The 2008 National Championship Game – A Memphis Hedge

Posted: April 7th, 2008 | Filed under: Last Decade | 6 Comments »

#1 Kansas vs #1 Memphis, 9:21 PM, Jim Nantz and Billy Packer

The Line: Memphis -2

The Money Lines: Memphis -122, Kansas +112

The Total: 146

My Play: Memphis ML -120 (Risking 12x to win 10x)

Remember, I stand to win over 30 units if Kansas wins the national title. This is a HEDGE not a big play on Memphis. If Kansas wins tonight I walk away with about 18 units in profit. If the Tigers are the last team standing I make 4.5 units. That is a pretty big difference, but not as big of a gap as say, -5.5x and +30.46x.

There is no right or wrong, cut and dry, textbook answer when it comes to hedging. Mathematically speaking you are almost always better off letting your initial bet ride, but math can’t account for the mental trauma that losing 30 units on one bad call or one lucky shot can cause.

When evaluating a potential hedge I ask myself two questions. 1) Who would I take in this game if I wasn’t holding a future?

In this scenario the answer is Kansas. I cannot believe this number. I thought the opening price of Kansas -2 was a good one. I am shocked and disgusted that the number currently sits at Memphis -2. In some ways this number is even worse than UNC -3 was in the semi-final.

If my preferred side tonight was Memphis rather than Kansas I would have risked 16-20 units on the Memphis ML instead of 12.

The second question I ask myself is, Will I regret letting it ride if the wrong team wins?

The answer in this case is a definitive Yes. The gap between a -5.5x loss and +30.46x win is huge. It would be crazy not to hedge. Not just from a financial standpoint, but from a mental one as well. If I let this ride and Kansas were to lose then there is a good chance I would go insane. It’s just not worth it.

I asked myself both of these questions before every game of the tournament. The answer to #1 was always Kansas. The answer to #2 varied from game to game. I can honestly say that if UNC had won on Saturday, I would have had no regrets about not hedging.

The difference tonight is that I can easily lock in a profit without completely destroying my investment in Kansas. 12 units may seem like an arbitrary amount, but to me it is perfect. If Kansas wins I am ecstatic. If Memphis wins I will be disappointed, but ultimately content.

I have two more posts planned for today. One will be my bases plays, the other will be yet another premature preview.

6 Comments on “The 2008 National Championship Game – A Memphis Hedge”

  1. 1: Rob said at 10:47 AM on April 7th, 2008:

    Congrats ML. Nice work on playing their futures when you did, and I think the hedge (and amount) is a good concession.

    If Kansas pulls it out tonight, I’ll win my office bracket and blind-draw Sweet 16 pool. Unfortunately, since the entries and fees are peanuts compared to my other pools, I’ll just about break even for the tournament.

  2. 2: jonny513 said at 1:16 PM on April 7th, 2008:

    Brandon Lang with a hundred dimer tonight on the game. Realistic money management, gotta love it. Erase a 98 dime hole on one play, this business is easy!

    I really hope hes on Memphis.

  3. 3: skoormit said at 1:24 PM on April 7th, 2008:

    Do you do a Kelly Criterion analysis as part of your bet size decisions?

  4. 4: f said at 7:55 PM on April 7th, 2008:

    what side is b lang on?

  5. 5: moneyline said at 9:08 PM on April 7th, 2008:

    Rob,

    I hate to do it, but I had no choice in this position.

    Skoormit,

    I don’t use the Kelly criterion.

    F,

    Lang had a 100 dimer on Memphis tonight. Best news I heard all day.

  6. 6: skoormit said at 10:53 PM on April 7th, 2008:

    Congrats on the big win.

    FWIW, if your units are 1% of your bankroll, you about nailed the Kelly Criterion bet if you gave Kansas a 50% chance to win tonight.

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