Devo's backing article

[Bonified]

On Pokerpages

Backing arrangements on the tournament circuit are "the elephant in the corner" to some extent. The majority of the casual audience have no idea that such a large proportion of the field are basically playing with someone else's money. Bryan's article is well-written, explains backing arrangements very clearly and it's good that he has brought this into the open on a site like Pokerpages which has a very large casual audience.

But ... I do have a problem with parts of it. I cannot accept that backing people is "free money". "So they go $40K in the hole. Big deal, when they will eventually cash for $200K". You can't just wish away the worst case scenario as having zero probability. The worst case scenario is so bad for the backer that even if it is low probability, it has to be factored in. Look, this does happen. This has happened. Horse is $250K in the hole, goes up to backer and says "I don't want to play any more". Now what's the backer going to do ? What do you do in this spot Bryan ? Options that I can think of are :

- Write off the $250K
- Sweet-talk the horse round into playing some more
- Take the sheets option, and tell the horse if he quits he's going to find it difficult to play with one arm

Frankly I think the sheets option is by far the best, if you're ruthless enough. If you're not, you can either write the money off or persuade your horse to keep going, which might just be digging the hole even deeper. He's already demotivated, and he's in a situation where only a huge win can get him out of it, but continuing to lose is basically not going to make his situation any worse. Not being able to pay $250K isn't really any different from not being able to pay $500K.

How likely this scenario is depends on your judgement of the staked player, both as a winning player and a trustworthy person. But I do think it is clearly wrong to assign it zero probability. I repeat, this can and does happen.

That's my main problem with it. I also find it hard to believe that when 55 bracelets are being given out every year, there are really any substantial "TV endorsements and other sponsorships" on offer. I personally would feel more pressure to cash if I was on someone else's money, but maybe that's just me.

I know Bryan posts on here so I welcome his comments, and I've never been in a backing arrangement on either side so of course if people who have been can put me right based on experience, go for it. For me, I would be very, very careful about entering a make-up arrangement on either side. It may be unlikely to go wrong, but if it does, it will go very wrong indeed. I derive a lot of satisfaction from making my own way in poker, and of course I also get to keep 100% of the profits. Now that's free money :-)

[cking]

Thats why you have signed contracts that involve paying the backer back. This is known as "make up". Now how it's enforced is one thing but if you have a firm legal contract then it certainly is the right start.

[gobboboy]

He's talking about not paying back as in he's not going to be playing for the backer anymore and not going to enter any more tournaments. Almost all backing deals (if the backer is smart) has makeup and I don't think that is a problem for them, but people quitting in the middle of a deal is probably a much bigger problem (or just quitting when they have racked up a quarter mill in debt and not signing on for a lot more tournaments).

[daryn]

haha.. sheets is ruthless? i wish he would try to break my arm. i could use the money.

[Bonified]

What gobbo said.

If you have a contract saying that the player has a legal obligation to the debt if he walks away, then fine, but that clearly means that the deal is not risk-free for the player.

The point I'm making is that there is a chance that the player will reach a point where he doesn't want to play any more, or even if he does, if he keeps losing and the backer has no confidence that continuing the deal will be profitable. At this point, someone has to pick up the tab. You can't wish this away and say there's no risk to player _or_ backer, as I think Bryan's article implies.

Edit : As for sheets, I made that comment based on something he said in another backing thread. If it was a joke or a level, he got me :-)

[MaverickUSC]

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

[FatalError]

100% risk free?

[gobboboy]

Risk of ruin still exists for a long term backing deal, Bryan, same as you playing yourself. But you can't get frustrated and quit yourself.

[Bonified]

That's what I'm really saying, you're sharing the risk, not eliminating it. I appreciate that you (Bryan) are aware of the psychological factor of being stuck deep and maybe didn't want to over-complicate the article. But the possibility of the arrangement ending, for whatever reason, when the horse is seriously stuck is a "black swan" event that I think has to be considered because, while it may be rare if you pick your horses carefully, it will (as I have said above) be very bad if it does happen.

Anyway, thanks for the responses. If anyone who is staked / does a lot of staking wants to chime in I'd be very interested to hear their thoughts.

[Zetack]

[ QUOTE ]
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

[/ QUOTE ]

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:

[ QUOTE ]
"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.''

[/ QUOTE ]

Source of quote here