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Math Nerds Needed (1 Viewer)

otello

otello

Footballguy
Let's say that you have tickets to a sporting event final (three home games - games 3, 4 and 5 of a best of 7 game series), but your team is currently in the semi final (i.e., they have to win the semi final to get to the final).

There is no guarantee they will get to the final, but someone is willing to offer you guaranteed money now, for your single ticket to games 3, 4 and 5 of the team could participate in if they get there and the best of 7 series final goes at least 5 games), regardless of whether that team actually makes it; in essence guaranteed money.

The offer you have received is currently 1/2 of the net that you would receive if you sold your single ticket to all three games on stub hub, today, net of all fees; mind you, if your team did not make the final, any transactions on stub hub would be voided and you would only get the money back you paid the team for the final tickets when you bought them at the beginning of the playoffs.

Please outline the shark move taking into account:

x = your cost of the final tickets, which you would get refunded by the team if they do not make it

y = the odds that the team will make the final

v = odds that the team gets to the final and the series goes at least five games (i.e., so all three games will be played)

z1 = the net cost of what you, the seller would get, if you sold the ticket to game 3 on stub hub today (remember, if your team makes the final, you get that money; if not, sale is voided)

z2 = the net cost of what you, the seller would get, if you sold the ticket to game 4 on stub hub today (remember, if your team makes the final, you get that money; if not, sale is voided)

z3 = the net cost of what you, the seller would get, if you sold the ticket to game 5 on stub hub today (remember, if your team makes the final AND there is a game 5 (i.e., a third home game), you get that money; if not, sale is voided)

Hedging opportunities to maximize or guarantee you make the most of this opportunity.

What other information would you need to evaluate this offer, which expires the moment the semi-final starts (at which point, the deal could still be made, but it may be on different terms, depending on how game 1 goes)?

How would you approach this situation?

 
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otello said:
How would you approach this situation?
Click to expand...
Money is BS. Keep the tickets, root for your team, if they make it and you're in the building when they win, it will be an experience more valuable than the dollars you're thinking of making. Or just wait and see if they make it and sell them then, you have nothing to lose since you're getting face value back for them anyway.

 
Also, you are out of town for a long planned work trip and can't make the games, otherwise you would go.

 
so the only variables I changed were y and v. I modified y to be the probability that your team makes it and the finals go to game 5 (or later), and v I have as the probability that your team makes the finals but there is no game 5.

v * (z1+z2+z3) + y * (z1+z2) = (z1+z2+z3)*1/2

if we can make the assumption that z1=z2=z3=$1667 (so the sum of z1 z2 z3 is $5000)

v*5000 + y*3333 = 2500

if you told us who the teams were, it would be pretty easy to use implied probabilities from betting markets to get values for v and y.

 
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If you figure the chance of each game winner is 50/50, then there's obviously a 50% chance they make it to the finals.

In the finals, there's a 12.5% chance it ends in 4 games one way or the other (.5^3) so game 5 would be discounted that much further off the 50%. It would happen 50%X87.5% = 43.75%

You gotta figure the fees but that is your starting points so the 50% offer all around is a slight advantage.

The consideration is whether the price will increase further if they make it to the finals. Demand tends to go up when it is more 'for sure'. Prices will drop the day before and day of the event usually. Risk/reward on that decision.

 
right now, one team is favored over the other, but where can you get a survey of odds to win this round?

 
If you take the offer now, and the team doesn't make the finals, do you keep that money AND get the refund for your original purchase of the tickets?

 
otello said:
i

Peyton Marino said:
otello said:
right now, one team is favored over the other, but where can you get a survey of odds to win this round?
Click to expand...
5dimes has cubs to win the series at -145, implied probabilty close to 60%.
Click to expand...
is that a reasonably good number, versus other sites?
Click to expand...
I'd rather get a price from pinnacle but I couldn't find series prices there. I also forgot to take out vig in my probability calc (it's closer to 57%). But yes, 5dimes is a decent gauge for these things.
 
Blue Jays to win 2015 World Series? Yes 2.940 No 1.450

Royals to win 2015 World Series? Yes 4.060 No 1.277

Mets to win 2015 World Series? Yes 5.290 No 1.190

Cubs to win 2015 World Series? Yes 3.540 No 1.338

Blue Jays to win 2015 World Series? Yes +194 No -222

Royals to win 2015 World Series? Yes +306 No -360

Mets to win 2015 World Series? Yes +429 No -525

Cubs to win 2015 World Series? Yes +254 No -295

from pinnacle

 
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yea but those aren't Cubs - Mets series prices, they are odds to win the world series.

If we use the 5D number, waiting to sell comes out to and EV of $2760 vs. an EV of $2500 for selling now. fairly close, but in favor of waiting. even more so if you take into account what MikeMan said about prices inflating once they make it.

 
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Also, if they don't make it, my EV includes the money you get back from the team, whereas if they do, you don't get that money back. How would that change the result?

 
Peyton Marino said:
Personally I would try to find a way to go. You know it's been over 100 years since the Cubs won a World Series, right?
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remember, you are working and will not be in town for the series. You can't go. Also, you weren't born in Chicago, so, while you appreciate all of this, it's not your team.

 
otello said:
Also, if they don't make it, my EV includes the money you get back from the team, whereas if they do, you don't get that money back. How would that change the result?
Click to expand...
If they don't make it, your EV is 0. If they do make it, your EV is the profit you make on the sale. It's assumed that you make back that money you would have received from the team, plus profit. So that was factored in and shouldn't change the result.

 
If the current offer of 1/2 the net profit does not include base ticket cost plus 1/2 net profit (which is what I assumed), then waiting is pretty much a slam dunk (depending on what actual ticket cost is).

 
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Excluding v for the moment (i.e., assume the finals would go 5 games), and setting z = z1+z2+z3 (i.e., assume sell all or none) would these be correct equations?

EVhold = (z * y) – (x * (1-y))

EVsell = z/2 + (x * (1-y))

 
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If those formulas are right, then this is extremely dependent on the value of y

For y <= 0.5, selling is always better; at y = 0.5 they converge when x = 0

For y = 0.6, the EVs are equal when z/x is just under 8.3; selling is better for any ratio below that

For y = 0.7, the convergence is a z/x = 3.0

So the more likely that the team is to reach the finals, the better off you are holding. Which now that I type it out is obvious.

 
heckmanm said:
If those formulas are right, then this is extremely dependent on the value of y

For y <= 0.5, selling is always better; at y = 0.5 they converge when x = 0

For y = 0.6, the EVs are equal when z/x is just under 8.3; selling is better for any ratio below that

For y = 0.7, the convergence is a z/x = 3.0

So the more likely that the team is to reach the finals, the better off you are holding. Which now that I type it out is obvious.
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Keep in mind that you can counter as the buyer understands that the favorite should skew what he pays to a higher amount (i.e., over 50%). In that case, instead of 50%, what should you ask for?

 
Peyton Marino said:
so is this some sort of Socratic method thought experiment that you already know the answer to?
Click to expand...
No. You are in a real time situation.

Keep in mind also that, on stub hub, the list price is, for example, $100, he would pay $120 on stubhub, and I would net $90 from stub hub (roughly). He is basing his 50% on the $90 you would net, as opposed to what he would pay. So, not only can one counter based on the EV that the Cubs get to the series (50 vs 60%), but also that the haircut off of an amount closer to 120 rather than 90, or somewhere in between. Make sense?

 
Classic case of "don't overthink this." The math is there in the thread but the real question should be which would make you more upset:

- Selling now and finding out later you could have gotten more?

or

- Holding and ending up with next to nothing since you held?

Whichever is more palatable is the one for you irrespective of the math.

 
So

Jayded said:
Classic case of "don't overthink this." The math is there in the thread but the real question should be which would make you more upset:

- Selling now and finding out later you could have gotten more?

or

- Holding and ending up with next to nothing since you held?

Whichever is more palatable is the one for you irrespective of the math.
Click to expand...
I want to make sure that the final number takes into account the current market for tickets and the likelihood that the team makes it to the series. If they don't make it, remember, you get paid a set amount from this guy, plus the money back from the team.

 
How is World Series history at odds with basic math?

Assuming that the two teams are evenly matched, simple probability yields the following chances for the number of games in the World Series:

# games​
% chance​
4​
12.5​
5​
25​
6​
31.25​
7​
31.25​

However, in the last 50 years' worth of World Series (1952-2002), the actual percentages of World Series game lengths were:

# games​
% chance​
4​
16​
5​
16​
6​
20​
7​
48​

https://www.insidescience.org/content/are-7-game-world-series-more-common-expected/681

 
thinking of countering, taking into account 60% likelihood that cubs advance, 85% likelihood, based on history, there is a game 5, and that the final amount is priced off of a higher starting amount (i.e., between what one would get and he would pay)

 
otello said:
heckmanm said:
If those formulas are right, then this is extremely dependent on the value of y

For y <= 0.5, selling is always better; at y = 0.5 they converge when x = 0

For y = 0.6, the EVs are equal when z/x is just under 8.3; selling is better for any ratio below that

For y = 0.7, the convergence is a z/x = 3.0

So the more likely that the team is to reach the finals, the better off you are holding. Which now that I type it out is obvious.
Click to expand...
Keep in mind that you can counter as the buyer understands that the favorite should skew what he pays to a higher amount (i.e., over 50%). In that case, instead of 50%, what should you ask for?
Click to expand...
OK, so assuming you should sell when EVsell > EVhold and substituting w for the 50% figure in the initial offer

[SIZE=10.5pt]EV[/SIZE]hold[SIZE=10.5pt] = (z * y) – (x * (1-y))[/SIZE]

[SIZE=10.5pt]EVsell = (z * w) + (x * (1-y))[/SIZE]

[SIZE=10.5pt]EVsell > EVhold[/SIZE]

[SIZE=10.5pt](zw) + (x * (1-y)) > (zy) – (x * (1-y))[/SIZE]

[SIZE=10.5pt](zw) > (zy) - (x * (1-y)) - (x * (1-y))[/SIZE]

[SIZE=10.5pt]zw > zy - (x - xy) - (x - xy)[/SIZE]

[SIZE=10.5pt]zw > zy - 2(x - xy)[/SIZE]

[SIZE=10.5pt]zw > zy - 2x - 2xy[/SIZE]

[SIZE=10.5pt]w > (zy - 2x - 2xy) / z[/SIZE]

The percentage offered (w) would need to be higher than [SIZE=10.5pt](zy - 2x - 2xy) / z[/SIZE]

[SIZE=10.5pt](Where, as noted in the OP, x and z are the known cost of tickets and known/assumed StubHub proceeds, and y is the probability of the team reaching the finals)[/SIZE]

 
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Guy is backing away from his offer; thinks prices will drop. Even if you agree to price off net proceeds to seller, which benefits the buyer, the 50% discount is another benefit to buyer, given that cubs are 60% favorite to advance.

 
otello said:
Guy is backing away from his offer; thinks prices will drop. Even if you agree to price off net proceeds to seller, which benefits the buyer, the 50% discount is another benefit to buyer, given that cubs are 60% favorite to advance.
Click to expand...
:oldunsure:

 
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