Sponsored Poker Players the post-boom, corporate-think era

Sponsored Players"To get water from a faucet, you've got to turn it
To get butter from milk, you've got to churn it
If you want my love, you've got to earn it"

-- Smokey Robinson & Cornelius Grant

One aspect of the poker business (as distinct from poker playing) that spun completely off the rails during the transition from the entrepreneurial poker boom to the corporate poker plateau is the handling of poker player sponsorship deals.

As I mention in The Saga of Paradise Poker, I was the first member of the first group of sponsored tournament players that Paradise put together. (Phil Hellmuth, Annie Duke and Mike Caro were already associated with other cardrooms, but they had a closer relationship to their sites than a mere "sponsored player".) The biggest deal Paradise ever even tried to make was in March 2002 offering Phil Ivey $25,000 for a year, plus some mild incentives that could double it if he won multiple WSOP events (which he did end up doing at the 2002 WSOP).

Then in 2003 the World Poker Tour had its initial broadcast and weeks later Chris Moneymaker won the WSOP.

During the first commercial break of the first WPT broadcast, I got out of my chair and in about four minutes threw up a webpage on my old domain titled "Shana Hiatt - World Poker Tour Hosts". Within a few hours Google indexed the page, and by dawn the next morning I was ranking #1 for both [world poker tour] and [Shana Hiatt] searches. Looking at my web stats after one day, I was floored to find that while I received hundreds of visitors coming from [world poker tour] type searches, I got almost 2000 visitors who searched for [Shana Hiatt].

The poorly-constructed website finally passed me for #1 for a [world poker tour] search within a couple weeks, but I stayed first for [Shana Hiatt] for over a year (and then was in the top two or three after that). During that first year, I averaged about 800 visitors a day from [Shana Hiatt] searches. While these Shana visitors weren't as valuable to me as people who came searching for [play poker online] or [how to play poker], they were virtually all poker players or wanting to learn to be poker players. In short, Shana Hiatt made me and the online cardrooms who advertised with me a lot of money that first year.

To be valuable to an online cardroom, a sponsored player or celebrity has to:
1) draw brand new players/depositors to a cardroom
2) get existing players to play more
3) get more eyeballs on and generate more chatter about the online cardroom

The above three things are not equal though. The first item is far more important than the second, and far, far, far more important than the third. New depositors are the lifeblood of online poker. An ongoing influx of new players is what makes a boom. Merely getting existing players to play more, without generating new players, will at best only allow an industry to plateau. And merely doing the third is of trivial value without the first two items.

During the entrepreneurial boom years, there was a culture of creating and growing the industry. Today in the corporate-think poker industry, most people in positions of authority have well-defined jobs rather than a piece of the business or the ability to create their own job niche in a flexible environment. This has lead to a lemming-like approach to player sponsorship that was extensively followed, but never made economic sense in the first place.

Look at sponsored players in the same context as any other marketing tactic or affiliate. A cost-per-acquisition (CPA) of $100 is good for a new player (unless the person is a micro-stakes player from Mongolia who will never be able to have the resources to be an average player). A CPA of $200 starts getting you into an area that might be not worth the expense.

This means that a player with a sponsored deal worth $365,000 a year should be generating at least 3650 new players a year (plus getting some greater play from existing players) to be worth their deal. That is 10 new, real money, depositing players every single day. How many sponsored players with deals that size do you think can say with verifiable certainty that they deliver ten brand new players a day? The answer is hardly any.

There are broadly three types of truly valuable sponsored players:
1) People like Daniel Negreanu, Liv Boeree, Jason Somerville and Kara Scott who actively do stuff that draws positive attention to themselves and the merits of their sponsoring cardrooms.
2) Players who are among the top five most prominent in their non-English speaking country, like Spain or Brazil.
3) Women.

The last item may be hard to accept for people who simply don't understand the CPA aspect of sponsorship, rather than who wins the most tournaments or appears on donkey TV shows the most. Sponsored female players are important for two almost diametrically opposed reasons. The first is women are still the biggest relatively untapped pool of players out there. The second reason is the largest pool of existing online players are millennial males who have spent a huge amount of time playing with their joysticks, both kinds.

There are many fine people in poker, but on top of relatively normal but overly horny males of all ages, the poker world also includes a large contingent of misogynist beta males who couldn't get a date in a woman's prison. Sponsored women players are like a proverbial "shiny object" that gets the attention of this pool of players, both in the positive way of attracting their interest like the Shana Hiatt example above, or negative/misogynist crying attention along the lines of "waaaah, I deserve a sponsorship deal if she has one!"

Some random millennial male with a WSOP bracelet and other tournament wins is worth basically nothing as a sponsored player, but corporate-think mid-level cardroom people have been slow to fully understand the CPA idea. Most player deals have been with players who do nothing to generate new, depositing online players. In contrast, some players show exactly what needs to be done to be a valuable sponsored player.

Try calculating how much "x" dollars Daniel Negreanu is worth to generate the "y" new depositing players that he does, then divide those numbers by 10 or 100 to come up with corresponding numbers for deals with lower profile players. If you are a poker player, or wonder why so-and-so player wasn't offered as much as they wanted to renew as a sponsored player, think about how you are going to generate 10 new real money players every single day to earn $365,000. As an experiment, how about trying to get 10 brand new players on even one day. This level of player creation is simply impossible for most poker players.

Back in 2009, a high profile player was negotiating with both PokerStars and the old Full Tilt to become sponsored. When asked my opinion about the amount PokerStars was seriously considering, there was an explosion in my head and for a few moments I couldn't even speak because the amount was so ludicrous. This person was popular with players who already played, but had no mechanism to generate new players, or even get players to play more. He had many lookey-loos wanting to watch him, but that doesn't bring a cardroom any meaningful value.

People slow down to look at a car wreck on the freeway, but there is no economic gain to be made by getting that attention! Just because someone can interest some people to look at them doesn't mean there is any profit in that.

Coming from my background as an Internet business owner and a tournament poker player, as a ballpark guide, any expense that doesn't generate a longterm return of 10x (spend a million to get a net return of ten million) is a poor use of resources.

A lot of sponsored players have been fine players and good people, but neither of those things leads to a meaningful amount of people making real money deposits at an online cardroom. The old Full Tilt business model was an utter failure in part because it didn't understand this point. They gave free rake to many known players, but the sum total of that was to simply decrease the amount of rake the site took in from some regular players without generating a thimbleful of new players.

Somehow, the failed Full Tilt sponsorship model convinced the corporate-think people that they should follow a similar path. (Of all the things to model yourself after, the old Full Tilt is pretty close to the bottom of my list!) They've been throwing deals at players while giving them low or no expectations in terms of new player generation, or even any guidance besides acting essentially how they have been before, except for wearing a new shirt.

At the same time, in December/January of every year, a different corporate-think group, the bean counters, come along and question some of the sponsored deals that have no way to justify themselves. Sometimes the bean counters want to make a deal for less, but the players balk. Sometimes the players want the equivalent of a cost of living increase and the cardroom balks. It's doubtful that a cardroom ever lets a truly good thing get away from them, and also doubtful a player declines an offer that is truly in the "fair deal" ballpark.

At the same time, the cardrooms do expect sponsored players to get out there playing, so sometimes deals end because players want to do other things like focus on family or other business choices. There is no flaw in a system that allows people to change their minds or focus each year.

But, even the mega-flawed corporate-think way the cardrooms are doing things has limited merit that doesn't seem to be appreciated by some in the general poker public. That way of doing things is: give a player a ludicrous sponsored deal... and see if they rise to the occasion and really work to generate new players like Negreanu does. When they don't, offer them less or move on to try to see if you can find the "next Negreanu" with someone new.

Finally, just a bit about non-poker celebrity endorsers. A couple generations ago Joe DiMaggio became a legendary celebrity pitchman for Mr. Coffee. He wasn't successful because of how he drank coffee. He was successful because he got millions of people to try the coffeemaker. Once again, the important concept is getting new users, not in getting people to drink a bunch more coffee, nor in getting people to chat about other folks drinking coffee. When you see Usain Bolt promoting poker, think of how a cardroom would love to catch lightning in a bottle and have him be like Joe DiMaggio selling coffeemakers.

The idea of using celebrities outside of poker is to draw people from outside of poker to poker.

Chris Moneymaker, Daniel Negreanu, Mike Sexton and Phil Ivey have brought enormous value to the cardrooms they have been associated with. Other celebrities like Shana Hiatt, David Levien & Brian Koppelman (Rounders) have also brought huge value to online cardrooms, even if they weren't directly compensated for their work. The future should include plenty of sponsorship deals, but both cardrooms and players (and celebrities) need to understand what the lifeblood of the online poker industry is -- generating new depositing players -- and make quantifiable deals with that in mind. Adapt or die.

If you want to be one of the very top sponsored pros at a major online poker site, "you've got to earn it".

Also Chris Ferguson Almost Became the Face of PokerStars, Amarillo Slim and PokerStars, and The Poker Ecosystem