FossilMan)

[Moovyz]

Greg,
Thanks for this response. It was well thought out and calculated. To sum it up...in short, you're saying that a "Break-even" player (return of 100%) will just be basically a break-even deal for the backer. Fair enough.

I've never been just a break even player. I cashed in 28% of tournies enterred (granted they were smaller events, but then again, I think my game has improved over the past 2 years) and in those 28% cashes, I won the events 40% (granted this was probably a slight deviation from normal) because I've always played my best when the final table begins.

Now I admit that this is a small sampling < 100 events.
But I've been making money in live games for more than 25 years, tournies for more than 6 years and NL is easily my stongest game (as I feel it is yours as well Greg).

I agree that it would be a better deal for the backer to "put me in" all year. But there isn't enough money and I don't have the time, right now, to play all year. Deviation is the key. If I run bad, it's a bad deal. If I run average or better than average, It could be a very lucrative deal for both. And let's not cancel out the "hungry" factor. I feel I'm at a level of thinking in the game that I've never been at before. I truly "expect" to do well. Time will tell.

[drewjustdrew]

Yes it is Form 5754

[TomCollins]

100% ROI is a phenomenomal player, not break even. You have a +EV of $10,000 for the WSOP with 100% ROI.

[Vincent Lepore]

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you're saying that a "Break-even" player (return of 100%)

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Am I missing something here. Doesn't a %100 ROI mean that if you invest $100 you recieve $200 thus earning $100% not breaking even.

Vince

[Moovyz]

Sorry, my mistake. Thanks for the clarification.

[M.B.E.]

Suppose a player has 106% ROI in a $1,500 WSOP event. A backer pays the whole entry fee, with any prize being split 50/50. As the tournament starts, the total equity of the two of them is $3,090, of which $1,545 is the backer's share. So the backer has EV on the deal of +$45. The player has EV of +$1,545 on this transaction, but her EV would have been +$1,590 if she had bought in to the tourney herself without the backing arrangement.

If the player is broke then this is a terrific deal for the player; from the backer's perspective it is +EV but he should be able to negotiate much better terms.

If the player has a huge bankroll relative to the buyin, then it isn't a good deal for the player, because why give up even $45 of EV? For the backer it would be a fair deal.

In any event ZeeJustin is correct that if the player has ROI greater than 100%, a deal in those terms is +EV for the backer. But whether that makes the deal "fair" depends on other factors.