1. Two common methods to sell short-term action.

    Markup is the percentage that is an a added premium to the list value of a tournament or tournament package.

    Example - Player A posts a package of $2,000 and wants to sell 50% of his action. He decides on a mark-up rate of 1.2 (or a 20% premium) and therefore is asking for $1,200 for the 50%. He can break this up into pieces where each 1% would cost $24 ($2,000 * 1.2 X 1%). Effectively, player A only pays 40% of his package, but if he wins, he receives 50% of the profit. Any cashes would then subsequently be split on a gross basis. So if Player A cashed for $5,000 he would keep $2,500 for himself and payout $2,500 to all his investors. If Player A cashed for $1,000 he would keep $500 for himself and payout $500 to his investors.

    Another method is just using a split such as 70/30 with the original stake being paid back.

    Example - Player B posts a package of $2,000 and wants to sell 100% of his action with the original stake funds being paid back before profits are split up. He decides on of 70/30 split for each share and therefore is asking for $2,000 in total for 70% of his profits. If Player B wins $5,000 in the tournament, he would first payout the $1,000 buy-in and split the remaining $4,000 in a 70/30 split. Therefore he would pay out in this example $1,000 + $2,800 or $3,800. If Player B cashed for $1,000 in this example, he would pay entire amount out to his investors.
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  2. ok...so would anyone be willing to give me an easier explanation? Im very new at this and kinda need a "Staking for Dummies" approach.
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  3. you sell action and split based off the pre-determined percentage. 70/30 is not a good staking agreement in the previous example imo. basically you sell you action then pay out your investors based off the amount they bought of action. for instance if i sell 100% of my action for a tourney and agree to a 50/50 split. then my profits will be split 50/50, however, you also have to return the stake. so say i get 1k staked to me and end up winning the tourney for 7500. i would return the 1k stake leaving 6500 then this would be chopped 50/50 as well for 3250 to myself and my investor(s). Hope that helps.
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  4. 50/50 is a horrible cut for the investor on just one tournament or a group of tournaments. This is typically the cut in a long-term arrangement with make-up. Basically a player would have to have a long-term 100% roi for 50/50 to ever be profitable for the backer, this is without even considering taxes. Backers won't have an expectation to make money even at 70/30 and the example if meant to be more realistic to be fair for backers buying action in profitable players should have been closer to 85/15 rather than 70/30.
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  5. I cant understand the math about the part where you talk about premiums, what would the equation be for like $20 stake and 10% premium?
    Edited By: StrugLife Nov 27th, 2014 at 12:35 AM
     
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  6. i have a question in my mind,
    what if somebody got stacking 100% and lose in all tourney because of tilt then what about the investors?
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  7. Is the buyin rake normally included when selling pieces?

    For exmaple:
    I was thinking about selling for a $1,000 buyin but it is actually $1,115 with the rake. So should 1% be $10 or $11.15?

    Thanks
    Chris
     
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  8. hey bro that should be 11.15$ as per the rule, why should you pay the extra cost associated with it.
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  9. What if I sell my actions on a 70/30 schema and I don't make the money?
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  10. Man I have been playing poker for years, sold action and played as a backed player, and I'm quite confused from this explanation.

    In the second example "Player B" sells a $2,000 package, but is only investing $1,000 later in the example. He's also selling as a 70/30 split, but you claim 80% goes to investors, rather than 70%. Have I missed something or is this an error?
     
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