Flynn still doesn’t get it. Ollie may or may not get it. And, as always, the editors of the Chronicle have very strong opinions about staking, or buying pieces. Strong opinions they readily admit they don’t adhere to very consistently.
Let’s break it down in bird and otter simplicity:
Simple Staking: The backer, “Gollie”, gives the horse, “Synn”, a whole bunch of money to play a tournament. They agree that Gollie gets a high (> 60) percentage of Synn’s winnings. Synn plays for free, and Gollie foots the bill. If you are Synn, who wouldn’t want that? Got rich friends, ask them for some dough for a ‘sure return on their investment”. A 10% chance of cashing is almost a sure thing, eh? If Synn does not cash, he’s got a back-ache from sitting in the chair, and is out some time. Gollie is out all the moolah. Synn: “My bad, Gollie. I called the all -in pre-flop with AK, turns out the villain had KK. Oopsie and sorry about your money. TTFN”
Way too Complicated Staking: Gollie gives Synn a whole bunch of money to play several tournaments or cash games, over a period of time. Same percentages apply, but this time there is ‘make-up’ involved. Synn does not get to profit until he has paid-back Gollie his initial investment. At which point the profit it is still the agreed upon >60% of winnings to Gollie. Synn gets <40% after he has paid off the debt. No pressure there, Synn, cause, you know.. the next one is sure to be yours since you are a stellar player. Oh yeah, don’t forget you owe Gollie $40k now. BTW, you should re-buy into that $5k tournament with Gollie’s money. (We digress.)
Buying a Piece: When a flamingo borrows money from a bank (aka loan shark) he pays interest. Standard business practice. When an otter (the bank) uses money from a customer, the otter pays the customer interest (standard savings & CD’s are a pittance). The two amounts are not equal, which bites, but the concept is still borrow/use=pay interest.
In poker, it is the exact opposite when buying or selling a “piece” such as 1% or 10% of the entry fee. Hey Gollie, wanna buy a 10 % piece of Synn for the next tournament? Okay, Synn is going to charge you a 20% fee (markup) to give him money to play. There is a 90% chance that Gollie will lose his money by giving it to Synn, and a 10% chance Gollie will get more than he loaned back. GL us!
How does this even make sense? If you are Synn, you are charging Gollie for the privilege of contributing to his entry fee. Gollie gets a set percentage of the prize money back if Synn should happen to cash. Poker pros like Synn charge what the market can bear for their name or poker-playing reputation. Synn has expenses such as travel and food, and deems fees a way to offset the cost of being a pro. Yeah, okay. But most flamingos don’t get to charge off the fuel they use to drive to work or lunch money. And, if they do, they claim it on their self-employment tax form.
Our highly respected and valuable opinion is that backing and buying pieces is devaluing the game. The Synns are playing with other animals’ money, and this changes the dynamic radically. It becomes not what you know, it becomes who you know. However, what Gollie chooses to do with his money is up to him, and so Bill Perkins, if you would care to contribute to a well-versed 1/2 NL player’s bankroll, Flynn won’t object. And the editors fully admit that we tried to buy some of DNegs cheap/no markup action, but were shut out both times.
Clearly this short commentary did not cover no-markup requests, usually made by the humble. It has not covered the exchange of pieces, usually done by pros, nor has it delved into how serious a conflict of interest it should be deemed when a buyer plays the same game as his horse. Best let this rest for another day.
Daniel Negreanu, we are still waiting to ship you 5 bucks for a piece. Don’t forget us. Phil Helmuth, someone may want to buy you at 30%, but humility is not your social persona so we are out (love you, really tho). Chainsaw, we’d be in, but your pieces are too big. Guess we just stake ourselves.
Fin
Flynn