Part 2: Getting Staked in Poker Tournaments: How to Land a Deal and Not Get Screwed
Published on April 20, 2017
Recently we wrote an article about poker tournament staking and how deals worked. We went through all the inner workings of the deals and the different options available. Not to sound like a school teacher, but if you haven’t read it yet, we highly recommend doing so as a prerequisite to reading this article.
Since we’re all good little boys and girls and have read our homework, we are all now up to speed on how poker staking works and all of the ins and outs. What we’d like to get into now is how you go about actually getting staked, whether you’re looking for a one-time deal, a package, or a long-term deal.
The easiest staking to get is usually for a one tournament deal. This type of deal will have no makeup and will be for one tournament only. A onetime deal is usually easier to get funded as it’s a much smaller investment than a multi-tournament package and can also be sold to multiple people in the form of shares. You’re also not dead in the water if you don’t sell the entire package as you could choose to invest more of your own money into yourself if you get close to selling out.
Here are the steps to trying to land a onetime poker tournament staking deal
Decide on the tournament you want to play. Decide how much of your own money (if any) that you want to put up and then decide what sort of markup you want to charge on the remaining portion of the buy-in. If you don’t know what markup is, then you didn’t do your homework, and we highly recommend reading Part 1 of this blog first.
When deciding on the level of markup to charge, it’s best to look around and see what is being charged in the industry by players with similar skill levels as you and for similar tournaments. Ultimately, you want to try and find the highest markup you can charge that will still get you fully funded. We’ve seen standard markups anywhere from 1.00 (no markup) to around 1.4 or 1.5. We have seen higher but don’t count on it. You also don’t want to be trying to rip off your investors with an astronomical markup because if they find out and wise up, good luck trying to get them to stake you in the future.
When you determine how much of yourself you want to keep and what percentage you want to sell, find out exactly how many percentage points you need to sell. For example, if you are trying to play in a $1,000 event and you decide that you want to put up $100 yourself and sell the rest at a markup of 1.25 then you need to raise $900 more dollars. First, find what 1% will cost. It will be your markup times 10, or $12.50 to buy 1%. If 1% costs $12.50, then you would divide $900 by $12.50 to find out what percent you need to sell. $900 divided by $12.50 equals 72. You need to sell 72% at $12.50 per 1% to raise the remaining funds.
Check your math before you go advertising. Make sure that all the percentages add up, and you did it all correctly, or you could have a huge mess on your hands. If you paid $100 and sold 72% for $900, then you’d have the $1,000 for your buy-in, and you would be playing for 28% of the profits. The remaining 72% of profits would be given to your investors if you made money on the tournament.
Begin selling. Now, before you go selling to just anyone, there are a few guidelines you should follow to avoid headaches. The next section will be a continuation of this list and is extremely important.
Can you sell shares of yourself, your package, or a full-fledged backing deal to anyone? Of course, you can. Should you? Probably not. The truth of the matter is that investing in a poker player is an obscenely risky investment. When doing so, you should really only be doing it with money that you’re planning on losing or are at least comfortable with losing.
The problem is that most people that aren’t in the poker industry don’t fully understand this. They assume that poker players make money in every tournament they play in and just print money day in and day out. This gets perpetuated because no one really posts about their losing sessions, but only the times they win. This is going to lead to investors that are expecting to see returns and will be confused when you call them to tell them you got knocked out of the tournament and made no money.
Not following the above advice could result in lost friends or damaged relationships. If you absolutely must take money from non-poker industry people, make sure you obnoxiously spell out to them that they are more than likely not going to make any money on this investment. If they’re cool with that, then go for it.
Regarding finding investors, there are several online sites that you can start with to find backers. Just Google ‘Poker Staking’ and a whole handful of them will pop up. The important thing to remember about this option is that it’s going to be challenging to get investors this way if you aren’t known in the community or don’t have a proven track record on the site. You may have to take significantly smaller investments first to prove you aren’t scamming to get access to bigger investors. Consider that an investment of your own if you’re forced to do that.
The easier and more common way of finding investors is through your network of friends, family, and poker friends. Sometimes just posting on social media that you are looking to sell action will be enough to get yourself backed for the event. Typically, social media has proven to be the most effective way to network to find people to buy pieces of your tournament. Sometimes friends of friends will purchase by piggybacking off the trust your friend has in you not to scam or run away with profits.
We want to close this section with two important takeaways. If you learn nothing else from this article, promise us that you will at least remember these two things.
Securing a tournament package deal is the same process as getting a one time deal except you’ll need to get a few more things figured out first. Here are the steps for securing a package deal.
Decide on which tournaments are going to go into the package. Decide how much of the package you want to keep for yourself. You’re also going to need to write out what your plan is if certain things happen. For example, let’s say you put two tournaments on your package that start on a Monday and then Tuesday. If you make Day 2 of the first tournament, you can’t obviously play the second tournament. You need to write up for your investors what you will do if that happens. Here’s a quick list of situations you need to have figured out before looking for investors.
Most of the answers to these should be fairly straightforward but need to be figured out AND discussed before the package starts.
Decide the markup you want to charge on the package and figure out how much you need to sell. The math is the exact same as with one tournament except it will be done on the value of the entire package. Make sure to calculate in any and all potential reentries or tournaments that you could play. The total package cost should be the maximum that it will cost if you were to play every tournament. Tournaments being missed due to Day 2’s and such are common and are refunded back to investors at the end of the package.
Check your math before you go advertising. Seriously, this one is important with one tournament deals but becomes even more important with packages. If you have someone who can help have them look over your package and your math to make sure that everything is correct. If you happen to find a mistake after you start selling, contact investors and fix it immediately. If there is a mistake, they should have 100% right to pull their money out if they don’t like the correct deal.
Begin selling. Remember to follow all of the guidelines we laid out in the section above this one.
Long-term backing deals are nowhere near as popular as they used to be, but they still do exist and are great if you can get one locked up. Typically, you’re only going to be able to get one of these from another poker player or someone with some insight and expertise in the poker world. This actually is great because you want a backer that understands the variance in poker and isn’t riding you every time you get knocked out of a tournament. If they don’t trust your abilities, they shouldn’t be backing you.
When finding a long-term backing deal, your history and results are going to be a lot more important than with a one-time deal where someone might just be gambling on you. Make sure to have this documentation ready and proof of your accomplishments. Make sure that you paint an accurate picture of your winnings and success. DO NOT LIE or fabricate results and make sure that you give an honest representation of profit and not just winnings. You are going to want to have a long and great relationship with your backer so make sure you start off on the right foot.
Once you find someone who is interested, there are several things that are going to need to be decided.
Remember, they should most likely be favoring the backer as they’re the one with the money here and pleasing them should be the name of the game if you want to keep your deal.
We feel a bit like Jerry Springer having a final thoughts section, but we wanted to try and tie all of this together as it’s a lot of information all at once. The bottom line is that staking in poker tournaments is a fantastic way to get to play in events that you otherwise wouldn’t be able to and hopefully make you and your investors some serious cash. The relationships and agreements can be great as long as you follow the guidelines we set out and don’t skimp because you’re lazy. Our final takeaways for you…