Pokerstars thinks Joe Cada isn't worth $0/year plus 100% rakeback

Amaya Gaming, the new owner of Pokerstars, seems to be trimming the fat.

They already released Humberto Brenes and others, as I talked about in this thread.

However, that stuff occurred with minimal fanfare. Nobody seemed to care that a few B-and-C-level tourney pros were given their walking papers.

A more recent situation is raising eyebrows, however.

Joe Cada, WSOP Main Event Champion of 2009, recently tweeted that Pokerstars cut him loose after they refused his request for 100% rakeback and no other salary/benefits.

Keep in mind that Joe Cada wasn't just a 2009 one-hit-wonder, but rather has had some success after that, including a recent second bracelet win.

While Cada doesn't have a particularly exciting or memorable personality, he is young, semi-charismatic, and generally known as a nice guy. While I can understand Amaya believing he has minimal value (as opposed to a Negreanu type), I don't understand this decision. He was basically offering to work for free, trading his name and likeness in exchange for not being charged to play on their site. This is known as an exchange of professional services, and I think Stars would get great value out of having him on their roster and simply not raking his play.

However, I believe the now-Amaya-run Stars sees it differently. Cada plays fairly actively, and I think they translated what 100% rakeback would equate to at his current rate of play. And they probably don't think he's worth that. And they probably believed he would still play there regardless of whether or not they kept him on as a pro.

Need more proof that Amaya is cutting back on expenditures? How about the fact that they are terminating agreements with longtime affiliates?

I think Amaya is taking a long, hard look at Stars' business model, and has decided to cut in areas where they perceive poor value. They are shaking up the longtime model that a successful poker site needs a large roster of paid pros and aggressive affiliates with generous player recruitment deals.

Amaya is discovering what I have said for a long time:

1) The affiliate model is antiquated and no longer necessary for large sites.

2) Pros provide little value to a site unless they are huge, widely recognizable names.

With that said, maintaining Cada for simply 100% rakeback still would have been the right play.

That is the proper way to keep pros especially Americans who only spend half the year or less outside of the country to play on the site. They can still get them to wear patches here at the WSOP and maybe some other events here without putting any entry fees up? Giving pros an all rakeback deal with nothing else seems way better then what Pokerstars gave these pros in the past so refusing just seems silly imo.

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1) The affiliate model is antiquated and no longer necessary for large sites.

2) Pros provide little value to a site unless they are huge, widely recognizable names.

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100% agree with both of these things and have been saying it for years.

Furthermore, now that online poker is being legalized traditional marketing channels will be available further decreasing the need for affiliates. Everything will be ad buys and CPA in the near future

Joe Cada needed to play hardball and threaten to not play on the site if they didn't agree to 100% rakeback. Then AmayaStars would have to chose between keeping Joe Cada as a pro and not collecting any rake from him, or not having him as a pro and not collecting any rake from him.

The more I think about it, the more I realize that the 100% rakeback model should be the way to go for most non-A-list pros in the future.

This accomplishes a few things:

1) Encourages pros to actually play on the site. This is always good for business, as people enjoy playing with "big name" players online rather than just anonymous grinders. Furthermore, it brings railbirds out to watch the games, which then sometimes translates into deposits.

2) Eliminates "hard costs" of salaries or tournament buyins.

3) Site pros with 100% rakeback will probably start more games (and attract players partially due to their notoriety), thus getting more games going and ultimately making more money for the site.

I feel it is incorrect to look at this from the perspective of, "Cada is raking $XX,XXX per year, and we don't feel he's worth that as a sponsored pro if we return that money to him."

There's a huge difference between hard costs (money you have to pay out to third parties) and simply rendering your own services for free at minimal (or no) cost. Yes, Amaya can look at it from the perspective that he would probably play anyway (and thus will cost them real money by giving all of the rake back), but that's too presumptuous. Perhaps Cada will quit playing on Stars and go elsewhere to sites which will give him a better deal. Perhaps he will sharply decrease his play out of bitterness over the situation. The bottom line is that you can't equate "he would have spent this money here and we would have made it" with "we are paying him this amount of money". Comping automated electronic services (which is what Stars is doing) is one of the best things you can professionally trade, as there is almost zero real cost to your business, and presumably you will gain a good deal with what you receive on the other end. This is different than, say, a guy demanding that he eat at a restaurant every day for free, as that has real cost associated with it. Cada playing with 100% rakeback has almost no cost.

I think Amaya is on the right track with trimming the fat from Pokerstars, but I think they're taking it a bit too far.

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Originally Posted by Dan Druff

The more I think about it, the more I realize that the 100% rakeback model should be the way to go for most non-A-list pros in the future.

This accomplishes a few things:

1) Encourages pros to actually play on the site. This is always good for business, as people enjoy playing with "big name" players online rather than just anonymous grinders. Furthermore, it brings railbirds out to watch the games, which then sometimes translates into deposits.

2) Eliminates "hard costs" of salaries or tournament buyins.

3) Site pros with 100% rakeback will probably start more games (and attract players partially due to their notoriety), thus getting more games going and ultimately making more money for the site.

I feel it is incorrect to look at this from the perspective of, "Cada is raking $XX,XXX per year, and we don't feel he's worth that as a sponsored pro if we return that money to him."

There's a huge difference between hard costs (money you have to pay out to third parties) and simply rendering your own services for free at minimal (or no) cost. Yes, Amaya can look at it from the perspective that he would probably play anyway (and thus will cost them real money by giving all of the rake back), but that's too presumptuous. Perhaps Cada will quit playing on Stars and go elsewhere to sites which will give him a better deal. Perhaps he will sharply decrease his play out of bitterness over the situation. The bottom line is that you can't equate "he would have spent this money here and we would have made it" with "we are paying him this amount of money". Comping automated electronic services (which is what Stars is doing) is one of the best things you can professionally trade, as there is almost zero real cost to your business, and presumably you will gain a good deal with what you receive on the other end. This is different than, say, a guy demanding that he eat at a restaurant every day for free, as that has real cost associated with it. Cada playing with 100% rakeback has almost no cost.

I think Amaya is on the right track with trimming the fat from Pokerstars, but I think they're taking it a bit too far.

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Meanwhile they continue to offer rakeback to king donk himself Gus Hansen.. I could see them worried about paying him back his rake but the half they'd be keeping from the folks who are pwning him left and right would be worth it.. All I gotta say is Gus must have some hidden dungeon filled with gold 1oz plaits or kilo bricks because the dude has lost soo much its mind numbing..Guy Laliberte losing that much wouldn't be a big deal hell he puts up most of the buyins for Big1 in some form or fashion at least a part but Gus doesn't have LaLiberte kinda bank in life..