By this point everyone and his or her mother has heard that Party Gaming came in and stole WPT from Gamynia Limited. I actually heard rumors about Party being the mysterious “other bidder” but truthfully I couldn’t see that deal making sense. It wasn’t until one of my most respected friends pinged me to ask what I thought about Party being the other bid did I really start to take the rumor seriously.
Obviously, the rumor turned out to be true.
So, I gave it a few days to sink in and I pinged some people I know as a sounding board for some ideas and here’s my take on the WPT deal.
There are so many things wrong with this deal. First off, you have a company that can’t market in the US owning a poker tour / television show that has its biggest audience in the US. The WPT has never been big in Europe or the LatAm market. According to their Q2 release they took a bath on the China deal losing over $1.1 million before shutting it down.
Many sites have reported that this may signal that Party is planning on getting back in the US market. It might. But as I’ve outlined in previous posts about legalized online poker in the US, I don’t think this is going to be an easy route for Party. The thing everyone seems to forget about Party’s settlement with the US was that they admitted guilt. That admission of guilt could prove troublesome depending on what the licensing requirements are if/when online poker is legalized in the US.
The really interesting part though is that this WPT deal might actually eliminate that problem. If Harrah’s or someone else cockblocks Party trying to re-enter the US market they can always spin off the WPT and license the clean entity a skin on the Party network.
But the real question is how do you exploit this brand? There’s a reason why the WPT brand is being sold in a fire sale. The show/tour hasn’t kept up with the poker market and other tours and television programming have eaten into its popularity. Of course, that wasn’t helped by the pissing contest between the WPT and several top name players like Howard Lederer who opposed the broad nature of the player release agreements. And on top of all that most of their online ventures have been money losing flops.
Now, I don’t mean this as any sort of personal attack on any of the (probably) fine people at the WPT but the business was basically being run into the ground. In other words, sometimes you buy a company and they have a very strong structure in place that you can continue to allow run itself while you capitalize on the synergy of the deal. For instance, Party’s recent purchase of Cashcade seems to be a perfect example. Cashcade is an excellent brand that’s kicking ass right now.
The WPT isn’t one of those cases though.
So really what Party purchased was the WPT brand. The business side is a mess and if allowed to stay the course would eventually become a worthless or worse – a money-losing asset.
The big question then becomes whether or not Party has the expertise to turn the WPT around. Some might think that Party would be perfectly suited to this but running an online poker room and running a television production company and poker tour are two very different things. Sure, you can consolidate some aspects of the marketing and other operational costs but after that you’re running two entirely different beasts.
And that doesn’t even scratch the surface as if you go through the WPT’s press releases it becomes obvious that they’ve signed a lot of deals with poker rooms that directly compete with Party. Will iPoker or Ongame want to continue doing events with the WPT if they’re owned by Party? Or will Party attempt to capitalize on their investment by having a big presence at WPT events thus alienating other poker rooms similar to complaints that have been heard about PokerStars EPT events?
Then you have to look at Party itself. Declining poker revenues, a major shakeup in their marketing department, still digesting their Cashcade purchase, etc. Can Party afford to take their eye off the ball to fix the WPT?
I guess only time will tell with this one but it’s certainly not the no-brainer a lot of people think it is. This is a huge gamble for Party.
Let’s just hope they bring back Shana Hiatt 😉
I think you hit the nail on the head when you suggested that they’ve bought a brand rather than a business. Party used to be THE big boys in poker, and now they’re quite irrelevant. If the American ban does end, having a well know brand such as the WPT to promote could be invaluable, as promoting party against every other rakeback friendly poker site just won’t carry any weight at all.
The only viable reason for Party to make that purchase is to gain access to the US market when the UIGEA flips. I understand your point about the fines and admitting guilt, but operating under a totally different entity could circumvent the licensing requirements. An issue I’m sure they thought of and investigated, and vetted (paid someone off) out before overpaying by 4 million for the WPT brand.
We’ll see how successful they are in fixing the company. The WPT is so badly broken on every level, it shouldn’t be that hard really. Little fixes should be very noticeable.