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Headstring News
Trudeau Changes His Tune: Players Will be Paid in Full
Nov 8, 2006, 10:17 AM
After an unpropitious announcement that the $3 million prize fund of the International Pool Tour's World 8-Ball Championship in Reno, Nev., would be slashed by two-thirds and delivered to players in three installments, tour founder Kevin Trudeau has back peddled on that announcement, issuing a statement that he will pay the players in full.
"You all will be paid 100 percent of the $3 million prize fund from the World Tournament. You will be paid 100 percent, in full," he wrote in an e-mail sent to players at 9 p.m. on Nov. 7.
The 200 players who participated in the event have been waiting to receive their checks since the event culminated on Sept. 10. Trudeau cites recent U.S. legislation banning online gaming as the wrench in his business plan. While Trudeau has promised to pay the players in full, he intends to do so on a weekly installment plan, to begin "starting this week," he wrote.
The full text of Trudeau's e-mail correspondence is included below:
Dear IPT Players:
In my last e-mail I told you to pop the champagne. This may have been a little premature; for that I sincerely apologize. First, I want to clarify the most important issue. You all will be paid 100 percent of the $3 million prize fund from the World Tournament. You will be paid 100 percent, in full.
As you are aware, President Bush has signed a new law making online gaming in America illegal. Online gaming was an integral part of the IPT business model. Over one year ago I met with representatives at HoCasino.com and
structured a strategy that would combine online gaming with our pool website and televised pool matches. This business "trade secret" was the magic ingredient that produced a viable, profitable business model and revenue
stream that would make the IPT a profitable ongoing business enterprise.
The unforeseen, surprise, and sudden outlawing of online gaming in America dramatically and instantly reduced the IPT's 2006 sponsorship revenue and additional funding sources by over 80 percent. This totally unforeseen and
unfortunate development has caused a temporary shortfall in IPT revenues.
This has forced us to delay your prize money from the last tournament. Even with the funding that we have received in the last week, a major shortfall still exists. Even with this shortfall, it is still the IPT's intention to pay all players, in full, 100 percent of the prize money promised. We are organizing additional funding sources now to get you paid in full as soon as possible. For the future, we have commitments, based on the IPO of Ho Interactive, of $25 million from institutional investors after the first of
the year.
The funding and sponsorship money that was promised to us was reduced to only 20 percent of what was originally committed. Other sponsors and funding sources are being organized now.
Again, I want to make perfectly clear that all players will be paid 100 percent, in full. At this time, due to these funding shortfalls, the IPT cannot immediately pay all of the prize money. What we are committed to do is pay all players a portion of the prize money due each week, starting this week, until you are paid in full. I appreciate your displeasure with not receiving 100 percent of the money immediately. However, please know that no one is more disappointed than me.
This situation was created by the congressional legislation outlawing online gaming. It was completely unforeseen, unavoidable, and came as a complete surprise to everyone. Partypoker and other publicly traded online gaming companies lost 70% of their value in one day because of this surprise law. Investors, including myself, lost over $15 billion in combined valuation following the signing of this new legislation. Nobody in the online gaming community or international investor community saw this coming. Because of it, our investors, sponsors, and funding sources temporarily put the IPT on hold. We are handling this situation and are doing everything we can to correct it. Based on this new U.S. law, the IPT's business model is currently being revised to deal with this substantial change.
Many of you may wonder why I do not personally put the money in the IPT to pay the players. I have already personally invested over $10 million to date into the IPT. The IPT must operate as a profitable, independent corporation to achieve long-term success. Remember, I have the most to lose if the IPT is not successful. In business, unforeseen circumstances can dramatically change the viability of an enterprise. Hotel owners in New
Orleans had to dramatically alter their businesses when hurricane Katrina wiped out their hotels. People who were promised rooms did not receive them. The hotel owner lost money. Everyone was adversely affected by the
unforeseen hurricane. When an airline is not profitable, it closes down. Passengers who paid for tickets lost all their money due to the business failure. The stockholders and owners of the airline lost the most. When companies fail to achieve profitability they file bankruptcy. All of the
creditors do not get paid. Customers lose, vendors lose, employees lose, and stockholders lose. These things happen in business all the time. Business owners do not personally fund companies whose business models are
adversely affected by changing market conditions, new legislation, or natural disasters. Donald Trump bankrupts companies instead of personally putting cash into those enterprises. The wealthiest people in the world do
not continually fund businesses out of their personal assets. They have a lot more money than I do, yet they still don't personally fund business ventures. To date, I have personally invested more money into the IPT than
any successful business person would ever consider. I took the risk and invested the money when nobody else in or out of the industry even considered putting up a dollar. I did it because of my sincere love of the game, my personal friendships with several players, and my total belief that a professional pool tour can be an enormous success.
Due to the new U.S. law, the IPT's business model and operating structure will change. I have $10 million invested in this business and I have every intention and desire to deal with this situation and make the IPT a
long-term viable business and tour. I have the most to lose. You, as players, should have a strong desire for the IPT to succeed. If the IPT continues and succeeds, all of you will financially benefit. If the IPT no longer exists, we all lose. As players, you should consider being understanding and supportive of this tour. It is in your personal best interest to do whatever you can so that the tour deals with this business model change and continues year after year.
I want to answer directly several questions. Will there be another tournament? The answer is absolutely yes! Most importantly, every player will have been paid 100 percent, in full, before the next tournament. Will there be a 2007 season? The answer is absolutely yes. We are working with venues and dates now. We hope to announce the tournaments for 2007 very shortly. Is the Ho Interactive merger completed? No. We are still finalizing documents for the Ho Interactive acquisition. The delay has been
caused by a dramatic restating of our pro forma and business plan based on the new U.S. legislation. It still appears to be a deal that will happen. However, our backup plan is to do an independent IPO of the IPT regardless of whether HoCasino.com is involved.
Our television coverage on VS in primetime is expanding. Our European EuroSport TV coverage is also expanding. We will be announcing further television broadcasting deals for IPT tournaments. Our broadcasting partners are excited and committed to the IPT for the 2007 season and
beyond. The IPT continues to achieve more television broadcasting than any billiard tour in history. We continue to generate never before seen ratings
for billiards. With massive TV coverage world-wide, and strong ratings, we are attracting major sponsors for the 2007 tour and beyond. Fortune 500 companies look at TV distribution and ratings. We have achieved
unprecedented success in both of these areas. Major sponsors budget a year in advance for sponsorship initiatives. I will have great pleasure silencing critics when we announce unprecedented major corporate sponsorship
for the 2007 season.
Please remember that when I launched the IPT we were met with massive negativity and skepticism. I was criticized for every decision I made by players, so-called fans, billiard organizations, and competitors. The IPT
plan was the most ambitious and risky business endeavor in billiards history. I have my own personal money at risk. I have been attacked personally and repeatedly even though we have, in fact, achieved great things. Remember, we have paid out over $3 1/2 million in prize money directly to the players. We have put on world-class tournaments sparing no expense, providing the best accommodations for spectators and players. We have paid over $1 million providing free food to players. For the first time in billiards history we have secured primetime television coverage in America with a major broadcast partner. For the first time in history, pool
is being broadcast live in primetime in Europe. For the first time ever, pool is achieving spectacular ratings on television. Major sponsors are coming onboard.
Yes, not having the players paid from the last tournament is more than disappointing. Yes, having to cancel a planned tournament is disappointing. Yes, having to reschedule several tournaments is disappointing. I admit
that our 2006 tournament schedule was overly optimistic and overly ambitious. If I were to do it all over again, I would have had only one tournament this year and built the business slower. Creating such high expectations based on the commitments I received from funding sources and sponsors was a mistake.
Overall I believe that the positives dramatically outweigh the negatives. Mistakes were made. I am sure more mistakes will be made. I believe we all should focus on the positives and the achievements we have made so far, and focus on the future as we deal with this challenging temporary situation caused by the new U.S. legislation.
I wish I could call each and every player personally, but time commitments make this impossible. I would like to personally thank the overwhelming majority of players who have e-mailed me and left messages offering their
support, understanding, and patience. To the players who have been vocally negative, I would like to say I appreciate and understand your frustration and disappointment. I would ask for your understanding and patience. At this point it would be easy for me to shut down the IPT and have it become another failed sports business venture like the USFL, XFL, or the dozens of other attempted sports leagues that have failed. This would be the easy thing to do. However, my whole life I have received great pleasure in silencing critics and proving people wrong. To all the nay-sayers I would simply say, "You will eat your words."
Remember, all players will be receiving checks this week and each week thereafter until paid in full. There will be a robust 2007 season and beyond. If you want to play in these tournaments I encourage you to do so. If you choose not to play in IPT events, that will be your choice. I am taking the IPT to the very top and whoever wants to come along with me is welcome!
Remember, the dogs may bark but the caravan moves on!
Very truly yours,
Kevin Trudeau, Founder
International Pool Tour
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