|
RugRat
Home away from home
Joined: 19-May-2006
Posts: 439
From: Stavanger
|
Posted: 2006-10-25 15:48
Originally Posted by Billiard's Digest.com
The hottest topic in the pool world is, of course, the International Pool Tour’s delay in paying out prize monies from the $3,000,000 World 8-Ball Championship in Reno in early September. The 200 players in the event still have not been paid.
In a series of e-mails to players this month, Trudeau indicated that that the funds were wrapped up in the sale negotiations between the IPT and Asian billionaire Stanley Ho, which were complicated by recent U.S. legislation restricting Internet gaming.
On Monday, Trudeau announced that a financing package related to the sale had been signed, making the prize money available. Players have been promised their payouts by next week. The sale itself was said to be near completion. The first full season of Trudeau’s International Pool Tour is shaping up far differently than expected. As originally planned, the 2006 IPT season was to consist of five major events with a total of about $8.5 million in prize money, and a qualifying tournament for 2007 tour membership.
These plans first showed signs of fraying at the World Open in early September — just the second event of the season. There, players learned that the $1.27 million Masters 8-Ball Championship, set for late October in London, would be cancelled due to problems arranging for the venue; that Trudeau intended to sell the fledgling tour to Ho Interactive, an Internet gaming firm held by Ho; and that checks for World Open prize payouts wouldn’t be available at the event, due to a shipping error.
Billiards Digest: Your latest press release said checks would be sent out within seven to 10 days. Should players expect that to change at all?
Kevin Trudeau: I just talked to our attorney and all the documents to secure the financing are being faxed to my office in Chicago.
BD: How will the Reno checks be dispersed?
KT: We’re going to call every player when we have checks in hand and either wire the money to them or Fed Ex a check.
BD: Was there a connection between the IPT financing and your Ho Interactive deal?
KT: It’s part of the same transaction, but there were two elements to that transaction. In the negotiation with Ho, one of the elements was the financing that Ho and some of the other investors would put into the IPT prior to the IPO (Initial Public Offering). The other element was the acquisition, and generating additional financing through the public offering.
BD: The players in Reno were initially told that the checks were, for lack of a better term, “lost in the mail.” Then a week or so later the story changed to the prize fund being impacted by the Ho deal. What was the truth?
KT: Two things happened. All the checks were written and sent. But the Fed Ex didn’t arrive, which was no big deal. We figured we’d simply sign them on Monday. But come Monday, the financing package with Ho was all sideways. So we just put everything on hold until we could sort it out.
BD: That was the delay, but where was the shortfall?
KT: The shortfall was in the initial financing. We got a lot less than we thought, so we’re making up the difference.
BD: You’ve cancelled London and postponed the King of the Hill, correct?
KT: Because the financing is a lot less than we thought, we’re probably going to have to push the King of the Hill into the early part of next year. That’s not official yet, though.
BD: Is Chicago 100 percent?
KT: As of this moment, yes.
BD: Could that change?
KT: Anything can change, but as of this moment, it’s a go.
BD: When might everyone know for certain?
KT: Good question. We want to make sure we have the prize fund available, because, again, that’s from our financing. If there are any changes, we will contact the players directly to discuss those changes.
BD: Early in the process you told the players you had money escrowed for the first two events, and already had the money apportioned for 2007. Why has that changed?
KT: When market conditions change, like they did here, you sometimes have to make different business decisions. When you say financing is “in escrow,” you have commitments, letters of credit from financing institutions and sometimes the financing package just doesn’t turn out like you expected. People say, “Why don’t you put the money yourself? You have tons.” Well, that’s not what you do in business. You have different funds aside for different projects, and financing is how you generate funds for projects.
BD: You also made other cuts in Reno. You didn’t tape all the matches and didn’t have live TV overseas. And since Reno you’ve had to let people in the office go. How has your business model changed? And how have your expectations changed?
KT: The business model hasn’t really changed. In terms of the staffing, we have a number of people who float between companies when we start a new enterprise. I threw 20 people from another company into the IPT on a short term basis to get things started. Once that occurred, those people have become redundant. Now they’ve been pulled off the IPT and been put into custom fulfillment services, distributor services, Natural Cures, etc. All of the people are being offered positions in other businesses.
BD: When all is said and done, this year will have had three events, two events short of what you’d promised the players. What will happen in 2007?
KT: I don’t really know the answer. We’re committed to the tour. And as I said at the first event, we set out for what we think will be the best plan, but as conditions change that plan may be altered and modified from time to time. Next year looks really solid. We have a host of sponsors lined up for 2007. Our television looks solid. Versus is thrilled and is repeating events. We’re about to sign with ESPN Star.
BD: You said in Las Vegas that the IPT was “already making a profit.” All of the current signs would indicate otherwise.
KT: There’s two ways to look at profit. There’s profit and there’s cash flow. When you write a proforma and have a sponsorship package that comes in at $1 million, that goes onto your books as revenue even though it hasn’t hit your account yet. And then you depreciate certain expenses over five years. You can look at it that way and say this is a very profitable business on a proforma basis.
Now cash flow, on the other hand, may be very tight and may even be upside down for a while. So, in terms of cash flow, we’re currently putting out a lot more than we’re bringing in. But in terms of what’s on the books for revenue, etc., it’s very solid.
BD: The qualifiers have become a bit of a problem. Participation is dwindling, in large part caused by the credibility hit the IPT has taken recently.
KT: If I’m a player out there and I hear that the IPT players haven’t been paid, I may seriously question whether the IPT is going to be around next year and if it’s wise for me to risk $2,000 into a qualifier.
BD: There are certainly a number of players who have turned their lives upside down, quit jobs, borrowed money, etc., banking on your promises with the IPT. How many tournaments can they bank on in 2007?
KT: I can’t give you a specific number right now. I think we have 10 or 11 in the books. We’ll be close to that. We may have to scale back a little bit, I’m not sure. Our first objective is to get the players paid, get our next tournament behind us and get through the IPO. Once we have that, we can lock up sponsors for 2007.
BD: How will the players be paid from here on out?
KT: That’s a good question. Obviously, because of the last snafu we’re going to figure out a way to get the players paid quicker.
The one thing that did surprise me was just how financially distraught many of these players are. At the first event a total of three players came up to me and thanked me for the food and a fabulous event. Do you know how many players came up to me asking for a loan? Almost 50. I was a little ticked off at that. Some players were acting like it’s my responsibility to make sure they could make their car payment.
BD: But is it unrealistic for them to expect to be paid when they’re eliminated? Or at least when the tournament is over?
KT: That’s not unrealistic. And at the first event they were. But the other thing that players are forgetting is, say, how many players got paid at the U.S. Open? There were more than 200 players, and half of them didn’t even get a check. And they put up $500.
BD: That’s not the same. The players are basing their participation on a promise. They go to the U.S. Open knowing that if they finish in the bottom half, they’re not going to get a check. They come to your events expecting that once they’re finished … whether they finish 200th or 21st … they’re going to get paid then and that’s what sustains them until the next tournament. That shouldn’t be unrealistic for them to think, unless they’ve been told ahead of time that they wouldn’t be paid for a month.
KT: You’re exactly correct. I think maybe we gave some expectations, and we were very optimistic and aggressive in those expectations, and maybe that was a mistake on my part. But we’re going to make sure that in the future, that our expectations are set up correctly from the beginning and make sure we meet those expectations.
BD: What would you say to the players who are a little gun shy, and are wondering if they should still give up their day jobs for the hopes of 2007?
KT: I don’t know what to tell them. This is a new business venture, and we’re moving forward. I also think people need to take responsibility for themselves and adapt and improvise based on the scene. This is going to be a situation where over the next few years this business is going to change and evolve. We’re going to be learning about market conditions, the industry, etc.
In the end, there are no requirements. If the players want to play on the tour, fine. If a player is nervous at all, I’d say don’t play. Play in all the other tournaments. Take a look-see attitude. Watch us for a few years. And then if you feel comfortable, come play on the tour.
If you want to play on the tour in 2007, know going in that we’re new and trying a lot of huge things that have never been attempted before, and there’s going to be a learning curve for us too. They players will have to deal with modifications and go with the flow as best they can.
The bottom line is that certainly this was an unfortunate situation and maybe we didn’t communicate to the players as well as we could have. We’re learning. We’re very sincere about the future of the IPT. I’ve invested a huge amount of money into the IPT and I don’t want to throw it away at this point. I’m committed, and we’re going make this up to the players.
Let’s put it behind us and move ahead.
|
