Quote:
Originally Posted by tzwien
No they didn't. If they did, buying FTP would be a waste of $731 million since it would just divide the PS player pool and not earn them any money.
Edit: You think PS is buying FTP to make it a profitable site and then sell it for more than $731 million in the future? Remember how incredibly hard it was to sell FTP in the first place? Nobody is going to buy it, especially for $1 billion+.
It's amazing how many things you can get wrong in such a short post.
The $731 million was not only to buy FTP, a large portion of that was for fines to the DOJ. They don't bring these types of cases unless they're confident they can get a few hundred mill out of it. My guess would be $400-$500 mill just for fines. Therefor the cost of buying FTP is considerably less than $731 mill.
FTP was hard to sell because it was a POS company that owed hundreds of millions of dollars and potential buyers weren't willing to pay that much in the state the company was in. Think of people that flip houses. They get a great deal because people don't want to put in the work to fix them up or don't know how. Yet even with the current housing market people still buy distressed properties, fix them up, clear the titles and sell them for a profit. It's not as easy at it was during the boom but still possible for people that know what they're doing. PokerStars knows how to build a world class poker site.
You really believe that after FTP shut down that many ROW players that could still play poker chose to not move their play to other sites with Stars being the biggest recipient of those players? They just gave up poker until FTP chose to return or exclusively chose sites other than stars?
I know an area that used to have 2 bagel shops within a couple hundred feet of each other on the same street. Both had their share of customers and there were loyalties to each store among residents. One of the stores had a fire and burnt down and they didn't rebuild. Did the owner of the other store decide it would be a great opportunity to buy the property and rebuild the bagel store to get those other customers? No. Because people didn't stop eating bagels because their favorite store burnt down. They went to the other store instead.
People who could still play poker in their countries didn't stop playing poker. It's not exactly the same because there are other available sites they could move their play to but PokerStars is a big company and their ability to play players after black friday would make many players feel more secure about playing there.
If PokerStars planned on keeping FTP for eternity they would consolidate operations to save money like most other mergers. Instead they decided to keep both as separate entities according to their statements which is more expensive but makes it easier to sell. To use another real estate analogy... Imagine your next door neighbor was selling his house and the next neighbor down decided to buy it. If the buyer decided to tear down both houses and build a new big one or otherwise combine them you'd know he likely plans to occupy both properties as one. If instead he kept the other property separate and instead made repairs on it then you know the most likely scenario is he plans to rent or sell it.
Even though PokerStars is paying a lot to the DOJ they are in a position where they're likely getting a good deal on FTP. FTP had little money for the DOJ and they DOJ want's to get paid. Selling FTP to PokerStars allows the DOJ to get a little more out of Stars and Stars in turns gets something that can help them recoup some of that money at a later date.
Based on things that came out after Black Friday Stars didn't seem too worried about FTP as a competitor or they wouldn't allegedly work together on dealing with processor issues.
The only way it makes sense to Stars to keep FTP is if FTP was the only company allowed back in the US but the DOJ deal clearly would allow either company to reenter if things change.
Anyway... I don't think this is the proper thread for this discussion.