Dummies Guide to BAPs with Cake

[Loonbat]

Since there is so much confusion all the time, here is a pretty simple example of how normal, unfrosted, vanilla cake SHOULD be working for BAPs. Others may have different versions but this is how the industry standard goes.

For multiple investor cake:

First you take each share and assign it a portion of the winnings, based on the percentage each share is worth. So, let's do a simple example.

100 shares, 50/50 terms + Sb with cake.

Total won on BAP: 12,000, thus each share value allotment is $120

Investor A - 20 shares - no cake
20 shares x 120 = 2400.
2400 - 200 (SB) = 2200 profit on these shares
1100 kept by horse, 1300 returned to staker

Investor B - 10 shares - 2000 cake
10 shares x 120 = 1200
1200 - 100 (SB) - 1100 (cake) = 0 profit on THESE shares
1200 returned to staker, 0 kept by horse ... 900 cake carries over

Investor C - 50 shares - 2000 cake
50 shares x 120 = 6000
6000 - 500(SB) - 2000(cake) = 3500 profit on these shares
1750 + 500 + 2000 = 4250 returned to staker, 1750 kept by horse

Summary:
Horse makes 2850 for their efforts and has 900 in cake due to investor B. The horse still realizes a profit, even though all cake is not paid back, based on shares sold to non-cake holders or those with less cake.

[dapfunkera]

can we sticky this and require this to be the definition if you use the term "cake" - I mean carrot cake or whatever. I think we need a standard so it is less confusing.

So if I offer cake today is that to pay back all previous investments by the backer or only those in the past that I offered cake on as well?

After I come back to MTTs I would love to have a standard in place if we choose to use it.

[nalai550]

Loonbat for mod

oh, mr bat, i'll ship tomorrow night at the latest.

[Loonbat]

The irony of me putting this up ... I don't offer cake.

[MrPOKERJACK]

Good thread.

[dapfunkera]

Originally Posted by Loonbat

The irony of me putting this up ... I don't offer cake.

I am coming to this conclusion...

[24shack24]

neither do I after i take care of the cake i owe


since this still confuses me, im prolly gonn apay everyone back half the cake i owe them, since apparently according to this formula its about half profit half cake or something like that

[philivey123422]

Probably the most confusing thing I ever read. The way I think of cake makes it so much easier whether I am doing it right or not.

[undream2]

Got to be a genius to understand what cake is here. I still don't know what it is. I just see numbers and a formula. Plus, why would anyone offer cake, and not distributing profits based on % of shares held only. Im lost.

[ducttape217]

Can somebody please explain cake to me with a simple definition and not a ultra confusing formula? It would be greatly appreciated.

[MrPOKERJACK]

Originally Posted by ducttape217

Can somebody please explain cake to me with a simple definition and not a ultra confusing formula? It would be greatly appreciated.

From my understanding, say you offer cake on BAP #1, so basically you're saying you'll refund them their money if you lose.

But, to get their cake, they have to invest in another one of your BAPs.

[ChessSafari]

Originally Posted by MrPOKERJACK

From my understanding, say you offer cake on BAP #1, so basically you're saying you'll refund them their money if you lose.

But, to get their cake, they have to invest in another one of your BAPs.

Exactly!

Here's how I describe it in my BAPs:

"Cake" means essentially that I will reimburse you for any losses you incur in this stake, from my share of the profits in my next BAP (or any future BAP) that you invest in. It comes from my profits and not any of the other investors, which means giving cake does not in any way dilute the current BAP investment.

Fortunately, I don't owe anyone cake (yet) and I hope it stays that way...

Best wishes,
Frank

[WuTangSword]

this is ****ed

[herschelw]

It really makes a lot of sense once you understand it. It is an industry standard among professionals and protects backers from losing money over the long term with profitable players.

[wawaman100]

yeah im still clueless

[jscallstar]

i'm so glad that i read this now.

here's what i get:

if i take a bap on XYZ and he/she loses, i lose everything, right?

now, let's say that I take a bap on same XYZ with cake and he/she still loses, I still lose everything except this time, I take another bap on a future deal and he/she wins. Now, I get my investment back on that current bap plus my stake from the previous failed bap?

right?

[cthomaz]

exactly

[necromancer]

Originally Posted by jscallstar

i'm so glad that i read this now.

here's what i get:

if i take a bap on XYZ and he/she loses, i lose everything, right?

now, let's say that I take a bap on same XYZ with cake and he/she still loses, I still lose everything except this time, I take another bap on a future deal and he/she wins. Now, I get my investment back on that current bap plus my stake from the previous failed bap?

right?

Yes

Plus your share of the profits from BAP2

So you get

BAP2 Investment + BAP2 Profits + CAKE (which is your investment in BAP1)

The problem comes when the Horses profits from BAP2 are not enough to cover the cake he owes from BAP1. THEN I assume the cake is distributed as a percentage based on the the percentage of investment in BAP 1. So if you held a 50% investment in BAP1 you get 50% of the Horses profits from BAP2 and if this doesn't cover all your investment from BAP1 then he still owes you cake.

[Loonbat]

Originally Posted by necromancer

Yes

Plus your share of the profits from BAP2

So you get

BAP2 Investment + BAP2 Profits + CAKE (which is your investment in BAP1)

The problem comes when the Horses profits from BAP2 are not enough to cover the cake he owes from BAP1. THEN I assume the cake is distributed as a percentage based on the the percentage of investment in BAP 1. So if you held a 50% investment in BAP1 you get 50% of the Horses profits from BAP2 and if this doesn't cover all your investment from BAP1 then he still owes you cake.

NO profit is computed UNTIL cake is paid ... makeup/cake does not come from "horse's profit" exclusively. If I stake your full entry into a $100 event, you lose, and then I stake you in another $100 and you win, cake basically turns the stakeback amount into $200. So, if the horse wins $200 the second event, he ships staker $200 and they are even - no further cake is owed and no profit is realized by either party. .

It gets a bit more confusing if 2 or more people stake (like in a BAP), so look to the first post to see the breakdown.

[baca85]

Cake is simple until applied to baps always biggest headache i ever had trying to work out how it went together and the formula aint easy to explain