I wanted to revisit a post I wrote not too long ago called The Online Poker Arms Race. Since that post Greg Raymer and PokerStars have announced that the two have decided to part ways. I’m not going to repeat all of the stuff people have said about Raymer being a great ambassador for the sport because it’s self-evident.
What I will say is that this does sort of go back to my theme about the rationale of signing up all of these players in the first place. Brian Ralentide over at Part Time Poker writes:
The Pro-Centric Marketing Model is Busto
While we may never know the whole story behind Raymer’s departure, Kathy Liebert (via Twitter) strongly suggested that Stars is looking to cut compensation for their pros, and one has to think that if Raymer was facing a cut, not many Team Pokerstars sponsored players would be dodging it.
Making such deep cuts – cuts deep enough to encourage one of your more visible spokespersons to walk – can’t be something Stars undertook lightly. They had to know that the cuts would result in some public exits (like Raymer’s) and that other rooms would then be able to cash in on Stars’ marketing of said pros by scooping them up.
With those consequences in mind, it seems that Stars would only make such cuts if they had concluded that the marketing model of assembling a stable of high-profile sponsored players was no longer sustainable, or at the very least not sustainable at its current scale.
Actually he goes through a list of very possible implications of Raymer’s departure but this is the one I wanted to focus on because I sort of danced around it in my original post (though I did address it again in the comments).
I’m surprised he didn’t also make the connection between Annie Duke and Phil Hellmuth leaving UB recently and replacing them with Prahlad Friedman. Friendman is an A-List player but I don’t really feel he’s an A-List poker celebrity. And that’s not meant as an insult. He can play with the best of him but he’s never been on Celebrity Apprentice or rode a chariot into the WSOP ME. As far as I know there are no rumors of Prahlad being on Dancing With the Stars either.
And I also want to make it clear that neither has stated that this is their reason for leaving UB. However, one can only notice that UB seems to be lowering the average age of their pro team. And that probably means substantially lower costs. Again a guess but I don’t think, for the above reasons, Prahlad commands anywhere near the juice that Annie or Phil do.
Even Wicked Chops noted after their departure was first announced:
UB is moving in a different direction with their team and marketing efforts, building up more of a youth-orientated squad headlined by Eric Baldwin, Adam “Roothlus” Levy, and Maria Ho. We expect this trend and complete remodeling of the team to continue in the near future.
From a risk-reward standpoint popular poker players who don’t bring people in the front door are a bad investment because they cost a lot. Unfortunately, I think there are more than a few big-name poker players who might be good role models but aren’t exciting to watch and thus don’t necessarily translate into new signups. I mean, look at Doyle Brunson. One of the most respected and well-known guys playing the game. Could he build a successful poker room off of that? I’m guessing their recent signing onto the Yatahay Network with the network’s 7 day average of 73 (cash game) players (according to PokerScout) says they are hurting a bit.
I don’t think anybody can say that Doyle is not one of the biggest names in the game even with the young whiper-snappers getting into the game today. Hell, even some of these youngsters worship Doyle but they won’t sign up on his website. Why couldn’t he make his card room work?
Likewise, I really don’t think Annie Duke, Phil Hellmuth, or Greg Raymer bring customers in the door. Why? Probably because they no longer represent the face of the players that the rooms are trying to attract today. And that’s not to say that their celebrity is worthless. It’s just not what drives young faces to your online poker site.
We’re sort of going into a second phase of the Online Poker Cycle. It’s just like the dotcom bubble. In the first phase you can throw money around like a drunken sailor and somehow everything you do seems to turn to gold. But as competition saturates the market or you have a bubble burst like the dotcom bubble or the UIGEA and all of a sudden it starts to become a business of grumpy old guys who staked you early on looking at the books and asking why you’re hemorrhaging money in your marketing department and still losing market share. Or, in the case of someone like Stars, why certain assets are performing and why others just keep coming up short.
So maybe what we’re seeing is a sobering up. Less and less money will be thrown at individual pro players because they’re risky investments that can come and go out of favor very quickly.
But here’s the kicker, this model hasn’t been proven either. It’s just that another model (paying anything to get big name pros) is starting to show some weaknesses. Signing up 6,000 less expensive “pros” hasn’t been proven to be a sure money maker either. Having several hundred or several thousand bets out there which were paid for by folding on a big bet that wasn’t paying off is at least a reasonable business response.
The bottom line is that other than some real superstar performers like Phil Ivey or Daniel Negreanu very few sponsored pros are big enough to really pull in new customers. Again, no offense to Tiffany Michelle but how many people do you think signed up on UB because of her? Isn’t the fact that both Tiffany and Maria Ho thought they could pass themselves off as non-profit workers an obvious enough indication that they have little mass media recognition?
How is that providing benefit to UB? They can stir up poker media press. But when is the last time you’ve heard a hard-core poker player say, “Dude, Tiffany Michelle plays on UB so I’m going to play there!”? It simply doesn’t happen.
So while lesser known players might be cheaper I’m not really sure they really accomplish the big goal so this all might be a transition from an expensive strategy that isn’t working to a less expensive strategy that may also not work.
@Kim: I forgot to mention but I love your comparison between Annie Duke and Phil Hellmuth leaving UB to Lebron James. People don’t have a loyalty to a room like they do to a sports team. That’s the part the poker room don’t/didn’t seem to ever get.
Nobody really cares whether Annie Duke has left UB. Nobody is going to quit playing at UB because she’s left. Her fans will still follow her in terms of what she does next and if she signed with a new card room they *might* check out the new site but they’ll probably just keep playing where they already play because changing card rooms, especially in today’s age where payment processors seem to come and go more often than people change underwear, is often difficult and a pain in the ass.
But that really isn’t loyalty to the card room. It’s simply a hassle. They don’t necessarily play on UB because they love playing on UB. They play on UB because that’s where their money is or they know they can get their money on and off the site with few hassles.
That is the part that, unfortunately, most of the “pros” don’t get. They really don’t understand that what the card room is paying them for is to be an ambassador and bring customers in the door. They don’t understand that their value to the card room is 100% tied to their ability to attract and retain customers.
The reason why someone like Daniel Negreanu is different is that he’s constantly out there interacting with people. Stars doesn’t have to prod him to write a blog post as per their contract because he probably already produces 10x the content stipulated in the contract.
Look at when Clonie Gowen got caught plagiarizing. Her defense was that her boyfriend (and manager) wrote the article for her. Many pros have ghost writers writing their tweets, blog posts, strategy columns, etc for them. As you mentioned in your article, Phil Hellmuth has even been caught playing online while he was at another event which means the person playing under his name wasn’t him.
Having worked in the industry I can tell you that it’s a pain in the ass to get many of these “pros” to do anything. Many of them don’t even maintain their commitment to play X number of hours on the site. I know that one room actually bought laptops and shipped them to some of their pros who kept trying to use the excuse that they were on the road as the reason why they couldn’t meet their play time commitments.
These aren’t people looking for ways to bring more players to their sponsor’s card room. They look at the relationship purely as a way to make some guaranteed cash in case they’re running bad at the tables. It’s a paycheck for doing nothing other than being themselves.
Oddly, that was not the kind of person Raymer was. He was outspoken. He was very active in legalizing poker in the US. He was someone who probably went above and beyond his contractual obligations.
Unfortunately, I think what happened is that Stars was in the middle of cost cutting and Raymer felt that what he was doing compared to the other pros on Stars’ team warranted him being excluded from the cost cutting. When the two couldn’t see eye to eye on that they decided to part ways.
@Kim: I totally agree with what you’re saying and what you said in your post. I also think part of this adulation of poker pros has to do with the fact that many of the people involved in running poker shops don’t know anything about poker. They’re marketing guys. They see how the model works in other sports and they assume that it works the same way with poker.
Seems like I managed to mess up the link…. sorry.
http://www.infiniteedgegaming.com/marketing/annie-duke-leaving-ub-so/
Great post Bill,
My thoughts on the issue of monetizing players sponsorships are pretty much summed up in this post from like last week.
A couple of things are to blame imho.
Sponsored pros who think they are more valuable than they are and simply don’t do the work they need to do to generate enough value for the site. Daniel Negreanu is an excellent exception.
Sites who haven’t figured out more ways to monetize or extrude value from sponsorships.
Individual poker company employees too wrapped up in being part of the “scene” themselves to dare push sponsored players to do their duties. I’m sure there are excellent exceptions here as well. I’m generalizing.