good posts tdom and FE.


interesting situation. i heard some stuff about this backing org as well. seems it was run about as bad as possible.


posting names and their MU figures is pretty ridic, imo. all that should be left out. no one wants their MU numbers thrown around in public. (can say player A player B etc etc)

Great points and a lot of good information being posted about backing in general. I agree with FE that there should be some sort of counsel to discuss these types of things, however posting it in a forum has some positives.

I was put in a similar situation this summer, maybe not as bad and really wish there was a thread like this to really understand what was right/wrong.

My question to guys like mattg/fe/other well known hsmtt backers is, how long should a horse have to wait for his MU to be sold til he has the right to seek other situations to play?

I dont really want to go too much into my situation as I still appreciate what opportunity's were given to me . I basically waited for almost a month and at times it was tough to get a response from one of my two backers.

Not really sure how I feel about the situation at hand until I hear some more insight and having never been on the backing side of things to this extent.

I'm not sure even the best stable managers out there could have made this fund work given the number of horses it took on. Looking back, I'm sure everyone involved on the investment side feels like it was conceptually flawed from the beginning. It was incredibly underfunded, and the fact investors could buy back shares at a formulaic "share price" was likely one of its major downfalls. Investment trends in staking probably have a lot of correlation with 1) how the horse is doing and 2) how the backer is doing in his own games. Once investors saw their risk of ruin increase they probably started to bail on the fund, causing the already underfunded project to fall even more into the danger zone of being bust and, finally, actually busting.

The key issue now is how to move forward for these guys, and I'm not sure I have those answers.

So your backer was out of contact with you for a month causing you not to be able to play poker/earn a living? If that's the case, I don't think anyone would fault you for seeking other opportunities at this point.

Wow.

I am just now reading The Poker Fund's Prospectus, very interesting to say the least.

I hate to use this thread to pile it on, and I won't, I'll just say that after reading that it is very clear that the fund manager didn't have nearly as much experience in HSMTT staking as he should to be managing a stable of that magnitude.

I actually think if I were a major investor and invested based on that, I'd have a major gripe with the manager as there are a ton of false statements in that prospectus that he portrayed as absolute truths. Namely, "Worst case scenario the fund loses all the cake will be sold at market value, which is around 50% (this is also statistically near impossible)."

The Fund "Fees" are also ridiculous.

Not completely, obviously that would be redic and id of moved on but , itd be I hear alright we have one other person were talking to and a week would go by w/ out me hearing anything back . It dragged on way too long but obviously like someone mentioned, over time friendships and a sense of loyalty comes.

It was a complicated situation where the backer who didnt communicate well had bought half my mu at the beginning of the year and half way through the original backer got staked and couldnt transfer. I wanted the best resolution for everyone involved as I said there was friendships involved (obv never good for business but i think its natural when your with someone for over a year).

It got to the point where I set a deadline after 2-3 weeks of waiting as well as a few months of lack of communication and money not being sent when needed (ie i missed the last scoop Sunday cause i wasnt filled which ask any backer is absurd). This was getting closer and closer to ftops/uboc/wcoop which as everyone knows is some what crucial if your doing this for a living like I was.

I talked with a few people who I respected and they basically said I needed to stick up for my rights and that I wasnt a slave. There's just a lot of gray areas that I feel like need to be defined more clearly and maybe this thread will help make more people realize that.

Id prefer not to go into any more detail then I already have publicly if you care to know more feel free to pm me . Im not trying to burn any bridges with anyone I just think it was handled poorly much like this situation in the op. I was more curious about how long people think someone should have to wait?

From the "Prospectus":

Something tells me you didn't run any of this by a lawyer.

I respectfully disagree. And I understand that the markup changes the actual value of the makeup, but the makeup itself, by itself, has an actual maximum cash value no matter what the markup is. Anyway...

In your examples there are 2 things being sold, not just 1. The staker is selling the makeup and selling the future staking rights as well.

It's completely plausible that a staker could sell makeup on a horse without selling the future staking rights along with it. But no one would ever pay > 100% for just the makeup, even if the horse was God himself, right?

It isn't the makeup that makes your examples possible, it's the value of the future staking rights that are being sold in conjunction with the makeup.

My experience: personally none with any staking. Years of exposure to situations similar in nature to this here on 2+2, and a former mod here in the marketplace who helped formulate the rules for selling makeup in the marketplace.

I don't have much to say about the specifics of valuation or selling of makeup. That's up to those who do it on either side to discuss.

I generally have more to say than anyone wants to hear about how things could/should be done differently each step of the way (not specific to this thread but this thread qualifies). The whole concept of "generally accepted practices in the xyz community" line comes up so often and it's nearly universally used to bolster a position that almost never seems to be a firm/detailed part of an agreement prior to it becoming an issue.

The problem is it relies on the other side saying "ok sure" to some extent.
Their position can/will be it's also a generally accepted practice that when the backer goes busto the horse goes and finds a new backer and the previous backer is sol. Absent something binding from your agreement that covers all of it what can you really expect?

In an ideal world the horse would say "sure thanks for finding me a new backer/deal that will put me in a similar position, I'd like to make this work somehow". But staking seems to be so far from an ideal world that I don't know why anything like this would be left to anything other than being explicitly spelled out and agreed to prior to incurring the makeup.

Once communication breaks down it's incredibly hard to resolve any of it. That's another compelling reason to have it figured out ahead of it happening. At this point maybe try picking someone/s who has no financial interest in any of it to try to broker some basic communication between the two sides. I can't imagine a more important step aorn. I doubt just digging into a position is going to help you resolve any of it.

Good luck with it all.

+1 mattg/fatalerror

and +1 tdome too that the timeline is at least a little important.

This situation seems patently ridiculous to me, I came into this wanting to believe that you had some claim to the money that you were seeking and were looking to find an adequate solution given specific disputes in regards to the amounts, however, as far as I can tell you have forfeited the right to any recompense, especially from the horses themselves.

Backing is inherently a two-way street, wherein each side derives utility from fulfilling their end of the relationship, as was pointed out earlier your inclination to treat this as an employer-employee conditional is unreasonable. Ultimately, The Poker Fund defaulted on its obligations as soon as it became unable to provide the backing upon which the basis for this arrangement was derived, simple as that. There is an argument for flexibility in the arrangement but in terms of functional contract mechanisms I believe that their claim to these horses may have been forfeited at this point.

This situation has not been handled badly by both parties, this 'issue' is solely due to the misstep of the backing parties. They did not live up to their obligation to provide funding, did not find a buyer to purchase their makeup before they defaulted and have stalled and tried to strongarm the horses into accepting unreasonable deals which they should be under no obligation to accept not by asking for gestures of goodwill (which is what each horse whom allowed their makeup to be sold after they were no longer receiving backing gave) but by threatening blackmail in the staking community and threatening their very livelihoods.

I do not view this as negative towards any of the horses, but I would think long and hard before doing business with whomever came up with this abortion of a resolution for your fund Jon, and I'm frankly surprised if it was you, because this is clearly awful.

You can either sell the makeup (in which case the new backer has to agree to the exact same arrangement that you had with the horse or the horse has to agree to the new arrangement), continue staking them, or let them go.

If the horses want to buy back their own makeup for a rate that satisfies all parties, that's wonderful. You can't force them to do this, though. The whole point of a backing deal is that the horse does all the work and in exchange the backer takes all the risk. If a horse can be forced to pay back a % of makeup at any time, then suddenly they're taking on plenty of risk.

If you do sell the horse's makeup, either do it really quickly (i.e. like a week) or allow them to play on their own or set up temporary deals while you get it figured out.

It looks like you even mentioned "Cake can be transferable and sold" in your prospectus, so that's good. Ideally you would have specified exactly what the terms are of stuff like this somewhere, though, so there would be no disagreement if it happens.


BTW, it sounds like you really really didn't think this through at all. There are a ton of things wrong with your plan. One really really glaring one that stands out is that you value makeup in share prices. This means that if on the first day a player loses $x and then everybody cashes out, the "fund" is down $x/2.

I don't have experience with HIGH stakes backing but I would like to ask how it got to the point that you ran out of money before even the wsop ended? Did you over-extend, have a lot of players hit bad patches? Would be interesting to have some insight into this aspect. It seems like a very good idea.

I am backed and if i were in MU i would think it be fair for my backer to sell my make-up as long as i were getting the same (or better ofc.) agreement. I see no issue in this at all. I also think that if people where going to continue being staked then they shouldn't have even had the option of paying out such a small % of their MU. Though i am not sure how the high stakes stuff works.

I agree with Noah, the horse should be allowed to play in the mean time, however that may be.

Also it is common that someone can not leave while in MU, though people can often negotiate, aka if they are 1k in MU but have made backer a lot of money previously, backee is burnt out and quiting poker. That would be a case where a backer would take that loss. I have seen this before. Should the backee return to poker, the backer should be getting the option to stake the player with the MU added.

yes

Backing has it's risks. You're not going to win w/ every player. Why do you expect players to pay 20% to get out when The Poker Fund went bankrupt?

this is coming from someone who has backed 30+players/ and was backed by someone who has backed a ton of the horses in your fund, both currently and in the past


probably not what you want to hear, but these are my thoughts. correct me where im wrong, i asked for clarification on things that werent clear


you did an awful job. your sole job as a backer is to distribute funds to horses. did any of the horses steal money from you? did they breach their contract? many of them were made promises that werent fulfilled and they were forced to find alternatives. you didnt honor your end of the contract by giving them the agreed funds, so how can you expect them to honor your staking contract under another party, especially when there is very little assurance that the same thing wont happen with the new backer.

you broke trust and put a lot of people in a ****ty spot. you ignored phone calls, and bailed town when things got to their most critical point. you acted in an irresponsible manner with money that wasnt fully yours, and cost yourself and investors a ton of money.

as an investment fund, and its manager, how do you evaluate your performance? do you feel like you did everything you could to prevent the bottom-out? id think when i started getting short on money, i wouldve sought new investments, or brought in another partner. it cuts your profit margins, but you cant profit if you dont have investment capital.

its my impression that as an investor, youd be provided pretty regular updates, can someone like swisstard comment on that? because another investor alluded to the fact that you went bust literally over night without any kind of warning.


i guess i dont understand what your job as a manager entailed, and how you couldve done such a poor job at it. instead of trying to extort horses who did nothing wrong, perhaps you should try to take some more responsibility yourself in the blame for this entire fiasco and investors could recover money from you personally, since from the outlook, you seem responsible for a lot of it

Dont qoute me if im wrong but I believe this was offered as an alternative to horses having their make up sold.

The Fund was just way too underfunded. They had 10+ horses at times playing HSMTT's and eventually high stakes live MTT's. It appeared from the Prospectus that the number crunching was just taking each players longest historical downswing and maybe multiplying by 2 or some arbitrary number and adding all that up as how much starting capital they would need. When the initial cash outlay was going to come up short coupled with not selling out shares and people selling back their shares on the regular and you end up bust.

Tons of backers have started stables underfunded though, they just hit big scores before busting. This fund probably ran bad, but if you are busting 6 months into an operation it's pretty clear it was also somewhat conceptually flawed in its design.

It's disappointing that stuff like that is coming out now in this thread and wasn't mentioned at all in the OP. It's not surprising, but I certainly would have had a different response in my initial post in this thread had I known all the pertinent info.

Que? What happened here?

Did you read the long post by jdpc27? Seems to have a lot of relevant info left out by the op that I alluded to.

Former horses feel free to chime if they disagree...

Even so, what if the player has a valid reason to not want to be sold to another backer? Fatal Error had a great reason in the other thread - he played cash games and didn't want to be sold to Bax/Sheets because he wouldn't be able to play his own action on his accounts.

If it's not in the original terms of the agreement, I think a compromise could be reached so that backer can have another way out, but in this case the backers when broke - the fault was on their end - so I think they should be at the mercy of the staked player in this case and hope they get something out of it.

Even proposing that they buy their own makeup* (even if at a lower cost that what it would be sold to another backer) is a slap in the face.

* in this circumstance

Ah for some reason I overlooked that post. I think it's because I just scrolled down to FatalError's post when I saw he had responded in the thread.

**assuming all of that is true**

Not sure what I could do as a major investor, but I'd certainly be spending more energy looking into ways of recouping funds from the fund manager himself rather than from horses.

Like I mentioned earlier, the Prospectus was filled with falsities and had I invested based on the assurance that seemed to give that things were in good hands I'd be rather upset at the fund manager.

can people explain this cake thing to me, did p5s invent this term or something? is cake the makeup, or is cake the shares of the fund

also, after reading more, i'm fairly certain rocketmist has a bright future ahead of himself running the investment arm of morgan stanley some day