Sunday, November 9, 2014

What happens when you give marketing guys too much money (Part 2)

The first part of this story was pretty easy to write. There were two stories that I thought were a good representation of how money started to flow freely once PokerStars took off. This second part - not so much. And it's not because of a lack of subject matter - it's exactly the opposite.

I am a pack rat, something that drives my wife Sharon out of her mind. As an example, I have every ticket for every significant event I've been to in my adult life. I'm talking sporting events, concerts, plays, trade shows - everything. This extends to my computers - I have every email I've ever sent or received, and historical files from most of the places I've worked. I have every document and every proposal I ever reviewed at PokerStars, and the number is mind-boggling - a quick count put just the number of rejected proposals at 1,200. That's a lot of material to choose from. And the selection ranges from the absurd (a poker-based reality show featuring homeless people) to the outrageous (a $1 million buy-in tournament with two years of qualifiers).

Having said that, I'll warn you - a few of these were obvious inclusions, but the rest were a random draw. The best part of this, of course, is that I have a rich source of material for the future. The following story deserves some detail, so it's the sole subject of this post.

From 2005 to 2011, NBC produced and broadcast my very favorite poker show: the National Heads-Up Poker Championship. I admit to some bias, because I had a hand in this project. But when some of the smartest and most creative minds in the business got involved, this show/event became what poker television should be: fun, understandable and dramatic.

In early 2004, I got a call from Jamie Horowitz, an associate producer for NBC Sports. He had a germ of an idea for a poker show, and wanted to know if there was any interest at PokerStars in a sponsorship role. The poker boom had firmly taken hold, the World Poker Tour was getting very respectable ratings, even in reruns, in its first season and NBC had taken notice. 

This was the first of about a dozen calls between Jamie and me, talking through not just PokerStars' role but the structure of the show itself. I was a huge fan of the concept. Poker television was chock-full of shows that featured only a handful of key hands, which jaded the audience's view of what tournament poker is really like. This seemed like a chance to show what top-shelf poker really looks like - smart and creative poker players making magic with ordinary cards.

I didn't discuss the concept with Isai (the CEO of PokerStars, and my boss) just yet. He liked to get involved in the details of projects like this, and I had no objection to this in general, but I wanted his first look at the NHUC to have some substance. I did tell him that I was in discussions with NBC about a new concept for poker programming, and he was satisfied to wait until there was something substantive to look at.

Jamie wanted to bring in someone with poker production expertise, and chose Mori Eskandani, who had just produced the surprisingly successful Poker SuperStars broadcast on NBC. Mori proved to be an invaluable asset in the creation of this event - he was both an experienced television producer and a respected high-limit poker player. Mori would go on to produce some of the best and most successful poker shows during the boom, including Poker After Dark and High Stakes Poker.

By the fall of 2004, the show was taking shape, and I liked it much more than I had when Jamie first called me (which is saying a lot). There was one more component that I wanted in place before I presented it to Isai - I wanted to figure out some means of limiting the exposure our competitors could gain in the show. All of the major sites had at least a few pros in their stables at that point, and I knew NBC would be inviting them all. And I knew that I couldn't keep PartyPoker, Full Tilt and UltimateBet from advertising on the show.

I also knew something I shouldn't have - a source close to some senior people at NBC leaked to me that their management was concerned about production costs, which were looking like they might exceed $2 million. So I took a leap and called Jamie with a proposition: what if PokerStars guaranteed NBC a profit by underwriting the production costs?

Jamie was all over the idea. We quickly hammered out deal points to make PokerStars the presenting sponsor of NHUC. Our name would appear on the opening credits, at all of the breaks and on the felt. We would buy a substantial chunk of the 18 minutes of network spots each hour. We even agreed to be a contributing sponsor for Arena Football, a pet project of NBC's Senior VP of Sports Programming, Jon Miller.

After some wrangling, we established a price: $2.7 million. And to my utter shock, NBC agreed to a term that I had included with no hope of survival: exclusivity. PartyPoker, Full Tilt and UltimateBet were out. They would have players in logo gear playing in the event, but we owned the breaks.

Now I was ready to present it to Isai.

I expected there to be some selling involved. To my surprise, Isai was much more interested in how we could use this as a keystone project, anchoring our marketing around the WPT and NHUC. There were a few things he wanted to add (like some ratings guarantees, which we had gotten from the WPT and The Travel Channel), but for the most part he was in. There was no discussion of price - Isai knew that I had gotten everything I could before bringing this to him and had negotiated the best deal I could.

NBC quickly agreed to the few additional terms Isai asked for, and just before Christmas 2004, we exchanged deal point drafts. And then, in two disastrous strokes during the first week of January, everything fell apart.

The first of these was a call from my old friend/nemesis at the World Poker Tour, Steve Lipscomb. He had heard rumblings of what was happening with NHUC, which alarmed him - this was the first poker broadcast that had a chance to challenge the WPT and WSOP. He pointed me to an obscure clause in our 30+ page contract with the WPT that he believed precluded us from top-line sponsorship of a competing show.

24 hours later, while I was still reeling from this development, I got even worse news. NBC's Standards & Practices group had gotten their hands on one of the deal memo drafts, and determined that any production credit for PokerStars put them in danger, based on their continuing fear of the Department of Justice. I discussed various scenarios with Jamie and Jon so we could salvage the show, but it looked like NHUC was never going to air.

I still wasn't sure where we stood with NBC when I spoke with the WPT next, but I wasn't going to tell them that. There were a few conference calls that included lawyers on both sides, and while I usually like being involved in this sort of thing, I just didn't have time. We were a few days away from our first event at the Atlantis Resort (see "In which we learn what expensive really means") and I was swamped. But PokerStars had some really smart lawyers, and I knew they had this well in hand.

Later that day, Jamie called me with some relatively good news. While Standards & Practices wouldn't allow PokerStars to be the presenting sponsor of NHUC, they were still willing to take at least some of our money. Jamie asked if we would be interested in a 'cooperative arrangement' rather than sponsorship - we would guarantee NBC a certain amount of revenue in return for both spots on the show and other promotional consideration. I used this as an opportunity to squeeze one more PokerStars player onto the show (Greg Raymer and Chris Moneymaker had already been invited; we added Tom McEvoy). We went back and forth on a few other issues, but in the end we signed a $1.4 million deal that gave NBC sufficient guarantees to move forward with the show.

And the rest, as they say, is poker history. The National Heads-Up Poker Championship was a modest success for NBC and a huge success for poker overall. The show aired from 2005 to 2011, then returned for one more season in 2013. I hear rumors that it's coming back in 2015, and I truly hope this is true - it's the best poker show on TV.

Three endnotes to this story:

- We ended up with not three, but four players in the 64 player field for this event. The night before the first match, NBC held a huge cocktail party/match-up draw at the Golden Nugget, where the first event was filmed. Rich Korbin (my Director of Marketing and overall right-hand guy) called me that morning, telling me that Evelyn Ng was playing in the event and wasn't affiliated with a site. I was in LA, planning to go to Las Vegas the following day, but I printed a contract, jumped on a plane and tracked Evelyn down at the cocktail party. She signed the contract and was wearing PokerStars gear the next day.

- Team PokerStars didn't fare particularly well in this first year of the NHUC. Evelyn beat Bobby Baldwin pretty handily in the first round, only to be crushed by Carlos Mortensen. Greg Raymer beat Kathy Leibert in round one, but lost an excellent match to Huck Seed (1996 WSOP champion) in round two. Chris Moneymaker, who would go on to the finals of this event in 2011, also won his first round match (vs. Eli Elezra) and also fell in round two, to Mimi Tran, who had taken out our fourth player, Tom McEvoy, in round one.

- I haven't stayed in touch with Jamie Horowitz since I left PokerStars in 2007, so I thought I'd look him up for some background for this story. He's come a long way since his associate producer days at NBC - he left for ESPN, where he launched and produced Keith Olbermann's show, but returned to NBC in May 2014, where he has taken over as Senior VP/General Manager of The Today Show briefly took over as Senior VP/General Manager, only to be fired weeks later. I hope he's off enjoying the $3.3 million that NBC was required to pay him as a contract buyout.

Update: As I should have expected, Jamie landed on his feet. In May, 2016, Fox Sports hired him as their new President.


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