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Thriving from Both Sides of the Backing World

I've Got Your Back

Topics: Player Columns

The most common concern for novice tournament places is finding a backing deal. I received messages daily from players I’ve never spoken to, asking if I’d be interested in backing them. As the expression goes, “Give a man a backing deal, he’ll play for a day; teach a man how to use a backing deal, he’ll play for life.” I’ve been lucky enough to experience both backing and being backed, and I have been successful and unsuccessful as both. These experiences have taught me a lot about the best ways to function, whether as “horse” or “stable owner.” I learned these lessons the hard way, but now you can learn them the easy way.

I started in online poker like most players, repeatedly depositing $50, busting, and redepositing. When I was lucky enough to hit a couple decent scores in tournaments I had no business playing in the first place, I had no clue about bankroll management or the value of a dollar. It took me a while to build up a bit of a roll on my own.

A couple years later, I had become a decent tournament player, with a track record of moderate success. I was ready to play a full MTT schedule, but didn't have the funds. I approached a major backing team, and was lucky enough to have them accept me. Before I knew it, I was thrust into the world of high-stakes tournaments, both online and offline. I never really "worked my way up" to this - I just got put there.

After generating hundreds of thousands in profit for these backers, I moved on to my next backing team for a higher percentage of the profits. With them, I had my first monster score, chopping the 2008 WCOOP Main Event for $780,000. I instantly took the opportunity to go on my own, played cash games I didn't belong in, and began backing other players. As everything turned to disaster, it looked like my huge score was going to dwindle away.

I got lucky, thanks to a couple big scores from players I backed, allowing me to recover most of my losses. I quickly got out of backing, found myself a backer, and went back to the groove where I felt most comfortable - playing zero-risk poker with a well-managed bankroll. Ever since I've been infinitely happier, thriving financially, and having great results at the tables.

How could I have avoided the mistakes that nearly cost me my entire net worth?

Learning to Succeed on the Backer’s Bankroll

The reason why I was so lost after going on my own for the first time was because I never had the experience of how to manage a bankroll. Because backers thrust me into high-stakes tournaments, I never had to work my way up or manage my own bankroll at those stakes. The cardinal rule on how to function while backed is to treat your makeup like your bankroll. For those who don’t know, “makeup” is the losses that a backed player accrues that he needs to "make up" before he can see profit. For example, if you lose $10k, your makeup is $10k, and if you then make $20k, your $10k makeup is cleared (and returned to the backer), and you and your backer split the remaining profit. 

So how do you treat makeup like a bankroll, and how does that help you succeed?

If a player enters a high-stakes backing arrangement, their average buy-in (ABI) will be around $200 per tournament. At this ABI, makeup can build very quickly, and even the best winning players can find themselves in hundreds of thousands of dollars worth of makeup before they even know what hit them. Because they don't feel this hit in their own bank account, they don't feel the need to drop in stakes, and end up getting deeper in makeup as they try to get out with that one big score. The pressure of a huge makeup number should never be underestimated, and even the best players can dig themselves into a hole that they may never get out of. Fortunately, there is a great way to avoid this disaster scenario.

Start by picking a number that you refuse to let your makeup reach - for the sake of this article, let's say that number is $100k. This means that you should be playing like you have a bankroll of $100k, and play the stakes that go along with it. If your makeup is $20k, then your “bankroll” becomes $80k, and you must drop in stakes to maintain good bankroll management. If you wouldn't play a $2,000 buy-in tournament with an $80k bankroll, then you shouldn't play it with $20k in makeup.

You need the discipline to play not just what your backer will allow, but also what fits your bankroll. This will keep your makeup at a manageable number, relieve the pressure of makeup, and give you bankroll management practice that will be invaluable if you decide to go on your own. If I had practiced this three years ago, I would have avoided the mistakes I made when I first went on my own.

How to Succeed as a Backer in Three (Expensive) Lessons

The thought of making money without having to do anything is extremely appealing, so backing winning players can seem like a money-making machine. Put players in the highest-stakes tournaments, imagine them fulfilling their return-on-investment (ROI) every session, and find ways to spend your new income!

If only it were so simple. My rollercoaster experience as a backer taught me the following three lessons. (I am skipping the obvious rules, like backing only people you are convinced are trustworthy, are winning players, etc.)

Lesson #1: Assume the worst at all times - Instead of just assuming (like I did) that your winning players will immediately perform to their strong ROIs, assume that they're all going to lose. And lose. And lose some more. Assume that every single player you back is going to go on a lengthy, disastrous downswing, all at the same time.

This is exactly what happened to me. I was backing six players in high-stakes MTTs, and a couple more in low/mid-stakes MTTs, all strong players with proven winning records. Unfortunately, poker is a disturbing game, and some players can go an absurdly long time without achieving their "true" ROI. Accept this harsh reality and learn to stomach (and pay for) the potential downswings of a handful of players at once. If you can afford the absolute worst-case scenario for a substantial period of time (at least six months), then you will probably understand the second lesson.

Lesson #2: Don't overextend yourself - This was without a doubt my biggest mistake as a backer. It all comes down to being able to afford a downswing from all of your players at once. Imagining the easy-money profits of backing twenty winning players (instead of just two) can draw you into a trap. Most people simply don't realize the kind of swings that regularly take place for all players, especially in online MTTs. 

These are the buy-ins, per day, in a typical week for a high-volume, high-stakes MTT regular:

* Monday: $3,000
* Tuesday: $3,000
* Wednesday: $4,000
* Thursday/Friday: OFF
* Saturday: $2,000
* Sunday: $8,000

This comes out to about $20,000 a week in buy-ins.

Now multiply this by those six high-stakes players I was backing, and assume they all bricked for just one week. Before I knew what hit me, I'd lost over $100,000 in a week - really not a good feeling.

Along with these drastic swings, potential backers also don't take into account all of the responsibilities that come with being a backer: and constantly sending around thousands of dollars to large groups of players, balancing players' accounts, managing their makeup numbers, keeping detailed records, recording nightly account totals, listening to their bad beat stories, and having to stomach all the stresses of every player you back - like poker isn't stressful enough!

To be a successful backer, you must define your capabilities, decide how much responsibility you're willing to take, and turn away or let go players that you know are winners. Be true to yourself, and your bankroll, and you'll have plenty of time to exercise the third lesson.

Lesson #3: Be involved - As I said earlier, the major appeal of backing is the ability to make money while doing nothing. This is a serious misconception. You need to constantly monitor your players, help them with their play, review general concepts, and so on. Look at yourself as a coach first and a backer second - your primary goal is to maximize the potential of all your players, and your secondary goal is to keep them funded. 

Don't be lazy! Start by building a discussion group so that all of your players can learn together. Community-based learning tends to be extremely effective for poker students, and if all of your players can help each other improve, then suddenly you've got a well-oiled machine on your hands. Still maintain an active role yourself, having your horses regularly send you hand histories and questions that you can address personally. You should also give them the same advice that I just gave you on how to succeed as a backed player, so that they feel as attached to your money as you are, and are as successful as they can be. Their success will quickly lead to yours!

I came pretty close to blowing hundreds of thousands of dollars simply by being naive and making a lot of rookie mistakes. These mistakes, however, became my education in the lessons for a successful poker career, and I hope you can learn from me at a smaller cost.