Devo's backing article

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First: I am honored at my first ever 2+2 thread.

Second: I actually stand by my point that backing a WINNING player is risk free. OBV there are the circumstances to consider like long term run-bad and the psychological factors that those incur, but if a player is a long term winner on their own, make up insures that the player is playing basically on their own but provides the opportunity for them to play in bigger games. The rub that I think you're getting at is that if a player is stuck 100k due to make up they're going to play far differently than if they were stuck 100k on their own and playing off their own bankroll. If a player stuck on make-up wanted to make some beer money, he's gonna have to cash for over 100k, where as the guy stuck 100k in toruneys but still playing on a 20k bankroll still knows that he has beer money for the night and ain't sweatin' having to cash for 100k+ to make some bucks for the night.

Glad you appreciated the article. It was written on a plane without any inspiration at all- I was late on a deadline and asked my editor for any ideas, and he promptly said, "Backing."

Devo

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My understanding is that Make-up exists only for the duration of the staking agreement. So the horse gets down 200k in entry fees, the backer runs out of patience or money and ends the deal. Five years later the horse makes a $1.8 million score in a WPT event. He has no obligation to make up the $200k at this point, right?

If so, then staking obviously is not risk free.


Edit, see this quote:

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"Backing players is pretty much a losing proposition,'' says Ted Forrest, who has backed such players as Cyndy Violette and Layne Flack. "I've lost a lot of money backing other players. There's only a few players that have been lucky to back players that have won for them. I think [Phil] Ivey has backed players that have won for him and Daniel [Negreanu] has been lucky with players he's backed. But for the most part, backing other players is a losing proposition.''

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Source of quote here

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And more words of caution, this time from Thomas Keller:

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So, cutting to the chase, when should someone stake another poker player? My protective instincts toward my readers are screaming at me at this moment, wanting me to yell out, "Never, never stake any poker player in any game or tournament as the downsides are vast and often deceptive. In addition, those who stake poker players generally end up losing a lot of money."

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Keller also says this:

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I have learned a lot about how and, more importantly, when to stake players. Unfortunately, I have learned the hard way, and despite putting considerable time, effort, and heart into my staking endeavors, I am currently running a hefty financial loss in staking. This should not be surprising, as I believe that most people lose money when they stake poker players.

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Source of the two Keller Quotes

Note that Keller reputedly lost a lot of money in a backing deal with Scott Fishman that included make-up when Fishman got way stuck and walked away from the deal. Reports on the amount that Keller lost range from around 200k to 400k.

Staking is far from a risk free endeavor as far as I can tell.

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Sorry, one last one, before I stop flogging this horse. Even Mason Malmuth has criticised staking with make-up as a potentially risky endeavor:

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One problem with these deals is that if the horse does poorly and gets in a big hole, and there is always some chance this will happen [the horse walking away from the deal] no matter how well he plays, he will then be playing for nothing because even if he does well in a tournament, all the money will go for making up the entry fees.



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Source of the Malmuth quote

[DonkStrike]

Of course, you can, also, run into the Tom McElvoy "problem".

Tom's backer "thought" he was backing him the year he won the main event. Tom "thought" he was not backing him on that event. I believe all litagation was eventually dropped.
btw, I am NOT saying Tom was pulling a "Jaime" here. I'm just saying you must be aware that "misunderstandings" can occur.

[MaverickUSC]

All of the above obviously correct. I suppose I should have been more clear in my preposition of free money to include all those other litigating factors as well.

Devo

[Cornell Fiji]

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All of the above obviously correct. I suppose I should have been more clear in my preposition of free money to include all those other litigating factors as well.

Devo

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I really hate how sue happy everyone in America has become.

[ReptileHouse]

Definitely. We need more Karens, Ruths, and Helens. The population is totally skewed right now in favor of Sues.

[FortWorthJim]

Is there any merit to staking without makeup? Would anyone do this?

In the Mark Blade book, "Professional Poker," he said the best deal would be a 70-30 split in favor of the backer with no makeup. The percentages could be adjusted down to 65-35 or 60-40 depending on how strong the player is.

He said even with a 50-50 split he would rather back someone with no makeup because of all the issues talked about here with a prolonged losing streak (jumping ship to another backer, playing worse because of pressure and not having money to live on).

However, it seems like all the deals actually carried out in the poker world have makeup to prevent the player from making money before the backer does.

[Greg (FossilMan)]

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Is there any merit to staking without makeup? Would anyone do this?

In the Mark Blade book, "Professional Poker," he said the best deal would be a 70-30 split in favor of the backer with no makeup. The percentages could be adjusted down to 65-35 or 60-40 depending on how strong the player is.

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How can you back anybody for one event and give them 30-40%? Nobody is that good. If you back for one event, and the player is great, you can give them maybe as much as 20% and have positive EV for yourself. If you do a long-term backing deal, then you can give the horse 50% or so.

The way to avoid the make-up issue is to simply never have an open-ended deal. Make the deal for a set period of time, like 6 months or a year. Then, if the player has any integrity, they will play out the period, and do their best, no matter how deep the hole becomes. Of course, if they don't have such integrity, why would you ever back them to begin with?

Later, Greg Raymer (FossilMan)

[FortWorthJim]

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Is there any merit to staking without makeup? Would anyone do this?

In the Mark Blade book, "Professional Poker," he said the best deal would be a 70-30 split in favor of the backer with no makeup. The percentages could be adjusted down to 65-35 or 60-40 depending on how strong the player is.

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How can you back anybody for one event and give them 30-40%? Nobody is that good. If you back for one event, and the player is great, you can give them maybe as much as 20% and have positive EV for yourself. If you do a long-term backing deal, then you can give the horse 50% or so.

The way to avoid the make-up issue is to simply never have an open-ended deal. Make the deal for a set period of time, like 6 months or a year. Then, if the player has any integrity, they will play out the period, and do their best, no matter how deep the hole becomes. Of course, if they don't have such integrity, why would you ever back them to begin with?

Later, Greg Raymer (FossilMan)

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I should have specified. He was referring to long-term deals.

[ReptileHouse]

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How can you back anybody for one event and give them 30-40%? Nobody is that good. If you back for one event, and the player is great, you can give them maybe as much as 20% and have positive EV for yourself. If you do a long-term backing deal, then you can give the horse 50% or so.

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Can you elaborate a bit? How is this any different than any other short term vs. long term EV situation? That is, the odds are the odds regardless of sample size. What am I missing?