- In a Calcutta auction, when an NCAA tournament team wins a game, they are entitled to a percentage of the total pot. Payouts per round can vary, but a common (and highly recommended) payout scheme is 1.0% for a first round win, 1.5% for a second round win, 2.5% for a third round win, 3.0% for a fourth round win, 4.0% for a fifth round win, and 4.0% for a final round win.
- Because teams are entitled to a percentage of the total pot, the value of each team fluctuates during the auction until the total pot size is known. Even if an auction participant knew that Kansas would win the NCAA tournament, the exact value of the team would not be known until the auction was over and the pot size was known.
- A Calcutta auction should have no fewer than 5 participants to provide a minimum amount of bidding diversity. While there is no theoretical limit to the number of participating teams, 12 teams is a reasonable cap to ensure that each participant can acquire multiple teams if they so choose.
- NCAA Calcuttas use an auction format. To facilitate the auction, an impartial person should be selected as the auctioneer. This person should be capable of keeping participants interested while extracting maximized bids.
- Before the auction begins, the names of each NCAA tournament team are placed into a hat.
- One team name (e.g. Kansas) is selected from the hate. The auction participants bid on that team in a “live auction” format where bids are verbally announced until a winning bid emerges (Note: set a minimum bid increment to avoid “micro-bids”).
- The auctioneer should record the name of the team, the participant that acquired the team, and the price paid on a “master list”.
- Repeat this process until all teams have been auctioned. Immediately after the auction, the “master list” should be distributed to all participants to verify there are no discrepancies in team ownership or purchase prices.