Anyone have a backer?

[MsprinM]

As of right now I am strictly low stakes. Been playing mostly local tournaments which is hard to build a bankroll. I'm a winning player but want to make the switch back to cash games. I was talking to a guy whose opinion I trust and he suggested that I get a backer or stake horse. I plan on finding low stakes cash games away from the deep pocket games. In other words find the soft home games and make some new friends. To build something up. I don't mind grinding it out on my leather ass so to speak. Have any of you ever worked with a backer? What kind of percentage should I expect to pay them? Anything to look out for and be wary of?

[Wedge Rock]

Knish takes 25% of the winnings, and if you lose, its on him.

[Quads]

What type of stakes are you talking about playing in needing a backer?
Most common, AFAIK, is your backer takes 50% of the vig.

[Rounder Wannabe]

forgive my ignorance but what if you lose? is it on the backer? or do you have to pay him back

[Quads]

Losses are on the backer.
(AFAIK)

[MsprinM]

What type of stakes are you talking about playing in needing a backer?
Most common, AFAIK, is your backer takes 50% of the vig.

Yeah my post really wasnt that clear sorry about that.

My friend thinks I should be playing in the 5/10 or higher games around town but that would require bank that I wont have until I find someone to buy my wife off of me. Which is where the backer would come into play. I think he is a little nuts but like I said I respect his opinion. Really just looking at how the whole system works. I dont think I would do it. Ill find me some soft home games to build something up. Its just a matter of finding the games and keeping life expenses from eating up the profit.

[Gerdass]

I've had offers to back me in some smaller tournaments and things, nothing real big though.

I didn't want to do it. I think mentally it would mess with my game. When I play, I have to have a detachment from the cash. Knowing that if I lose, oh well, no big deal. But a backer may mess with my head and put some pressure on me that I wouldn't have when playing with my own roll.

Plus, the guy that has made several offers is a close friend of mine, and I don't want to mix friendship with business.

I've never been involved with cash games. What was proposed to me was for tournaments. The agreement was: Losses are on the backer. Wins, backer get's the entry fees back, profits usually split 50/50 or 60/40.

[Aust1227]

I am anti-backer. If you can't pay your own way then you playing too high stakes. Winning poker and proper bankroll managment is the only backer i trust!

How can you even consider a 5/10 game, if you can't win the $5000 required?

[T]

I love the idea of a backer. I don't have the roll to play big games. So I don't play big games. I play within my means. I also would love the idea of having the "financial ability" on someone else's dime where if I bust out/go card dead without missing a mortgage payment/car payment. Having said that, I don't play a weekly game or even a monthly game any more just due to poker fad dying out.


Next thing is this....at what point do you tell the backer you no longer need their financial backing once you start doing well at the game and build your roll to a self sufficent status. Does the backer still have the ability to keep you under their thumb?

granted all this is purely hypothetical for me, but the first things I thought of.

T

[MsprinM]

I am anti-backer. If you can't pay your own way then you playing too high stakes. Winning poker and proper bankroll managment is the only backer i trust!

How can you even consider a 5/10 game, if you can't win the $5000 required?

Thats my frame of mind to. Play the lower stakes and win my way there. The experience of the ups and downs and the pressure is invaluable. But id be lying if I said he didnt get my curiosity up.

[timsta007]

I've been backed and been a backer for tournaments and cash games before so I've been on both sides of the fence. Tournaments are easy, usually the backer fronts 100% of the risk and then you negotiate percentages of profit, after taxes and return of the entry fee. 50/50 is common but smart backers will negotiate better percentage for themselves because what you really are paying for is the time of the player you are backing as well as expenses for a certain tourny. Lets say you back a player in 5 $1000 tourny's. Your risk is $5000 but the player has to take the time to play in each of these tournies with the potential for no rewards as well so his risk is wasted time. In addition, usually the player will have to spend money on food and a room at the hotel, as well as other unforseable expenses. Often there is travel expenses (gas, airline tix, etc). The best way to do it is to figure out a fair distribution of costs and risk so that a win is distributed equally compared to the risks both players take. A lot of players being backed love the situation because they just want to play anyway and get to do so at a very reduced cost, especially if things go poorly cardswise.

No Cash games are a much more complicated situation but the same principles can be applied. One of the most simple backing solutions is that both the player and the backer provide 50% of the buyins and split the profits evenly. There is no room for negotiation or argument here, except for the time investment of the player. Usually the associated costs here are less as Cashgame players usually have a local game they can play so no hotel/food costs. Only the time, and with cashgame players that isn't usually an issue as if they didn't have the backer they would just play a lower stake. If you are looking for a 100% backing to start out then it gets quite a bit more complicated. For any NL game you should assume proper BR managment of having a starting BR of 20 buy ins with 100 big blinds per buy in. so for a 5/10 game you would need $20,000 BR to play in that game consistently. If you can find someone willing to spot you 20 dimes thats great but its hard to find unless you have established yourself as a top pro player and you live in LA or LV. You can play in bigger games like 5/10 with a smaller BR but you have a much higher chance of going broke even if you are the best player (or one of the best) because of variance.

Regardless of how big a stake you get from a backer I think the best way to do this is to establish about how much time you intend on playing (per month say) and balace the books every month. Lets say you get $5000 stake and you start playing 3/5NL full time. If you play a lot and have a good month you might make $3000 (just to pick a number). At the end of the month you would balance the books and take the 3k profit and split it by percentage you have negotiated. in this case a 50/50 would be a great stake for the person being backed but IMO the player would have had to demonstrate that he is hugely better than the others at the table for me to offer that big of a split. Normally I'd say anywhere between 30/70 to 45/55 would be more fair to the backer. As the player you should push for as close to 50/50 as you can get. Now lets take a losing month. Say you lose $2000, when you balance the books you inform the backer there is no profits and you'll get back to him next month. You then must work fully on his dime to get back up to $5000 (or over) and you neither backer nor player gets anything until you get back over 5k and balance the books again with a net profit. If you go broke the backer is out and has to make a new decision if he wants to back you again. If I was backing, I would set up a contract with all of this as well as an end date say 6 months to a year when I could legally pull my initial investment (or whats left of it) back out, or if I was happy with the araingment I could renew the contract or even increase it to get the player into bigger games. As a player, I would usually want a clause written into the contract that I can cancel the contract at the end of any month when the full $5k investment was intact. This way if you build up enough funds from winning, you can start playing and winning 100% once you have a BR.

These are the ways I've done playing and backing personally and havn't had too many issues, but that being said I do so very rarely and only with players I'm very very familiar with and can trust both as good players and as trustworthy people. Drafting and signing a contract is critical for both parties. Most of what I've posted is fair for both sides but as a player, you should negotiate the contract so that you get the greatest benefit possible rather than what is most fair. GL finding someone to back you, hope some of this info helps.

[T]

nice first person point of view tim. Seems like an overall pain in the ass. I'll stick with my $20 buy in games.

T

[Quads]

My wifey is my backer.

[Rounder Wannabe]

My wifey is my backer.

does she have a younger neice ? sister?

[MsprinM]

Timsta that was an awesome post. +rep being sent. Lots of great info.

[timsta007]

Glad I can help. I'm always grateful for the valuable information guys like Oz, Gerd, and Shadow provide regarding their profession. My line of work doesn't come up much in everyday life so it's cool when I know something that can help someone out. I think most people on this forum feel the same way.

[Aust1227]

Which one is better? A personal loan, or a 50/50 backer?

Key assumption - THIS IS A POSITIVE EV player, otherwise I think it is fair to say they wouldn't have a backer interested.

Ready for the math?
Assume we need $20K to get started. We expect to earn $3000 a month. 20% of all times we execute this deal we go belly up.. Fair enough?



A 50/50 backer....
20% of the time we go belly up, debt is forgiven... EV =0
80% of the time we make (12X$3000) $36,000 BUT, 50% of this goes to the backer.. our ev = $18,000
So, your weighted Valued is (.8X$18000)+(.2X0)=$14,4000, for a full year of playing cards.

A personal loan in the amount of 20K w/ an APR of 15% (no points, or initation fee, call it a high APR Home Equity line).
20% of the time you go belly up EV -21,660
80% of the time you make $3000 a month, monthly loan payments are $1806 for an EV of $1196 per month of (12X$1196) $14352
Weighted averaged (.2X-21660)+(.8X$14352) = $71496

So, with these assumptions the backer is a much better deal.. But, these assumptions were weighted to favor the backer (high interest rate, 50/50 split, no debt repayment for backer, small winning percentage)

YMMV...

[bigslickwood]

We had a kid we played with regularly down in Boise. He'd come play in the $20 tourneys with us, but couldn't afford any of the higher stakes games. We offered to back him several times, but he didn't want the pressure.

[Aust1227]

BTW, working a little further through my math calculations.. Change the assumptions to
60/40 backer/player split
10% APR
$10K bankroll
$4000 a month win
And only a .1 chance of going belly up and the results are much different
Loan = $28,500
Backer = $16,500

[Gerdass]

You calculations are flawed.

IF you go lose it all:
Backer = don't have to pay back.
Loan = still have to pay back

[Gerdass]

You calculations are based strictly on EV. You must also consider cash flow.

IF you go lose it all:
Backer = don't have to pay back.
Loan = still have to pay back.

So, with a loan, you go belly up and are now making $500+ per month at least monthly payments. If you had to borrow the bankroll to begin with, you no longer have a bankroll to operate on in order to make the monthly payments. So you've hinder all future earnings as well.

[Aust1227]

You calculations are flawed.

IF you go lose it all:
Backer = don't have to pay back.
Loan = still have to pay back

That was figured in there.. That is the only reason that a backer makes any sense at all! If you didn't have to pay back the bank a loan would be the obvious decision!