Questions about a potential backing deal

[Shaun]

This might not be the correct forum for this, but it is the forum I spend the most time on and I know there are a a lot of posters who frequent it that have knowledge about these things. Anyway here is the situation:

I have a friend who has a couple of partners in a side business. One of them has access to a great deal of cash. My friend is the business manager- he essentially makes the investment deals and decisions. He and I have played poker together a good bit and have talked about the game a lot. He has basically known me my whole life.

He has seen my development and results over the years and has confidence in my ability. The other night while playing we got into a discussion about sponsorships in pro golf. I mentioned that sponsorship in poker is probably not far away.

Later, we discussed an idea. He asked me if I thought I could make money for him and his partners. I replied that I was certain I could, but that in order to make it worthwhile for both parties they would have to provide me with a bankroll far greater than what I was currently working with, so that I would make more money than I am currently making playing in the smaller games after their cut was taken out. I told him that my only interest in doing it would be to build my bankroll to that level quicker than it will take if I stay on my current course.

We decided on 100,000$ and discussed the possible pitfalls of the endeavor, its chances of success, and how we could convince his two partners that the venture was safe and worthwhile. I have never been backed by anyone, so I didn't really have a solid notion of what a fair deal would be.

Finally, here are my questions: Assuming the party in question agrees to back me in the amount of 100k, what are fair terms? How much of my winnings do they get? Should there be a time limit on the venture? Should I sign a contract with them? Should they be paid their cut every month, quarterly, or after a year?

I told my friend that I would be pretty conservative with the bankroll because that's how I am now and I learned the hard way in the past to minimize risk. I also told him that it would be a slow grind out of the gates as I'd be moving up in limits and I'd want to be sure I could handle the games. I would play mostly no limit cash games, but would take the occassional shot in larger tournaments (probably through satellites) as the bankroll increased. I would mostly play online as it would be possible for them to monitor my results.

I know this a long post but I really want to hear what people with experience in these matters say. For example, what kind of returns should they expect? I have been playing 100NL for a while now- how much will my winrate decrease in proportion to the buy-in as I move up? If I am playing 1000$ buy-in games (probably where I'd start), what kind of expectation can a decent player have per table assuming I practice good game selection?

[NegranuFan]

I am not a pro by any means. I win most of teh time I play 1/2 limit home games where I am from. (can I leave my email if people are interested in a home game in teh Golden Horseshoe-Canada? I Didn't read the terms and conditions)
I do however see some logical flaws in the plan that may need to be addressed.

1) Sponsorship in Golf is an advertising venture, with the assumption that people will buy equipment. Where do your partners get value if you LOSE?
I unfortunatly can't see ANY value unless tehy are advertising on you and you are playing in major tourneys.
What is your bankroll now??
2)Now assuming that this then 100% a money making venture as per Rounders (minus the overnight truck driving), then what would your rush to move up limits be? Why do you not want to build up the bankroll Ye Olde fasion way?
I just see that if you are strapped foR cash and you are trying to turn pro, based on the desire for outside help, then jumping in with $100 000 seems like a horrible investment for your buddy, regardless of how good a player you are.
I guess the ultimate question is WHY DO YOU NEED $100 000???
If you need cash, and your friend is confident enough in your skills that he is willing to give you money, why not find a game, and have him pay the buy-in? Someone with access to $100 000 in a company has access to $1000 from the bank account.

I see that plan as a safer alternative. Less risk for your buddy, and a LOT less stress for you.

Thoughts? Did I understand tHe situation correctly?

[Shaun]

My bankroll is currently a little greater than 20k. Actually, I do play for a living and have been doing so about a year and a half. In the past year I got married (expensive), moved twice (also expensive) lent out almost 6 grand that is being repayed very slowly and generally blew too much money. That said, I did do it the old fashioned way. I started with 400 bucks and played a lot of freeroll tournaments to build a roll for the 25$ games before I started playing for a living. Sine then I have won slightly more than the proposed bankroll, but it has mostly been spent on college, living expenses, a car, and probably too much leisure.

The sponsorship conversation was what lead to the backing discussion, but you are right- the two things are different. I would not be generating advertising money for my backers, though if I were to ever make it to TV somehow I'd certainly wear whatever they wanted if they thought it would help their business (doubtful). Anyway their main interest in doing this would be it is actually very low risk and ensures a pretty decent return over time.

Think about it. If you invest 100k in stocks, how much can you make in a year? What is your risk? Could you lose in that year? How much could you hope to make?

Any winning poker player is going to be hard pressed to have a losing year. They aren't going to lose the whole bankroll- and there is virtually a zero percent chance that they won't make some money. It is certainly possible they might be able to make more money doing something else with their 100k, but that is their business and not mine.

Whether they back me or not, I am determined to get my bankroll to a level where I can play some of the bigger games I have seen that appear to be very beatable. There are games, for example, in two cities close to me that are very soft in which players regularly sit with anywhere from 2-10k dollars. When I go to these games, I cannot put 2k on the table, because it is ten percent of my bankroll and I want to play in games where I feel I have virtually zero risk. Since I play for a living I do not take chances. I grind. With a bankroll of 100k, 2000 bucks is one fiftieth of my roll and my risk of ruin is very low. Even with that much money, I would not take chances, I would still grind, but the grind would simply be at a higher level.

You are right to point to the fact that it could be stressful as heck for me. Right now my life is good and I have virtually no stress. Playing for others might change that. Anyway I am open to all comments and can certainly understand any skepticism.

[TStoneMBD]

i gotta say, something doesnt sound right. i cannot possibly see your buddy giving you the 100k that youre asking for. not happening.

[XChamp]

How are you so confident? Sure you are beating the NL 1/2 but the games change as you move up...

[lawpoker]

disregarding the veracity of the OP, isn't this what happened on TILT, except they were laundering money?

[dogmeat]

No offense, but:

1) as so many other posters that are looking at (or for) backing deals, you have proven yourself to have no long-term money management ability.

2) anybody that posts there is no risk to investors in a $100,000 backing deal is either a fool, or is looking for one.

Dogmeat [img]/images/graemlins/spade.gif[/img]

[voltron87b]

If I had 100K to invest I would not be looking for a poker player to stake.

[Shaun]

Wow. I expected to get flamed, but not 100% flames. LOL. Well, I'm still looking for a straight answer to a legitmate question. Since everyone is convinced I'm in fantasyland, let's drop a zero from all the numbers mentioned. Assume I will be staked 10k, and (work with me) that I am a decent player. What would be a fair deal?

I need answers to this question and there is no better place to get them. This idea definitely didn't come from Tilt- people have been doing this for a long time. Two Plus Two icon Greg Raymer was partially staked by others.

Finally, even if this is a terrible idea for said investors (why is that, again?), no one is going to make them do it. If they don't do it, they don't. I don't care that much. But I need a good idea of what a fair deal would be if they were to stake me.

I have another question and I'm really interested in the answer- if you did have 100k bucks, what would you invest it in?

[voltron87b]

[ QUOTE ]
Wow. I expected to get flamed, but not 100% flames. LOL.

[/ QUOTE ]

My post wasn't a flame. My point also was that IMO staking has a level of diminishing returns. Someone can make a lot of money staking someone at a low level since it is easy to get more than a 10% return (whatever the market average is) at lower levels. As you move up in levels it becomes harder and harder to beat the market. In poker, the higher the stakes the less the general return. When you invest that is not true in the same way.

[ QUOTE ]
I have another question and I'm really interested in the answer- if you did have 100k bucks, what would you invest it in?

[/ QUOTE ]

I would get a money manager/ mutual fund/ etc to do it.