#24, 5/6/2010--Satellites and poker profits

I have realized something that, logically, I should have figured out much sooner. If I can win tournament dollars playing satellites faster than I can win real dollars making other tournaments, then I will make less profit when I am converting my $t to USD.

As an example, let's say that I spend a day playing 21 $2.20 satellites to the PokerStars Sunday 1/4 Million, and I cash (earn a tournament ticket that can be cashed out for t$11) in one out of every 3 tournaments:

Gross winings = (21 tournaments) X (1/3 cashes per tournament) = 7 cashes = t$77.
Expenses = ($2.20 entry fee per satellite) X (21 satellites) = $46.20.

Net profit = 77 - 46.20 + = $30.80.

Keep in mind that to keep the bookkeeping simple, I count a dollar as a dollar. When I enter a tournament, when I win one, and when I lose one, it doesn't matter if I've won, lost, or spent t$ or $US. A dollar is a dollar. It's no different than when I play a tournament that is denominated in euros. I have PokerStars set up to automatically convert everything to USD, not matter what currencies are shown on the list of tournaments. As Freud might say, sometimes a dollar is just a dollar.

Ok, the bottom line is coming, I promise. Keep in mind that the example above is a day of playing nothing but satellites. theoretically, I could use all of my t$ to play more satellites, win more t$, and pretty soon, the majority of my bankroll is $t.

So let's say I have a bankroll of $200: 25 $US and t$175. And I want to cash out (withdraw from my PokerStars account) $50. I can't cash out tournament dollars, so I have to convert t$ to $US, and the only way to do that is to spend T$ on tournaments where I can win US dollars. That is, I have to play something other than satellites in order to have $50 that I can cash out.

This leads to an interesting result when I count my profits. I can spend a day playing other-than-satellite tournaments, spend t$25 and cash for US $25, and the change to my bankroll is 0. My total bankroll is still 200, but now it's US $50 and t$150. Now I can take my $50 out.

But in real life the satellites are much softer than the other tournaments, so when I'm not playing satellites I'm going to make money (build my total bankroll) more slowly. To keep my profits steady, I have to make sure I don't play too many satellites. When I play only satellites, my total bankroll will almost certainly go up quickly, but I can't keep that up indefinitely if I ever want to cash out. And when I'm not playing them, that is, when I'm converting my t$ to US$, my bankroll will go up more slowly, and there will be longer stretches when I only break even.

It's amazing how many things there can be to think about that don't have anything to do with actually playing poker. And of course, it's not just a matter of whether I play tournament A or tournament B. It depends on the payout structure, the tournament structure (how long it takes, how quickly the blinds go up, etc.), how soft the field is, what time the tournament starts, etc.

This week, for the first time I played a "bounty" (also called "knockout") tournament, where you pay a little extra in entry fees, and get a "bounty" each time you knock someone out of the tournament. My spreadsheets don't have a place for bounties, and I don't have room for any more columns, so I'm going to have to redo the whole thing.

I guess poker is like anything else at which you want to excel. An elite runner doesn't just go out the door and run when he feels like it. He stretches. He has workouts to build speed, or endurance, or resistance (such as running hills or stairs). He practices good nutrition, and does weight training.

There's a lot more to running than just running. Likewise, poker is more than just playing poker.