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Securitized Monopoly

for finance geeks
  (+26, -3)(+26, -3)(+26, -3)
(+26, -3)
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There's that early part in every game of monopoly where no-one can build any houses, because they don't have a set. Then there's that part where some people still can't build houses, because they haven't landed on the right things to be able to swap them for a set, but they have an idle cash-pile which the rules forbid them to lend out. Then there's the end-game.

I propose to shake up this pattern by adding tradeable equity instruments (and possibly also debt instruments).

The equity instruments work like this: if [po] owns the Old Kent Road (U.S. - Mediterranean Avenue) and [dub] owns Whitechapel Road (U.S. - Baltic Avenue), instead of glowering at each other un-co-operatively, they can float a joint stock company. The company can own the properties and, because it owns the full set, it can build on them. [po] and [dub] relinquish title to the properties and, instead, hold shares (equity) in the company.

To protect the interests of minority shareholders, the company is only allowed to take certain, clearly defined 'corporate actions', some of which require unanimous consent of shareholders, others, a simple majority. These actions would include raising capital from shareholders (to build houses, presumably), selling additional shares into the open market (also to build houses, presumably) and distributing cash to shareholders (as a dividend). Certain 'Chance' and 'Community Chest' events (notably 'repairs') might be interpreted as affecting the properties of companies in which a given player has a shareholding, much to the annoyance of their fellow shareholders - who may, if they decline to provide the necessary extra funds, trigger the bankruptcy of a company.

For the real lover of gratuitous complexity, we can then allow these companies to issue debt securities (corporate bonds). The issuing company must pay a fixed amount to the holding players every so many turns (so, someone must be keeping careful count of turns), and/or must redeem them for their face value at the end of a somewhat longer period.

The main objection to all this is the extra paper-work. One way to overcome this objection would be to play this game only in an on-line format, where the book-keeping could all be computerized. Another would be to supply plenty of pre-printed cards and papers for share certificates and company records and, maybe, to have the banker act as a full time 'central banker-cum-regulator-cum-registrar', and not participate competitively in the game at all.

The main effects of all this (apart from sorting out the Gordon Geckos from the Arthur Daleys) would be
1. to get houses and hotels on the board faster.
2. to reduce the impact of on-board events on players' ability to make deals.

Effect 1 might shorten the game (in terms of number of turns, though maybe not elapsed time), because the big, bankrupting liabilities (landing on hotels) could start happening sooner.

Effect 2 might lengthen the game, because a rapid conclusion to Monopoly generally relies on the emergence of brutal inequalities, and my proposed rule changes, enabling better risk-management, might delay the emergence of those.

pertinax, Jun 17 2007

Loan and equity financed monopoly http://bigthink.com...he-game-of-monopoly
[calum, May 16 2014]

[link]






       Sounds like a fun game, and a good introduction to the basics of business
Voice, Jun 17 2007
  

       I'd never dare glower at [dub] hee, hee.
po, Jun 17 2007
  

       Now simply eliminate the real estate aspect and add hostile takeovers, junk bonds, insider trading, hedge funds, naked short selling, IPOs, pump and dump, commodities trading, etc. and rename the game Corporate Corruption.
nuclear hobo, Jun 17 2007
  

       Dibs on the car.   

       //rename the game Corporate Corruption//   

       ... one crucial difference is that monopoly, even in this variant, is intended to have an end.
pertinax, Jun 18 2007
  

       But if 3 out of the 4 players were stockholders in a company which owned most of the property on the board, they might want to claim (as a shareholder perk, and as part-owners) for payments due for 'landing' on properties to be waived. Then the income of this company would be dramatically reduced.
hippo, Jun 18 2007
  

       [hippo], I envisage that the waiving of revenue would *not* be among the actions permitted to a company. The closest you would normally get would be a special dividend, whereby the unlucky player's liability would in effect be reduced by, say, a third (dividend offset against rent), but the remaining money would go straight into the pockets of the other shareholders. Or, if one shareholder were having trouble paying his rent, the others might kindly offer him their own cash... in exchange for some or all of his shareholding.   

       Alternatively, though, it could be allowed on a case-by-case basis (possibly requiring unanimity), in which case it would stop happening soon after the fourth player was bankrupted.   

       I suppose that, as a general point, people would be most interested in forming companies when there were numerous other players in the game; as the game progressed and the number of players shrank, people might become more interested in debt capital raisings with a view to taking companies private
pertinax, Jun 18 2007
  

       I just want to be the bank. Failing that, CEO / CFO, or on the board at any of the corporations. Being simply a shareholder is a game for fools.
nuclear hobo, Jun 18 2007
  

       Yes, but can they consolidate all their debt into one low monthly payment?
hidden truths, Jun 18 2007
  

       Who cares? We'll just take their property if they can't.
nuclear hobo, Jun 19 2007
  

       //Being simply a shareholder is a game for fools.//   

       Well, in Monopoly it probably beats being a rental tenant with no assets at all. As for real life, ordinary shareholders can still do OK provided that they don't get delusions of grandeur or become fashion victims.   

       <Uncle Pertinax's homely financial advice>
Insiders watch the rumour mill and position themselves at the leading edge of the stampeding herd. Modestly successful outsiders watch the economic cycle and find somewhere quiet to graze by themselves.
</uphfa>
pertinax, Jun 19 2007
  

       Insiders are politicians, corporate honchos and the select few who actually have inside information or those who are in a position to manipulate the markets. Outsiders are everyone else.
nuclear hobo, Jun 19 2007
  

       This is so unnecessarily complex that it would only cause arguments, flinging of the game board in frustration, and hurt feelings. [+++]
shapu, Jun 19 2007
  

       I always thought the Dog beat the Hat, and the Car trumped the Shoe...   

       [po]Stop glowering at me, you're making me nervous.
Dub, Jun 26 2007
  

       [+]
methinksnot, Jun 26 2007
  

       I like it [+]. Although, I think this would be better for an expanded version with many more players - probably online. With so few players as in a normal Monopoly game, it would be too easy for most of the players too be in the same company. With many more players, though, there could be numerous companies competing against each other, which would make it very similar to a regular game of Monopoly, but with each player having multiple minds of varying influence, until most of the companies went bankrupt and the remaining ones were forced to split up. Also, just before the remaing companies split up, the more wealthy stockholders could team up to sabotage the company and bankrupt the less wealthy.
apocalyps956, Jun 26 2007
  

       Wow, Frank, and I thought *I* was over-complicating it!   

       OK, just for you, we'll bring out the expansion pack with barrier options on convertable preference shares with call-protection features predicated on LIBOR, and you can work out whether a proposed scheme of arrangement on the underlying equity would trigger a disclosure requirement in the jurisdiction where your depository receipts are held. Let us know how you get on.
pertinax, Jun 27 2007
  

       Let's not forget about leveraged buyouts, hedge funds, offshoring, pump and dump, hiring lobbyists to funnel tax breaks and government subsidies to your company, etc.
nuclear hobo, Jun 27 2007
  

       I'm not forgetting them, [nuclear hobo], but they don't really fit into any game with agreed rules; anyhow, basic crookedness doesn't conduce to entertaining game-play, because, in essence, it's rather monotonous.   

       I'm not attempting to excuse the real-life operations of financial markets. I'm only proposing what I hope would be an intellectually engaging game about them. It would be comparable to playing military strategy games without supporting real-world military aggression.
pertinax, Jun 28 2007
  

       This is a great idea, pertinax. [+] Will it include a new role, "the Fed", to add even more restrictive and complex regulations?
swimswim, May 03 2010
  

       I like this very much [+]. However, the monopoly board might be too simple, and the number of players too few to accommodate the weight of gratuitous complexity this deserves.   

       Perhaps it could be like the game Diplomacy, where the game proper has very simple rules, but where most of the real play consists of negotiations, deal-making, back- stabbing etc. among players.   

       Arbitrarily complex financial instruments could be constructed, because those are nothing more than contracts among players outside the rules of the game. The rules need make no provision for enforcing contracts: as in Diplomacy, the only penalty for violating a contract would be that people didn't trust you the next time you tried to make a deal.   

       [pertinax]//basic crookedness doesn't conduce to entertaining gameplay// It does, really, in Diplomacy.
[pertinax]//not attempting to excuse// A version of Monopoly in which you won by behaving unethically would be perfectly in the spirit of the game. The original Monopoly ("The Landlord's Game") was explicitly anticaptitalist propaganda.
mouseposture, May 03 2010
  

       // explicitly anticaptitalist propaganda. //   

       <irony>   

       Did it sell well ?   

       </irony>
8th of 7, May 03 2010
  

       <poker-face> No, until it was redesigned by someone who just wanted to make a fast buck. It's sold like hotcakes ever since. </poker-face>
mouseposture, May 05 2010
  

       What happens when the Bank collapses?
BunsenHoneydew, May 05 2010
  

       All the other players have to pay out vast sums to refinance the bank, lest the game end abruptly leaving them jobless, homeless and hungry.*   

       *Any correspondence with reality is purely coincidental.
8th of 7, May 05 2010
  

       Well, now there's an idea. If we're taking the already stupefyingly tedious game that is Monopoly and layering on top complex securitisation, why not layer the game further? Each Bank (itself a monopoly) must play against Banks from other games of Securitised Monopoly, being played simultaneously online (or in some grey-walled warehouse just off a minor motorway), each Bank striving for Game-Wide monopoly by means of being dastardly buggers and engendering collapse in each opponent's monopolistic market.
calum, May 05 2010
  

       //if [po] owns the Old Kent Road (U.S. - Mediterranean Avenue) and [dub] owns Whitechapel Road (U.S. - Baltic Avenue)//

I was having similar thoughts to calum but along a slightly different line inspired by the above quote. Why not have different nationality games of Securitized Monopoly playing alongside each other and introduce currency exchange to really confuse matters! With multiple banks involved, you could also allow the banker in each game to become a seperate player and earn income based on their bank's trading activity (mortgage lending, currency speculation etc) each turn.
DrBob, May 05 2010
  

       Don't be silly, [DrBob]. The very idea of such a flawed, failure-prone, rumour driven system is quite ludicrous.
8th of 7, May 05 2010
  

       {+} for [Calum]'s //grey-walled warehouse//
pocmloc, May 05 2010
  

       who gets to be in charge of bailouts? the banker?
teslaberry, May 18 2014
  

       Well, that depends on whether you *want* the game to go on forever.
pertinax, May 18 2014
  

       I had a stint of Securitized Monotony once, guarding a completely empty house.
not_morrison_rm, May 18 2014
  
      
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