Don't expect a bonus this month from Party & Skins

Lawrence Ng · #1 03-12-2005, 06:28 PM

Granny made an excellent post with great speculation that PokerNow's decision to withdraw rakeback is highly correlated with Party's move to make an IPO.

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pre-audits for IPO's of US based companies would include the underwriters telling a US based company to stop this practice prior to launching the IPO. the company/concept they are selling is a business model that does NOT include one group getting better treatment than others. also, for an IPO to be most effective, party would need to get back many of the players that left them for rakeback at a skin.

i don't know how UK based offerings work though, so this is speculation. rakeback is prohibited in party's terms. if they allow this term to be ignored, it does not look good to the underwriters and investors.

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Investment Banking 101 - Most companies usually have good momentum with price/earning ratios going into an IPO and prefer to keep it that way to boost stock price. Investment bankers (they are the groups in charge of setting up the IPO) have the responsbility to trade, manage, set up, provide any securty advice they can to the companies.

Party and it's group of investment bankers have most likely decided that it wants to boost its price/earnings ratio up thus knocking down PN's rakeback. If they have chosen the path to knock down rakeback, I would think their IB's would also choose to have bonus knocked down this month as bonus obviously do not provide the leverage they need to make their IPO more lucrative and desirable.

Sure enough, Party & Skins may possibly lose a small percentage of their player base as a result of this since some players do highly regard rakeback as being an important attribute to playing on these sites. But take note, that IPO's do not care about player base numbers. They care about $$$ numbers, ratios, earnings, costs, and most importantly capital. There is a marginal trade-off here that obviously exists if they lose a small player base but it's obviously offset by earnings gained from cancelling rakeback.

Lawrence.

mcozzy1 · #2 03-12-2005, 07:14 PM

Would doing away with rakeback really help the bottom line?

I think they are going to lose a lot of business if they do away with rakeback entirely. Many of the people with rakeback deals play multiple tables. I think you'll start to see some of these players playing at least some of their games at sites where they have better rakeback deals (maybe 4 at a Party skin and 4 elsewhere - instead of 8 on skins).

If there's an average of 50,000 players at any given time, I would guess that maybe 1/5 of them are multitablers. If they lose even 1/4 of this business, it amount to a lot of money. I would imagine it will impact the high limit players the most.

Plus, not having affiliates will cost them new customers as well. When a new player asks what site to join, they'll more frequently be referred to sites other than the Party skins.

I'm no business whiz, but will cutting rakeback programs really help their bottom line?

Catt · #3 03-12-2005, 07:25 PM

Investment Banking 102 - Departing from past practice around the time of an IPO or shortly after is frowned upon, to put it mildly.

No way do IBanks or auditors have anything close to the degree of influence to tell Party (IGM) to crack down now -- if anything, cracking down on affiliate sites would give the bankers, if an IPO is being prepared, severe heartburn.

RollaJ · #4 03-12-2005, 07:51 PM

Fuuny, I would think just the opposite...... Party should lay the Bonii on thick and heavey to cause more players to comeback and stay a while...... I wouldnt be surprised to se a $1,000 bonus for 10,000 hands

Uglyowl · #5 03-12-2005, 09:08 PM

They may offer a bonus if they want to offer impressive metrics, but I don't know what angle they will be taking in selling this. I am sure it will sell itself for the part.

Also if Party thought they would lose by doing this then they wouldn't have

LondonBroil · #6 03-12-2005, 09:24 PM

I think I'll live because I plan on making a ton of money on their stock (hopefully).

Dead · #7 03-13-2005, 02:17 AM

When does Party plan to make their IPO?

Reef · #8 03-13-2005, 06:01 AM

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I think I'll live because I plan on making a ton of money on their stock (hopefully).

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seriously.. someone PLEASE post some info on how to obtain some of their stock. (I'm a total stock noob)

andrew26 · #9 03-13-2005, 09:01 AM

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Fuuny, I would think just the opposite...... Party should lay the Bonii on thick and heavey to cause more players to comeback and stay a while...... I wouldnt be surprised to se a $1,000 bonus for 10,000 hands

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Hope they give more than 7 days to clear that one.

RollaJ · #10 03-13-2005, 10:28 AM

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Fuuny, I would think just the opposite...... Party should lay the Bonii on thick and heavey to cause more players to comeback and stay a while...... I wouldnt be surprised to se a $1,000 bonus for 10,000 hands

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Hope they give more than 7 days to clear that one.

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Yah, most people would need more than a week, but if they offer only a week they will still have hundreds who do it [img]/images/graemlins/shocked.gif[/img]