Market Madness (new kind of March Madness Pool)

[Green Caesar]

This looks like an interesting FREE pool. It is hosted on the RotoGuru site. I went ahead and created a division for us called "FOF Central" The password to join is trout

The rules can be found here
Contest login site can be found here

The Basics

The general framework of the contest requires you to buy and sell units. Each unit reflects the tournament performance of one or more teams.

Each of the 64 teams in the NCAA men's basketball tournament will be represented by a team unit. (Technically, these "team units" are fantasy sports derivatives contracts, denominated in GuruDollars, or G$ for short. GuruDollars are the only currency that will matter in this contest. Unfortunately, GuruDollars are absolutely worthless elsewhere. But I digress...)

In addition, there will be a number of "basket units", which provide the performance of a group of teams. There will be 16 seed baskets (each representing all four teams at each seed value), and there will also be a conference basket for each conference that is represented by at least three teams. Each unit will have a stated price - in G$. Entrants must sell short 10 different units. (Selling a unit short is like betting against the underlying team(s).) When you short sell a unit, you collect its price in GuruDollars. These GuruDollars can then be spent to buy as many as 10 units. (When you buy a unit, you're essentially betting on it, rather than against it.) Any GuruDollars that you don't spend you get to keep. Your units plus any residual G$ are your contest portfolio.

Each team will generate winnings or incur charges as the tournament unfolds. If you own a team unit (in the financial world, this is referred to as being "long" the team), you collect all winnings, but pay all charges. But if you have shorted the team, then you must pay the cost of any winnings, although you do get to collect any charges. Essentially, the cash flows for a short position are equal in size, but opposite in direction to those for a long position. Basket units provide the sum of the cash flows for the represented teams. The contest winner will be the entrant with the most GuruDollars at the end of the tournament. (The units themselves have no residual value once the tournament is over, so the only thing of lasting value will be your stash of G$.)

It is a nice change of pace form the standard pools out there. It is also fun to pick against a certain team or entire conference and get rewarded for doing so.

[Green Caesar]

Dola

Some more info on this pool

Scoring

Each game in the tournament will result in a winning payment for (you guessed it) the winning team. The amount of the winning payment will depend on the seeding of the two competing teams. The formula for the winning team's payment will be the greater of the following two values:

• the value of its own seed
• 17 minus the value of the losing team's seed.

An example should clarify this. Suppose, in the second round of the tournament, a team seeded #1 beats a team seeded #8. The winning team will collect G$9, calculated as the greater of its own seed (1) or 17 minus the loser's seed (17-8). However, if the #8 seed beats the #1 seed, then the #8 seeded team will win G$16, which is the greater of its seed (8) or 17 minus the loser's seed (17-1). Piece of cake!

How about charges? If the loser is beaten by a team with an equal or better seeding, then there will be no charge to the losing team. But if the loser is beaten by an underdog, then the losing team will be charged the same amount that the winning team wins. Using the same examples as before, if #1 beats #8, there is no charge to #8, since that team was expected to lose. But if #8 beats #1, then the #1 team is charged G$16. Anyone who is long that losing #1 team will be charged G$16, but anyone who is short that team will collect G$16. Still with me, or is your brain starting to cramp?

On to bonuses. If the tournament selection committee gets the seeding right, all four #1 seeds should get to the final four. (However, that's never happened in the tournament's history.) In this contest, if a team seeded other than #1 gets to the final four, that team receives a bonus payment, equal to 10 times its seed value. So, a #2 seed would receive a G$20 bonus, a #9 seed would receive a G$90 bonus, yada-yada-yada. A #1 seed receives no bonus for making it to the final four, though, since #1 seeds are supposed to get there. However, there is still one more bonus payment left, and all teams are eligible. The tournament winner receives a bonus payment (a second bonus, if it's not a #1 seed). The basic formula is the same: 10 times the winner's seed. So, a #1 seed will receive a G$10 bonus for winning it all. But a #2 seed would get two bonuses - one G$20 for making it to the final four, and a second bonus of G$20 for winning it all - for total bonus payments of G$40. If a team seeded #16 wins it all, it would receive G$320 (2 bonuses of G$160 each). But I doubt that'll happen.

That's all there is to it. As each game is completed, your portfolio value will go up or down depending on the game's result and its related winnings, charges, and/or bonuses. If you do really crappy (or is it crappily?), your portfolio value could even go negative. That's not a problem. (You won't win the grand prize, but your G$ credit is good with me. Why not? I can just create more!)

Strategy

The object is to buy the highest-returning winners, and sell short the worst-returning losers. If you can pick an underdog that wins a few games, or even a Cinderella team that makes it into the final four, that could provide a bigger bonanza than correctly picking a #1 seed to win it all.

Each team will be priced approximately equal to its expected value, based upon historical results for each seed and a double-top-secret proprietary pricing model which I have used to price similar derivatives markets in years past. Former business associates of the Guru will know what I'm talking about. (March was never one of my more productive months from my former employer's perspective.)

Since pricing will reflect expected returns, the best teams will generally cost more than the worst teams (although the seed-based formulas do create some idiosyncrasies). If you want to be able to afford to buy Duke, you'll probably have to sell short some pretty decent teams - or you could also short some higher priced basket units. (--No guts, no glory!--) If you wimp out on your short sales, you won't be able to buy much. Bear in mind, though, that although you do have to sell exactly 10 units, you don't need to buy 10. You can't buy more than 10, but you could take all the proceeds from your short sales and use it to buy one or two units (or none), if that's your preference.

Essentially, the contest rewards those who can select which teams will do the best and worst vs. their seed-based expectations. Most contests just ask you to pick winners. This contest asks you to pick the biggest relative over- and under-performers. If you short sell a #2 seed that loses in the first round to a #15, that could be more profitable than buying a #2 seed that almost gets to the Final 4!

As an example of the reward for performance vs. seed-based expectations, the winning team in the 2000 tournament was Michigan State. The Michigan State unit was priced at G$20, and then generated winnings of G$69, for a net return of G$49. That was pretty good. But the other teams in the Final Four each did better. Remember that the other Final Four teams included a #5 seed (Florida) and two #8 seeds (Wisconsin and North Carolina), so that reaching the Final Four for those teams was a greater "overachievement" than the win for top-seeded Michigan State. And the net returns for those three teams ranged from G$107 to G$128, more than double the returns for Michigan State.

[albionmoonlight]

I really like this idea.

[molson]

I like it - the thing that annoys me about most about regular tournament pools is you're pretty must guaranteed to be in at least the top 10% if you just pick all the favorites, and a final four of all #1 seeds.

[ImTheCrew]

whats the password?

[Green Caesar]

Originally Posted by ImTheCrew

whats the password?

trout

Like other pools, there reallyisn't much to do until the brackets come out.

[Green Caesar]

Bump ... this pool is now open.

Here is a snapshot of the page where you make your picks: