Investing in Greg - the big payoff and IRS

[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 [img]/images/graemlins/smile.gif[/img]. And yes, taxes must be paid [img]/images/graemlins/frown.gif[/img].

[Ulysses]

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

[/ 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