GPL Contract: A Look at the Fine Print
We’re now about two weeks away from draft day for the inaugural season of the Global Poker League (GPL). The list of draft-eligible players has been finalized and was released last week; each of the players on the list has signed the same contract, which anyone interested can read for themselves on the GPL website. The contract binds players to a two-season commitment and lays out both their obligations for that period and the way they will be compensated, in the form of an hourly rate, a share in the league revenues, and a bonus should their team win the playoffs.
Although the general tone in the poker community is a lot more optimistic about the GPL now than when the first details about it were announced this past fall, it still has its opponents. For some, the issue is simple skepticism; they believe the GPL should not be attempted simply because it is so likely to fail. Some are against it for other reasons: because they feel that “sportified” poker will detract from rather than complement conventional, for-money poker, or because they are opposed to PokerStars and consequently object to the number of that site’s sponsored pros in team manager positions. Most recently, a number of people have taken to social media to criticize Alexandre Dreyfus – Mediarex CEO and the idea man behind the league – for the terms of the contract, which they see as exploitative towards the players.
Indeed, the contract does include a lot of binding commitments for the players while reserving the lion’s share of gross revenue for the league itself. But does that make the contract unfair?
Negreanu weighs in
On Friday, Daniel Negreanu weighed in on the issue in a blog post. Although he’s neither a manager nor a draftable player, he will be involved in draft day coverage, so he’s not entirely a disinterested party. However, even as someone who frequently takes issue with Negreanu’s opinions and attitude, I find myself mostly in agreement with him on this issue.
Although wordy, his blog post boils down to two essential points. Firstly, that participation in the league is a “freeroll” for the players and one shouldn’t be too critical in examining the mouth of a gift horse. Secondly, that the nature of a contract is consensual and that a contract can therefore not be inherently abusive; if some players find the terms objectionable, then they should simply refrain from signing it. As usual, I find Negreanu’s viewpoint to be lacking in nuance, but in ballpark terms, he’s not wrong.
The league is not a freeroll, because people’s time and personal freedom have value, and players are being asked to commit a certain amount of the former, and give up a certain amount of the latter. At the same time, the financial risk to the league’s investors is huge, and zero for the players. Giant glass cubes, arena rentals, flights and accommodation for sixty players throughout the season… none of these things come cheap, yet even if the league tanks in its first season and never makes a penny, the players will walk away with, at minimum, a few thousand dollars for their time. It’s not that there’s no potential for regret if the league does not perform up to expectation, just that the worst scenario players will face is simply not receiving as much compensation for their time as they were hoping.
On the latter point, it should be noticed that contracts can be abusive, but only when the context is itself coercive. For instance, contracts between customers and cell phone or internet providers can be unfair to consumers when the alternative to signing is to try to live without such services in a society which is structured so as to make them essential. I don’t think it’s possible to argue, however, that not getting to participate in the GPL is an intolerable hardship for anyone, so in this case I think Negreanu’s logic applies. If someone does not want to participate in the GPL under the terms offered, then simply not participating in the GPL is an acceptable alternative.
In any event, we should examine the actual objections. The problems people have found with the contract have largely to do with two things: the degree and unilateral nature of the commitment players are asked to make, and the division of league revenues.
Players are asked to commit to two seasons, and agree to perform a number of services for the league beyond simply playing – interviews, media events and the like – for which they aren’t compensated on an hourly basis. They also commit themselves to participating in additional GPL-sponsored events like invitational tournaments, at the GPL’s discretion. If they want to back out of the contract, meanwhile, they’re obliged to return up to four months’ pay and leave the door open to additional legal penalties, while the league can unilaterally terminate their contract at any time without penalty.
It’s not hard to see how this would be concerning; in theory, there’s nothing stopping the GPL from demanding endless public appearances and invitational events in excess of what players think they’re getting into. They’re being asked to trust that the league will not abuse them in this way.
On the compensation front, the league expects to earn its revenue through a combination of ticket sales to live events, corporate sponsorships and sales of team merchandise. The league itself will keep 70% of these revenues, while the remainder will be split between players and managers according to a system laid out in the contract. To some, that split seems excessively skewed in favor of the league.
A question of commitment
To understand why the league requires such binding commitments from the players – and applies such stiff penalties for defecting – one needs to understand the business model, and how it differs from the rest of the poker industry.
On some level, we’re all used to the idea that simply getting people to play poker creates value. Card rooms collect money from all players, and professional players collect money from losing players. Losing players pay for an experience and the thrill of gambling. None of this is remotely the case for the GPL, however.
If the GPL is to succeed, it has to create value for itself and its sponsors, and that value will come from the establishment of brands – namely the teams themselves. At first, people will tune into streamed GPL events out of curiosity or to watch specific players, but the only way any money will be made will be to convert those casual viewers into fans with a loyalty to a specific team. Only players with a preferred team are likely to buy event tickets and team merchandise, and corporate sponsors will only be attracted when they can be guaranteed a reliable viewership.
Once team loyalty has been established, then individual players can more readily come and go, but in order for such loyalty to appear in the first place, a certain amount of stability is needed. At first, viewers will select teams to watch and cheer for based on the players involved, and if those players disappear or switch teams, fandom will never take root. Aside from the provisions of the contract, this is also the reason that teams will be limited in the number of players they can release or trade in the second season’s draft.
So, while the GPL could potentially use the terms of its contract to treat its players as slaves, that’s not the likely reason for those terms. Rather, there are very good reasons that having players quit mid-season would be hugely damaging and potentially fatal to the league’s chances of success. By the same token, it would be counterproductive for the league to attempt to abuse the players’ commitment; the amounts of money involved are small enough relative to their regular poker earnings that they could and would still walk if pushed too far, at which point no amount of money recouped from them would prevent the league’s demise.
Effort and risk
On the issue of compensation, meanwhile, determining a fair revenue split requires examining what everyone brings to the table. In particular, we have to think about where the financial risk lies, and who is investing effort in the league.
The point has been made that without the voluntary participation of pro poker players, there would be no league. This is true, but by the same token, the league would equally not be able to exist without many millions of dollars of capital raised from private investors, or the efforts of Dreyfus and his collaborators to form a plan for the league and to raise that money. For the players, the league starts later this month, but for Dreyfus and Mediarex, this is a project that has been in the works for years; the GPL concept was first announced in November 2014, but Dreyfus’s efforts to “sportify” poker predate that by quite some time.
Those investors, meanwhile, expect potential profits in keeping with the amount of risk they’re taking on, which is considerable. Dreyfus himself is the first to admit that the league’s chances of success are small, but this is what venture capital is all about. His investors are prepared to lose all their money most of the time, provided that the upside should the league succeed is enough to make this a positive expectation value gamble in the long run. You’d think that poker players, of all people, would understand this.
The effort on the side of the league should not be discounted, either. Yes, teams and players will have to shoulder a certain amount of the marketing efforts, but I don’t anticipate that the league will be sitting back on that either. The logistical hurdles in organizing and broadcasting the events themselves are likewise considerable. Even just moving “the Cube” around is going to be quite a feat.
It’s true that Dreyfus himself will not walk away from this with nothing to show for it, whatever happens. Yes, I would assume he’ll be compensating himself in some way – how much, I don’t know and don’t plan on asking – but that’s also completely standard. Every startup pays its CEO out of investors’ pockets and, if it goes bankrupt, the CEO lands on his feet and the investors lose out. Investors understand this; I don’t think we need to be wringing our hands over the plight of the poor venture capitalists.
Is 70/30 fair? I have no idea. “Fair” is a tough concept to pin down. I feel comfortable saying that it’s not outrageous, however. My personal frame of reference is as a board game author, and although that’s a very different thing, I know that for many fields, once retailer, distributor and publisher have all taken their cuts, it’s normal that not very much is left for the content creator. Since the GPL will be taking on the equivalent role of publisher, distributor and sometimes a retailer rolled into one, there are fewer middlemen. One would therefore expect a better deal for the players producing the content, but even so, 70% doesn’t strike me as particularly excessive for everything the league will be doing.
Are we capitalists, or aren’t we?
Back to Negreanu’s second argument, the GPL contract offers potential players a value proposition: a commitment of their time and the use of their personal brand in return for a combination of fixed remuneration (their hourly pay for playing), plus potential bonuses based on the performance of both their own team and the league as a whole. Meanwhile, the basic assumption of capitalism, and indeed economics in general, is that people will only take such a deal if they feel they’re getting more than they’re giving.
Over 200 players signed up for the draft, while only 60 were needed, even ignoring the fact that many managers will draft themselves. A true believer in capitalism – which I most definitely am not – might argue that this suggests that the terms of the contract are in fact too generous to the players. That’s an overstatement to be sure, but the number of players who accepted the terms is nonetheless evidence that the GPL is not asking “too much.”
Poker is a cutthroat game, and the usual attitude of poker players is that when someone’s mistakes cost them, they have no one to blame but themselves. Why, then, are so many people who’ve opted not to join the league so concerned about the terms of the contract that others have signed?
Presumably, it’s because they were hoping to participate themselves, but on better terms. Well, I’d like to own a Tesla Model X, but at a lower price. We can’t always have what we want, though, and unfortunately, everyone’s a fan of capitalism up until the point it’s no longer working in their favor.
If the GPL could not generate sufficient player interest with the contract as written, things would be different, but that’s clearly not the problem that it faces at this point. Elon Musk is selling enough Teslas at their current price point that he needn’t worry about the fact that I can’t afford one (the upcoming Model 3 notwithstanding); likewise, Dreyfus has enough players for his league that he needn’t be concerned if not everyone is willing to sign up for what he’s offering. C’est la vie, non?
Alex Weldon (@benefactumgames) is a freelance writer, game designer and semipro poker player from Montreal, Quebec, Canada.