Question about backing tournament players

[Assani Fisher]

Hypothetical scenario:

Someone is a good player but doesn't have a big enough bankroll to play in a big tourney so he gets one or two other guys to pay for 50% of his entry. A few questions:

1. Do they get exactly 50% of his winnings usually or do they get less since in addittion to paying his 50%, the guy also was the one with the "skill" that won the money? I understand that this probably differs on a case by case basis(especially depending upon just how good the person is), but what is the typical situation?

2. Does the tourney player subtract taxes and dealer tips before paying out the percentage to his backers?

3. Does the tourney player add in cost of travel and hotel? For example, if the backer paid $5000 and the event was a $10,000 entry but also it cost the guy $1000 for travel and hotel, then would the backer get 50% or 45%?

As I said, I understand that this probably differs between each case, but in general what is the standard practice?

Edited to add: Sorry if this is the wrong forum, but it came down to either here or the MTT forum, and I figured I'd find more help here. But mods feel free to move this if it doesn't belong here.

[beyeond]

[ QUOTE ]
1. Do they get exactly 50% of his winnings usually or do they get less since in addittion to paying his 50%, the guy also was the one with the "skill" that won the money? I understand that this probably differs on a case by case basis(especially depending upon just how good the person is), but what is the typical situation?

[/ QUOTE ]

Considering that the skilled player wouldn't even be in action without the stake, I would assume he has to give up a full 50%.


[ QUOTE ]
Edited to add: Sorry if this is the wrong forum, but it came down to either here or the MTT forum, and I figured I'd find more help here.

[/ QUOTE ]

I laughed.

[Assani Fisher]

anyone else?

[tripdad]

from my understanding of many backing deals, the person who is doing the backing pays for 100% of the entry, and gets 50% of the winnings. as far as the tax thing, i'm not sure.

i know if someone backed me with 50% of a tourney entry, they would get only 25% of the winnings.

now, i have heard that carlos mortenson backs several players. he pays for travel/hotel, puts up the entire buy in of the event, and gets 60% of the winnings....and i of course do not represent this as fact, only what i've heard.

tripdad

[jtomon]

#1. open to negotiation---I think 50% sounds right.
#2. I would, just need to agree on a marginal tax rate.
#3. I was under the impression that it was a total cost back, so I would want travel.

[Miggo]

Can you just have the taxes taken out of the winnings when you collect the prize money, and then split 50/50 what's left?

[jtomon]

I'm a CPA so I'm probably nitpicking---what the casino withholds and what your tax rate is on those winnings are 2 different things. Say the casino withholds 25%...the player may only be paying 18-20 something percent on the winnings (unless its a huge score)-or maybe vice versa. I would agree on a rate ahead of time--regardless of the casino withholding. Once again, I read contracts and negotiate financing for a living....

[Durs522]

The casinos do not take anything out for taxes. They give you the check for the amount you won, take your SSN, and leave it to you to worry about the taxes.

OP - I recently did a backing deal with a friend of mine. We took his total money earned, subtracted estimated taxes, hotel stay, and tip, and then took the percentage off of the new number. Whatever you do my advice to you is to put it in writing, you never know what people are going to do if you make a big score.

Durs

[TomCollins]

[ QUOTE ]
The casinos do not take anything out for taxes. They give you the check for the amount you won, take your SSN, and leave it to you to worry about the taxes.

OP - I recently did a backing deal with a friend of mine. We took his total money earned, subtracted estimated taxes, hotel stay, and tip, and then took the percentage off of the new number. Whatever you do my advice to you is to put it in writing, you never know what people are going to do if you make a big score.

Durs

[/ QUOTE ]

Not always true. But then again, most of the stuff posted in this thread is crap anyway.

[schmoe]

Suppose you won a million dollars and had a backer with an agreement to split winnings 50%. Legally, who is responsible for the taxes? In other words, what income does the player report, and what income does the backer report?