How to understand Yahoo’s daily fantasy management fee

Christel Deskins

One of the most overlooked aspects of becoming a profitable daily fantasy player is understanding how a site’s management fee can impact your bottom line. The management fee is simply the amount of money that a site takes out of a prize pool. Across different sites, the variance in management […]

One of the most overlooked aspects of becoming a profitable daily fantasy player is understanding how a site’s management fee can impact your bottom line. The management fee is simply the amount of money that a site takes out of a prize pool. Across different sites, the variance in management fees for similar game types might be as little as one or two percent, but those small percentage points could be the difference between being a long-term winner and someone that goes broke before season’s end.

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Consider a 50/50, since it is the most straightforward and consistent payout structure across all sites. In a 100-player $1 50/50 with a 10 percent management fee, 50 of the 100 players will win $1.80 each. In other words, $90 of the $100 prize pool is paid out. In order to be profitable over the long run, a player would need to win more than 55.6 percent of the time* to overcome the management fee.

*Break-even percentage = Total winners * (Entry fee/Total prize pool)

But what happens if we change the management fee of this 505/50 by just two percentage points? Consider the changes in break-even percentages for varying management fees:

Management Fee Changes

What does this mean in terms of profitability? Given these structures, a player who wins 60% of their 50/50s would profit $104 over 1,000 games with an eight percent management fee but just $56 with a 12 percent fee. Put differently, a reduction in management fees of just four percent can nearly double a player’s profit without changing anything else.

This is an overly simplistic view since many DFS players will play an array of different game types but the illustration highlights the most important takeaway: Finding reduced management fees is one of the easiest ways to improve your profitability in DFS.

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How to Apply Management Fees to Game Selection

Beyond comparing similar games across sites, DFS players can use management fees to decide whether they should be playing other games such as double ups or leagues or even moving up in stakes. The latter point is especially important. If a player has proven to be a consistent winner at a specific buy-in level, it can be profitable to move up in stakes, even if the competition might be tougher — the reduction in management fees at higher stakes can sometimes offset a slight dip in win rate.

While it’s difficult to calculate exact win rates and the impact of management fees in large-field tournaments, it’s clear that the more money that stays in the prize pool the better. In fact, targeting games with the biggest prize pools or top prizes can often be a losing endeavor. Sites like Yahoo might have smaller prize pools than other DFS sites but big tournaments, such as the Baller, often offer management fees at 12% or lower, compared to 15 percent or higher on other sites. In addition to finding contests that pay out the highest percentage of the field with a relatively even distribution of winnings, playing to reduce the management fee is an edge that players will have in Yahoo NFL DFS contests over players on other sites.

Make understanding management fees the first thing you do before signing up for contests this year. While Yahoo explicitly states its management fees for each contest, some sites do not. In order to determine the site fee of any DFS contest, simply divide the total money paid out into the total money wagered, then subtract that from 1. So a league that pays out $90 from $100 of buy-ins has a management fee of 1-(90/100)=0.1=10 percent.

Follow TJ on Twitter @TJHernandez

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TJ is a former full-time poker player who has been playing fantasy football for more than a decade. After online poker was outlawed, TJ ended his poker career and dedicated himself to fantasy football. His background in poker statistics and analytics translates to success in both daily and season-long fantasy football.

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