March 12--Expenses," "return on investment," "payout allocations" -- Michael Ochs sounds more like a hedge fund manager than a man selling an online hosting service for NCAA tournament Calcutta auctions.
It's probably fitting since the high-stakes twist on garden-variety tournament brackets has been a lure for traders from Wall Street to West Jackson Boulevard for years. Ochs understands the type of people who play Calcutta. It's part of why he and two lifelong friends from Park Ridge founded the auction site calcuttahost.com, which made its debut last week.
"They're competitive people," said Ochs, a 26-year-old software sales manager from Logan Square. "The reason I was drawn to Calcutta auctions is I was tired of filling out brackets and losing to someone's mother who had never watched a single college basketball game. Because filling out a bracket is too easy, there's too much luck involved."
"What's nice about Calcutta auction is it gives the user or participant a greater ability to control their own destiny because you're bidding against your competitors on teams you'll believe will go the farthest."
Calcutta works this way: You and you friends bid on the 68 teams in the tournament (or 64, if you prefer). The money goes into a pot, and the teams awarded to you through the auction only pay off if they advance far enough in the bracket to match or exceed their auction price. A Sweet 16 finish, for example, may pay back 10 percent of the pot; the Elite Eight, 20 percent. A No. 1 lock like Kentucky most likely comes with a high bid, so it's going to take a few rounds before they return a profit. A sleeper like Belmont could pay off with its first upset.
"I look at last year's NCAA tournament and there's a team like Mercer, which, if you bet a dollar on and they beat Duke, you're an automatic winner. Whereas (with) Duke, people were probably competing over (them) and the stakes kept rising, and to see them duck out of the tournament in the first round is almost heartbreaking for those people. So I think the skill comes in recognizing the underdogs as well as not overinflating the top seeds.
"The key is thinking about what is going to give you the greatest return on investment," Ochs said.
Calcuttahost.com doesn't dish out advice -- you're on your own, bracketeers -- but it does play auctioneer, track results and calculate payouts. The company charges a $50 service fee for the NCAA tournament, but the fee for other sports depends on the size of the league. It also doesn't distribute payments, that's up to each league's commissioner.
Ochs said the site is flexible enough to allow customized rules. And he has seen or heard about extremes in past tournaments: One league's pot was $50,000; in another, participants pulled teams out of a hat.
"That's what's fun about March Madness in general is it gets people to be creative and make the games more interesting," Ochs said.
plthompson@chicagotribune.com
