Backing situation - does this make sense?

[funshinebear]

I have someone who wants to be a longterm backer for me in live tournaments, and I want input on whether or not this is a good deal. I want a backer because the travel/hotel fees are very large....to large for my 50k bankroll to play comfortably.

The deal would work as follows...I would pay half of all my entry fees in live tournaments. My backer would pay half of my fees and pay for my room+board+travel. In return for this they would get 25% of my action.
This in itself is obviously a pretty good deal for me, however the caveat is that if I'm down money for this backer, including the living expenses, then I have to make it all up from any winnings I receive, before I can start collecting any winnings for myself.
Does this deal make sense? Is it good for me? I am a winning player, but by no means am I yet a great player, as I have very little live play experience. Any input would be greatly appreciated, thanks!

[fnord_too]

Let me see if I understand this. Your backer gets 25% + reimbursement for all his expenses from money you win? (When you sit down at the first tourney he is already down money.)

Here is my thinking: Make it so you both get prior losses paid out of winnings before the split, with refunds being proportional to losses.

Example: You play three tournaments with entry fees totaling 20,000. Other expenses are 10,000. At this point, you have spent 10k and your backer has spent 20k. Say in this third tournament you cash $15000. By his system, if I read it correctly, all 15K goes to him, and you still owe him 5k off the top out of future winnings (in addition to his costs associated with those furture winnings), plus you are down 10k in entry fees. By the way I describe, that 15 would get split up 10k to him and 5k to you, since he has spent 2/3 of the total money invested.

I think you need that percentage reimbursement to make this deal work, even if that means giving up a bigger percentage of the net. I would be prepared to offer up to 50% of the winnings in return for either a. removing the pay back clause entirely, or b. adding in the proportional split of the payback money. IMO b is the fairest, a favors you too much.

[jdbessix]

I had a very similar arrangement when I was on the golf tour. It really comes down to how much you want to play and how much confidence you have in your ability. The major down side I found was that there is pressure to "get ahead" of your sponsors. If you don't, and I didn't, 85% of my first big check went to repay sponsors. The "high" of getting the big check doesn't last to long when you have to give most of it away. Good luck.

[Gator]

Look at the corillary -- if you wanted to just play for fun, you could sell 75% of your winnings for half your entry fee less expenses. That's not a bad deal unless you are a tremendous player.
The proportional split piece is attractive - but as a the deal stands, I think it's o.k. too.

[funshinebear]

Another important question: If I do get ahead of my sponsor, like by winning 30k right off the bat. Then does the deal start over? Like they get the 25% of 30k, but then we start from scratch again immediately. That was how I understood that it would be, thus meaning that if I then turn around and lose them 7500....i still owe them that 7500 from my future winnings.

[SossMan]

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Another important question: If I do get ahead of my sponsor, like by winning 30k right off the bat. Then does the deal start over? Like they get the 25% of 30k, but then we start from scratch again immediately. That was how I understood that it would be, thus meaning that if I then turn around and lose them 7500....i still owe them that 7500 from my future winnings.

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No, I think you keep a running tab, no? Otherwise it would be a no risk deal for him (assuming you don't up and quit and stiff him)

[funshinebear]

Oooh figured out something

Sorry I made a mistake in my original post. The actual backing arrangement would be that they pay 50% of my touranment fees and get 25% of my action. If they are down money from this arrangement (including the travelling+room expenses), then they get 50% of my action for 50% of the buyin, until they are at least even again.

This sounds more reasonable I presume?

[fnord_too]

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Oooh figured out something

Sorry I made a mistake in my original post. The actual backing arrangement would be that they pay 50% of my touranment fees and get 25% of my action. If they are down money from this arrangement (including the travelling+room expenses), then they get 50% of my action for 50% of the buyin, until they are at least even again.

This sounds more reasonable I presume?

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That sounds pretty sweet.

[ligastar]

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That sounds pretty sweet.

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I agree with fnord_too. I could get excited over this arrangement.

Greg H.