How Much is a Tournament Satellite Entry worth

Poker players may purchase entries into the "main event" poker tournament for $160. Or players may qualify for the main event tournament by first doing well in a smaller, less-expensive "satellite" tournament. Say that it costs $60 to enter the 10 player satellite, and that, of those players, 3 advance, and 7 are eliminated...

If player A competes in the satellite and wins an entry into the main event, for what price should he be willing to sell his entry to another player? Similarly, if player B did NOT play in the satellite, and wishes to play in the main event, what price should he be willing to pay for player A's entry?

Exclude all other variables. Assume all players are equal in skill and luck. Etc. Thank you!

$160, to both questions. However, because of the hassle of player to player sales and the small risk of fraud, maybe $150-155 would be a fair price.

If there main event is sold out, you might be able to get more.

Hmm...

I suspect you are correct, but I don't see the answer mathematically. Could you elaborate?

Follow up questions: What if the entry to the satellite only cost $10, and not $60. Then, shouldn't player A be willing to sell his entry to the main event for less than $160? At what cost does it become "worth it" to enter the satellite tournament? All other variables (fraud, etc.) excluded.

Thank you.

Quote: dwheatley

$160, to both questions. However, because of the hassle of player to player sales and the small risk of fraud, maybe $150-155 would be a fair price.

If there main event is sold out, you might be able to get more.

If the main event isn't sold out, then why bother paying full price from somebody (and run the risk of it being a fraud of some sort) when you can pay full price for one that you know is legitimate?

Something like this was in the old rec.gambling FAQ's poker section, wasn't it? I think the answer there was along the lines of, you can get about 90% (in this case, $144) for it. Obviously, if the event is sold out, then you can wait until pretty much the last minute and see who's offering what.

i have bought and sold tourney entries before, and i can tell you that it's nowhere near as close to the price as dwheatley says.

if you win a satellite to a $5000 tourn, it would be nice to get $4000 for it.

the actual "value" is $5000, but the sale price is determined by what someone is willing to pay.

Quote: CSerpent

Hmm...

I suspect you are correct, but I don't see the answer mathematically. Could you elaborate?

Follow up questions: What if the entry to the satellite only cost $10, and not $60. Then, shouldn't player A be willing to sell his entry to the main event for less than $160? At what cost does it become "worth it" to enter the satellite tournament? All other variables (fraud, etc.) excluded.

Thank you.

This is totally missing the point.

Say you put up 10 cents and played in a 100,000-person satellite to the WSOP Main Event. Just because you bought in for 10-cents doesn't mean you should sell your $10,000 first prize for less than if you played a 10-person, $1000 satellite. It's worth the same no matter how much the satellite entry was.

I don't think that's true at all. If there are 2 ways to purchase something (a main event entry), 1) buy it, or 2) win it, and the price for winning it (or trying to win it) goes Down, then surely one should be willing to pay Less for a winning entry.

OK, so if you bought a share of AAPL 10 years ago for $50, you should be willing to sell it for $100 today even though it's worth $433? What you paid for it doesn't matter.

This also applies if you bought an antique for $1000 10 years ago, and it's appraised for $100 today. If someone offers you $200 for it, you should sell.

http://en.wikipedia.org/wiki/Sunk_costs

$450 for one $500 tournament chip or $950 for two $500 tournament chips are both fairly common trades.

The satellites happen over and over again. You can play basically as many as you like. Maybe that is causing some confusion.
This is basically the real life situation at the Hard Rock casino, right now, in Tampa, FL. You can play as many $60 satellites as you want, and when you win one, you can play in the next level which costs $160. Or you can sell your entry. Or you can just pay $160 up front, and play.

At the casinos where I've played here in the LA area, there were one table satellite games where a single winner gets "tournament chips" equal to the price of an entry in the main event. For example, if the main event cost $500 the "entry" into the ten seat single table satellite would be $50.

But usually, the last two or three players would "chop" and divvy up the "tournament chips."

When the players would not chop and played down to one winner, he would get all the tournament chips.

Some players play these multiple satellites and win lots of tournament chips and usually other players will pay "full value" for them.

Usually you'd stand at the entry line and simply exchange tournament chips for cash with players in the line. There has never been an objection by casino staff.

The tournament chips have always sold at full value. The winner of the satellites usually tipped the dealer a couple of bucks.

Several casinos here will pay you cash if you win multiple entries into a tournament if you win multiple entries in their satellite tournaments. And if you didn't want the casino's cash, again, the entries could always be exchanged for full value with other players.

The rules will usually state if the you can sell your entry. I have seen it both ways but more often there is no restriction on selling it. If the tournament is a sell out you might get a premium. If there are lots of seats available and people are buying entries then usually a small discount is a good deal for both parties.

The same is true for on-line tournaments. Usually the entry you win can be exchanged for tournament chips which are good for entry to any tournament you have enough chips to enter. They can also be traded to other players at what ever you can negotiate. Some on-line satellites state in the rules that the prize must be accepted as awarded and sometimes even which scheduled satellite it must be used on or it is lost.

Casinos generally don't like players selling their tournament buyin chips because they would rather the person the won the chips use them to buyin while everyone in line pays cash. If the person holding the chips sells them that in theory is 1 less buy-in for the main tournament. However if you don't make a big show about it I've never seen a casino hassle anyone.

There are people that will rack up satellite wins and offload the chips to cash out rather than play the main tournament.

Personally, I don't buy those chips from people because if I'm not familiar with what they are supposed to look like, how do I know I'm not buying fake chips?

Two examples here on explaining "cost" and "worth" of the chips.

First just watch early season "Pawn Stars" episodes where Rick explains whe he can sell at retail buy the seller cannot.

Second is from early in my career a d the company gave out little message slips stating, "this lead cost $50 to generate" as a way to remind salespeople leads were not magic. Once a region manager said it should really say it "cost" $350 based on number off ads you got times standard closing rates. But really that was the "worth" to the company in revenue.

So how does this all relate to value of the seat? First the seat holder will not get retail when the same seat can be purchased at the cage. Second the value is higher than the cost of the satellite seat as value has been added. So negotiation takes place. I would only pay 85% or so of face value and less and less until the tourney started. 10 mins to sit the price may drop to 50%. It is a perishable asset.

I have sold my $500 WSOP lammers for $480 cash when I couldn't get full value. I could often get full value just by reusing them in another satellite. If it is $125 satellite I would just sit down and ask three other people that were buying in for cash if I could take their cash and just use my $500 lammer for the buy in for the four of us. I don't recall anyone ever objecting because it worked out the same for them.

I think I figured this out.

The value of the entry ticket is equal to the lesser of A) the main event entry price, and B) the cost of the satellite divided by the chance of victory in the satellite. So Floor[$160, $60 / 0.3] = Floor[$160, 200] = $160.

So mathematically speaking, players who have advanced from the satellite should not be willing to sell their tickets for anything less than $160. And, it does not pay to enter the satellite. Excluding all other variables.

The premium percentage you pay going the satellite route is equal to the cost of the satellite divided by the chance of victory, divided by the cost of the main event, times 100. So $60 / 0.3 / 160 * 100 = 125%.

The crazy thing is that people are selling their entry tickets for as low as $100.

Quote: CSerpent

The crazy thing is that people are selling their entry tickets for as low as $100.

Not totally crazy. They make a profit and had an enjoyable poker session. Theoretical value is not everything.