Ominous Rumblings On The Poker Scene?
For virtually the last three years or so, the growth of poker as a worldwide phenomenon has been measured by quantum leaps rather than small steps. From the explosion of the game in the estimated 200-plus virtual card rooms and the revival (and success) of poker rooms in casinos around the world to the stratospheric rise of the World Poker Tour and the nearly tenfold increase in participation in the Championship Event at the World Series of Poker (from 631 in 2002 to 5,619 in 2005), poker hasn't stopped there with its reach and impact. On any day a viewer can turn on their television and see some form of poker, played by either the recognized professionals in the game or by celebrities and "Average Joes" attempting to become a recognized professional. Poker merchandise, from books to playing cards and chips, are readily available in the marketplace, from the highest-end retail outlets to Mom-and-Pop stores. With all of this stated, are we perhaps we are seeing some cracks developing on the "Poker Express"?
World Poker Tour Enterprises has started action that may have some wondering just what is going on with the company. WPTE announced on February 7th that they have hired the reputable financial firm of Thomas Weisel Partners LLC as its financial advisor. WPTE and Thomas Weisel are going to be looking into many facets of the business, including but not limited to the possibility of the sale or merger of the business with another entity offering strategic opportunities for growth.
It is commonly known that WPTE has some issues they would love to see resolved. In the four year history of the company, it has never turned a profit from the production of the World Poker Tour or the Professional Poker Tour, which recently was picked up by the Travel Channel for broadcast. Whatever they have made from the production of the WPT has been turned back around into the show itself. They have attempted to increase their revenue return through the marketing of the WPT in the international market and now have their broadcasts in 130 countries around the world, potentially adding more to the WPTE coffers than by simply concentrating on the United States market.
There are still questions to be answered regarding last year's attempt to "buy out" WPTE. As most of you will remember, during last summer's World Series a group allegedly led by poker legend Doyle Brunson offered a $700 million package to take over WPTE. With that news, the stock in the company shot to unprecedented levels, only to plunge just as rapidly when the deal was pulled soon afterwards. There is still much to be answered on this front, with the SEC investigating the claim and the recent subpoena of a Brunson associate regarding the case.
WPTE has also attempted to stake their claim as "the" brand in poker through a multitude of ventures outside of the casinos. Through such prominent marketing names as Mforma, U.S. Playing Card, Jakks Pacific, 2K Sports, Radica, Oakley and HarperCollins (to name a few), WPTE has put their name on a multitude of merchandise such as handheld and video games, apparel, jewelry, poker equipment and chips, books, DVDs, candy, games for mobile phones, PDAs and wireless devices, furniture and house wares, automotive accessories, talking bottle openers, lighters and other novelties, and has added more revenue through these ventures. And in an age where the legal questions of a U. S. based company participating in such ventures runs rampant, WPTE has also entered into the lucrative online poker business with WPTOnline.
While many may look at this and see the potential for the downfall of poker or World Poker Tour Enterprises from its angelic heights, it is more than likely just the "growing pains" of a company that is breaking new ground. WPTE may not have made a profit yet in its youthful history, but it is also a very solvent company, with no debt to burden their bottom line. With this healthy financial situation, WPTE is a property that many companies could invest in and the actions with Thomas Weisel Partners LLC are simply a way to accentuate their position in the poker world of today. We'll have to keep a close eye, however, on what could be the first ominous rumblings of discord on the poker scene of the 21st century.
Ed note: Vince Van Patten of the World Poker Tour plays at Hollywood Poker