[ View Thread ] [ Post Response ] [ Return to Index ] [ Read Prev Msg ] [ Read Next Msg ]

BGonline.org Forums

buy-backs and ROI

Posted By: Taper_Mike
Date: Friday, 8 February 2013, at 3:53 a.m.

In Response To: buy-backs and ROI (Tad Bright)

Buy-back calculations are straightforward, but cumbersome.

First off, as Bob Koca implies, if there is no Consolation Flight, then the fair buy-back price is the same as the original entry fee. This assumes the structure of the tournament for an original entrant is the same as it is for a player who makes a buy-back.

When there is a Consolation Flight, however, then a player who loses in the opening round of the Main Flight still has some equity in the tournament. That is because he has the potential to cash in the Consolation. When the price paid for that equity is subtracted from the original entry fee, you arrive at the fair buy-back price.

Actually, it is a two-step process. When there are byes awarded in the first round of the Main Flight, then a player who does not win one has already lost some equity compared to the player who still has a chance to get one. After that, he must sit down to his opening round match. In losing that match, he loses equity for the second time. Only then is he is entered in the Consolation Flight, perhaps with a chance for a bye in the first round there. His equity before the draw for byes in the Consolation is the equity that must be subtracted from his initial equity to determine how much equity he has surrendered.

Let’s define these variables:

F = original entry fee
M = equity (in dollars) of a player before the initial draw in Round 1 of the Main Flight
C = equity (in dollars) of a player before the initial draw in Round 1 of the Consolation Flight
B = fair buy-back price

Then,

B = F * (M - C) / M

Of course, when there is no Consolation, then C = 0, and the fair buy-back price is F. Because M and C already factor in the rake (if any), there is no need to explicitly reference it in the equations above. More precisely, it cancels out in the division above.

The relative skills of the player versus the field are generally ignored. Buy-back calculations are based on the assumption that a player has a 50% chance to win any match. It is a simple matter to alter that percentage if desired.

Interestingly, the number of players originally entering a tournament and the number who make buy-backs both strongly influence the fair price of a buy-back. That is because those numbers determine how many byes will be awarded at each level.

Mike

Messages In This Thread

 

Post Response
Your Name:
Your E-Mail Address:
Subject:
Message:

If necessary, enter your password below:

Password:
 

 

[ View Thread ] [ Post Response ] [ Return to Index ] [ Read Prev Msg ] [ Read Next Msg ]

BGonline.org Forums is maintained by Stick with WebBBS 5.12.