Investing in Greg - the big payoff and IRS

[midas]

Table rumor from last night at Foxwoods was that a $1000 investment in Greg payed $50,000.

Also, we know Greg had backers - did he get to take the entire $5 million home or did the IRS take their cut at the casino? Since Greg's a lawyer and now very high profile - I assume that all the backers and the IRS received full disclosure on any distibutions!!!

I wish I had their tax problems!!!!

[HavanaBanana]

1000$ into 50 000$ sounds a bit little doesn't it?
But if he had 50 backers/shares with 1000$ each then taking half the profits for playing it would be 2 500 000 divided by 50 000 which means 50 000 per share so it might be correct.

ToT

[Legend27]

Why would Greg have backers when he won the seat from pokerstars in the $150 double shoot-out?

[RollaJ]

As I understand, he took investors in his game/results for the long term, not just that one tourney. This is all stuff I have read online though

[GWB]

This is my guess based on what I have read:

The deal he offered in 2002 was (after initial investment repaid):

35% to Greg for time/effort
65% to backers based on share

Greg did not "sell" 100% of himself, so he gets a big chunk of the 65% too. And the $10,000 buy-in price or $150 qualifier price means nothing, they were just a small part of many investments in many games. So a $1000 investment may only mean a 2% share in Greg.

[Dynasty]

[ QUOTE ]
Why would Greg have backers when he won the seat from pokerstars in the $150 double shoot-out?

[/ QUOTE ]

This has been answered many times, including by Greg himself, in many threads over the last few weeks.

[Legend27]

I was just asking about the main event. I know he's had backers in other tournaments but it doesn't make sense for this one since he won for $150 bucks. Unless he let people back him after the fact he already knew he was in and just wanted some insurance. Which doesn't make sense to me. Well ok it does but I wouldn't do it, not for that much.

[GWB]

Its like a share in a corporation, they buy into his poker career for a year or more at a time. They have a share in everything he does poker related, since it all comes from a pool of money he and the backers created. So how much money it took to win a seat doesn't matter, it comes from the pool of money backed by his backers.

[Dynasty]

And I was just giving you the answer that if you want it to make sense, go find the answer in the other threads, especially the ones responded to by Greg himself.

[Legend27]

I've read most of greg's posts on here. I must have missed the one's that explained it like GWB did.

[M.B.E.]

I think Dynasty is mistaken in saying that Greg has responded to recent threads on 2+2 discussing whether he was backed. There's no reason why he should respond publicly to questions like that about his private affairs.

But Legend27's question, "Why would Greg have backers when he won the seat from pokerstars in the $150 double shoot-out?" can be answered in the abstract, without any knowledge of Greg's specific arrangement.

First, keep in mind that the cost of the particular satellite that gave you your seat is not as relevant as the total cost of all satellites you entered. I won my WSOP seat on PokerStars, but I spent several thousand dollars attempting to do so, not just $160.

Second, a backing arrangement can have just about any terms, as long as they are agreed to by all parties. For example, the arrangement might include all tournaments, even where the entry was won in a satellite, or it might exclude such tournaments. If you were a potential backer, which arrangement would you be more likely to agree to? Also, a backing arrangement might be for a fixed term (e.g. six months), or it might be for an indefinite term with either party having the right to terminate it at any time. Or it might be for a fixed term with one party (but not the other) having the right to terminate it early. There are lots of possibilities.

In summary, it should not be particularly surprising that Greg may have been backed for the WSOP, even though he won his seat in an online satellite, and even though his personal bankroll before the WSOP was probably pretty large (having taken second place in a big PokerStars tournament in February paying $40K).

[Dynasty]

[ QUOTE ]
I think Dynasty is mistaken in saying that Greg has responded to recent threads on 2+2 discussing whether he was backed. There's no reason why he should respond publicly to questions like that about his private affairs.


[/ QUOTE ]

Greg has said...

As my backers will attest once they get their checks, we won the whole $5M.

...in another thread.

[AceHigh]

A deal for backing has to be all or nothing. So once Greg made a deal cutting backers in on his action, he had to give it for all his action.

[El Barto]

[ QUOTE ]
A deal for backing has to be all or nothing. So once Greg made a deal cutting backers in on his action, he had to give it for all his action.

[/ QUOTE ]
I understand where you are coming from with this statement, but an agreement does not have to be all or nothing, as long as the exceptions are spelled out and agreed to in advance.

You could arrange a deal to specifically include or exclude certain tournaments.

[M.B.E.]

I stand corrected. Sorry.

[J_V]

As a backer, your figures are low /images/graemlins/smile.gif. And yes, taxes must be paid /images/graemlins/frown.gif.

[Ulysses]

[ QUOTE ]
As a backer, your figures are low /images/graemlins/smile.gif. And yes, taxes must be paid /images/graemlins/frown.gif.

[/ QUOTE ]

JV, don't spend it all paying nightclub covers, OK?

[Greg (FossilMan)]

I have had 4 consecutive backing deals, each for a fixed term of about half a year. At the beginning of each deal, the share price is set, with about 1/3 of the shares being bought by me. If we lost, the losses were shared equally by the shareholders. If we won, I got 35% off the top for playing time and effort, and then the shareholders split the 65% equally by shares. Each deal covered ALL of my poker for the entire term, including cash games, tourneys, and internet play.

Two years ago, 1 share cost $500. At the beginning of the last deal, each share cost a bit over $600.

Each share is now being paid over $35,000. Thus, I am paying out over $2.1 million to my backers. My largest single backer invested $5000 two years ago, and will be paid over one-third of a million dollars.

I think my only unhappy backers are the ones who invested early but cashed out along the way. There are a small handful of such individuals, as we have had a small amount of turnover (some backers out, some new ones coming in, and some investors adding to their original investment) on each new deal.

If anybody asks again, please refer them to this post for me. ;-)

later, Greg Raymer (FossilMan)

[midas]

Being in financial services - I love talking deals:

1. Seems like a standard partnership agreement with Greg being the General Partner (GP) and the backers the Limited Partners (LPs) - was this deal in writing?

2. How were Greg's returns prior to the big win?

3. Greg seems to be a very trustworthy person (I think its the fossil thing, plus no one has ever said a bad thing about patent attorneys!!) How do you determine if the player is on the level? (ie not selling out 150% of the pool), I wouldn't trust most poker players to put money in a parking meter for me!!

Thanks

[TxSteve]

Hi Greg, and Congrats! can't wait to see the replay..

i was just curious...are you days of being backed over? or will there be openings in the future?

steve

[Toro]

Signed contract notwithstanding, his backers must have a tremendous amount of trust in him as an individual as it would be quite easy to under-report live game winnings since there are no records.

[charlie_t_jr]

you have been more than forthcoming and open in responses to questions, about things nobody really has any business asking. You must be hell of a nice guy.

Congrats, and good luck in the future.

[Sundevils21]

[ QUOTE ]
If anybody asks again, please refer them to this post for me. ;-)


[/ QUOTE ]

I miss the "OFFICIAL" titled threads. Just kidding, I hope they never return.

[TPR]

Greg---I have a question that I hope you will respond to concerning your double shootout win on Pokerstars for the seat. When you were headsup and outchipped about 3-1, you proposed a deal to your opponent of 5k for the WSOP package. He responded---7k. You eventually offered $5800, but he didn't come off of the 7k, so play continued. You simply outplayed him from that point on and won when you caught the case queen on the river to beat his flopped straight. Afterwards, I e-mailed my brother explaining the turn of events and suggesting the counter offer I would have made to you if I had been your opponent. Here's the proposal and tell me if you would have accepted it at that moment in time and if not, why not. I will accept your offer of $5800 on one condition, that you pay me 10% of any cashout you make in the championship event. If you don't cash, then there is no further payment. Would you have countered this offer, accepted it or continued to play at that time? Thank you

[Greg (FossilMan)]

I would not have accepted it. It just makes things too complicated, what with my backers and all. I would've countered. Once negotiations start, I never stop making offers unless it is 100% clear that I'm never going to get a deal that I want to take.

Later, Greg Raymer (FossilMan)