Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne
Are escrows good for fantasy football?
-
Greg Ambrosius
- Posts: 36413
- Joined: Tue Apr 06, 2004 6:00 pm
Are escrows good for fantasy football?
Originally posted by Coltsfan:
Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne 1. I do not know the cost of escrow. I assume it's similar to the cost of insurance for my cash bonuses I'm paying for the NFFC Classic/Primetime and NFFC Classic/Online. That's based on a percentage of the guarantee. That would likely explain why few escrow the entire amount of prizes. It just gets too costly. Trust me, adding ANY additional expense with competitors trying to squeeze each margin is difficult in these days.
2. No, I don't believe people are questioning our ability to pay. But we are being lumped in with every contest in this space. If one goes bad, it shines the light on all of us. That's why I'm saying that when the light is being shown on the whole space, at least my 6+ years of paying prizes on time and in full along with the backing of a publicly traded company adds some reassurance to veteran players and potential new customers.
3. I don't know what you mean there. Our COMPANY is not being run on the prize money. Of course, prize money is part of revenue, but trust me there's enough to pay prizes, pay salaries, pay rent, etc., from revenue. But obviously entry fees cover expenses and prize money and entry fees are revenue, no matter how you slice it. Setting that aside is what you are really asking about.
Operating out of that prize fund or worse yet using that prize fund to pay another sports prizes is where we've definitely seen trouble. And we know companies have done that in our industry. When you get too far behind and entries don't come in for the next sport that's when companies default on prizes. Or in the most recent cases, the owners claimed they used that prize money to fund back-end development and they ran through the prize money. Unbelievable, but apparently true.
How did game operators ever get that dumb? They wanted to get bigger, more profitable, wanted to chase the dream. Instead, they took everyone's money and created a nightmare for the rest of us. Fortunately, some of us -- not all of us -- aren't running our companies the same way. I know I'm not playing those games.
Escrows may work in your business. Here, they definitely need to be paid by someone. And again, do you want me to escrow the $100,000 or the whole $800,000+? Should FFOC escrow the $1 million or ALL of the prizes. Nobody is questioning their grand prize winner getting paid, but the free entries are at risk now. How would escrowing the $1 million have protected the free entry winners?
Just so many questions after you come up with one answer.
Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne 1. I do not know the cost of escrow. I assume it's similar to the cost of insurance for my cash bonuses I'm paying for the NFFC Classic/Primetime and NFFC Classic/Online. That's based on a percentage of the guarantee. That would likely explain why few escrow the entire amount of prizes. It just gets too costly. Trust me, adding ANY additional expense with competitors trying to squeeze each margin is difficult in these days.
2. No, I don't believe people are questioning our ability to pay. But we are being lumped in with every contest in this space. If one goes bad, it shines the light on all of us. That's why I'm saying that when the light is being shown on the whole space, at least my 6+ years of paying prizes on time and in full along with the backing of a publicly traded company adds some reassurance to veteran players and potential new customers.
3. I don't know what you mean there. Our COMPANY is not being run on the prize money. Of course, prize money is part of revenue, but trust me there's enough to pay prizes, pay salaries, pay rent, etc., from revenue. But obviously entry fees cover expenses and prize money and entry fees are revenue, no matter how you slice it. Setting that aside is what you are really asking about.
Operating out of that prize fund or worse yet using that prize fund to pay another sports prizes is where we've definitely seen trouble. And we know companies have done that in our industry. When you get too far behind and entries don't come in for the next sport that's when companies default on prizes. Or in the most recent cases, the owners claimed they used that prize money to fund back-end development and they ran through the prize money. Unbelievable, but apparently true.
How did game operators ever get that dumb? They wanted to get bigger, more profitable, wanted to chase the dream. Instead, they took everyone's money and created a nightmare for the rest of us. Fortunately, some of us -- not all of us -- aren't running our companies the same way. I know I'm not playing those games.
Escrows may work in your business. Here, they definitely need to be paid by someone. And again, do you want me to escrow the $100,000 or the whole $800,000+? Should FFOC escrow the $1 million or ALL of the prizes. Nobody is questioning their grand prize winner getting paid, but the free entries are at risk now. How would escrowing the $1 million have protected the free entry winners?
Just so many questions after you come up with one answer.
Founder, National Fantasy Football Championship & National Fantasy Baseball Championship
Twitter: @GregAmbrosius
Twitter: @GregAmbrosius
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Route Collectors
- Posts: 3525
- Joined: Sun Aug 22, 2004 6:00 pm
Are escrows good for fantasy football?
Originally posted by Coltsfan:
Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne I ditto this question Greg. I was thinking the exact thing while reading the part of your post Wayne is referring to. My thought was this " If a company uses any part of prize money as operating cost then what is the source of that money being replaced?" Whatever the source is...why isn't it used in lieu of the prize money for operating costs?
I could understand the concept better if entry fees were paid over time as the contest is running but since everything is paid up front it doesn't makes sense to me.
Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne I ditto this question Greg. I was thinking the exact thing while reading the part of your post Wayne is referring to. My thought was this " If a company uses any part of prize money as operating cost then what is the source of that money being replaced?" Whatever the source is...why isn't it used in lieu of the prize money for operating costs?
I could understand the concept better if entry fees were paid over time as the contest is running but since everything is paid up front it doesn't makes sense to me.
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Route Collectors
- Posts: 3525
- Joined: Sun Aug 22, 2004 6:00 pm
Are escrows good for fantasy football?
Here's a side question since I saw your answers to Wayne right after my last post....if prize money isn't used for operating costs then replaced later then is it in a seperate account or just accounted for on the spread sheet. I guess what I'm asking is this...you've done it right for 6 years...how?
[ May 11, 2010, 11:37 AM: Message edited by: Route C ]
[ May 11, 2010, 11:37 AM: Message edited by: Route C ]
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Greg Ambrosius
- Posts: 36413
- Joined: Tue Apr 06, 2004 6:00 pm
Are escrows good for fantasy football?
Originally posted by Route C:
quote:Originally posted by Coltsfan:
Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne I ditto this question Greg. I was thinking the exact thing while reading the part of your post Wayne is referring to. My thought was this " If a company uses any part of prize money as operating cost then what is the source of that money being replaced?" Whatever the source is...why isn't it used in lieu of the prize money for operating costs?
I could understand the concept better if entry fees were paid over time as the contest is running but since everything is paid up front it doesn't makes sense to me. [/QUOTE]I don't know which part makes it sound like prize money is being used for anything. All I stated was historically in 2004 our entry fees didn't cover all of our prize totals, so we needed to dig deeper to pay off everything and we did. Fortunately we're no longer in that situation as profits can now be generated above prize money and expenses. But we certainly didn't profit in 2004 in the NFBC and NFFC.
quote:Originally posted by Coltsfan:
Greg,
I do have a couple of thoughts/follow up questions.
What is the cost of escrowing prize money? I'm guessing there would be different levels or service with the escrow. I"m guessing a bank wouldn't do this in exchange for the interest on the funds???
Greg - I believe that everyone trusts you and your ability to pay. I'm really not hearing that this is a huge issue. If it's being talked about today then I"m not privy to it.
The only thing that concerns me with you post is that it sounds like the company is being run from prize money that will be due at some time in the future. That is the exact scenario that gets companies in trouble. In theory the fantasy football operators should be able to run on the profits from operating the leagues and not from the prize money. If they are operating off of prize money then that is what can lead to an eventual collapse. Does that make sense?
Thanks for your openess and willingness to discuss this here on the boards. I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne I ditto this question Greg. I was thinking the exact thing while reading the part of your post Wayne is referring to. My thought was this " If a company uses any part of prize money as operating cost then what is the source of that money being replaced?" Whatever the source is...why isn't it used in lieu of the prize money for operating costs?
I could understand the concept better if entry fees were paid over time as the contest is running but since everything is paid up front it doesn't makes sense to me. [/QUOTE]I don't know which part makes it sound like prize money is being used for anything. All I stated was historically in 2004 our entry fees didn't cover all of our prize totals, so we needed to dig deeper to pay off everything and we did. Fortunately we're no longer in that situation as profits can now be generated above prize money and expenses. But we certainly didn't profit in 2004 in the NFBC and NFFC.
Founder, National Fantasy Football Championship & National Fantasy Baseball Championship
Twitter: @GregAmbrosius
Twitter: @GregAmbrosius
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Greg Ambrosius
- Posts: 36413
- Joined: Tue Apr 06, 2004 6:00 pm
Are escrows good for fantasy football?
Originally posted by Route C:
Here's a side question since I saw your answers to Wayne right after my last post....if prize money isn't used for operating costs then replaced later then is it in a seperate account or just accounted for on the spread sheet. I guess what I'm asking is this...you've done it right for 6 years...how? We've done it right because we haven't guaranteed prizes out of line with revenue. Like I said, in 2004 our $100,000 guarantee was too high for what we generated in revenue, but we had to show we could run a first-class event and pay the guaranteed prizes and run a good contest to keep our toe in the water. So we dug deep and stuck with the plan.
Jeff, this really isn't that hard and that's why we're all confused that some people have taken the money and run. Here's my example:
If I budget $1 million in revenue and budget 80 percent overall in prizes, it's easy to do the math. I pay out $800,000 in prizes and there's $200,000 in expenses. On my spreadsheet I have $100,000 in expenses. It leaves me $100,000 for salaries, benefits and profit. Not much, so you get the point.
Much of the $800,000 in prizes is guaranteed in league prizes. yes, I have overall prizes of $200,000+, but if I get fewer leagues than budgeted for I understand that some of my expenses also go away and I'm not hurt too bad if I'm near the budgeted goal for teams. Where some companies have done it wrong is guaranteeing too big of a grand prize because then every single entry is paying for that prize plus league prizes and if the number is too high you get hurt when entries are lower than expected.
We don't make a killing here on profit. But we can continue to fight the good fight by having a sensible plan without overburdened grand prizes. And we have historically done a good job of estimating how many teams we'll get in each contest. I think we know our customer base pretty good and how we can reach those goals.
That's why when folks tell me to shoot for 600 teams and guarantee $200,000 I tell them to try that themselves. I may be dumb, but I'm not stupid.
I'm not playing that game or chasing that dream just yet. The market doesn't allow that for me just yet.
Here's a side question since I saw your answers to Wayne right after my last post....if prize money isn't used for operating costs then replaced later then is it in a seperate account or just accounted for on the spread sheet. I guess what I'm asking is this...you've done it right for 6 years...how? We've done it right because we haven't guaranteed prizes out of line with revenue. Like I said, in 2004 our $100,000 guarantee was too high for what we generated in revenue, but we had to show we could run a first-class event and pay the guaranteed prizes and run a good contest to keep our toe in the water. So we dug deep and stuck with the plan.
Jeff, this really isn't that hard and that's why we're all confused that some people have taken the money and run. Here's my example:
If I budget $1 million in revenue and budget 80 percent overall in prizes, it's easy to do the math. I pay out $800,000 in prizes and there's $200,000 in expenses. On my spreadsheet I have $100,000 in expenses. It leaves me $100,000 for salaries, benefits and profit. Not much, so you get the point.
Much of the $800,000 in prizes is guaranteed in league prizes. yes, I have overall prizes of $200,000+, but if I get fewer leagues than budgeted for I understand that some of my expenses also go away and I'm not hurt too bad if I'm near the budgeted goal for teams. Where some companies have done it wrong is guaranteeing too big of a grand prize because then every single entry is paying for that prize plus league prizes and if the number is too high you get hurt when entries are lower than expected.
We don't make a killing here on profit. But we can continue to fight the good fight by having a sensible plan without overburdened grand prizes. And we have historically done a good job of estimating how many teams we'll get in each contest. I think we know our customer base pretty good and how we can reach those goals.
That's why when folks tell me to shoot for 600 teams and guarantee $200,000 I tell them to try that themselves. I may be dumb, but I'm not stupid.
I'm not playing that game or chasing that dream just yet. The market doesn't allow that for me just yet.Founder, National Fantasy Football Championship & National Fantasy Baseball Championship
Twitter: @GregAmbrosius
Twitter: @GregAmbrosius
Are escrows good for fantasy football?
'That's why when folks tell me to shoot for 600 teams and guarantee $200,000 I tell them to try that themselves. I may be dumb, but I'm not stupid. I'm not playing that game or chasing that dream just yet. The market doesn't allow that for me just yet.'
Please keep it at 100K and when you can bump League payouts.
Great Topic!
John
Please keep it at 100K and when you can bump League payouts.
Great Topic!
John
Are escrows good for fantasy football?
Originally posted by Raiders:
Please keep it at 100K and when you can bump League payouts.
Great Topic!
John Amen
Please keep it at 100K and when you can bump League payouts.
Great Topic!
John Amen
Hakuna Matata!
Are escrows good for fantasy football?
Originally posted by Coltsfan:
I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne Wayne, you are probably talking about Real Estate as your business. And, of course, Real Estate is heavily regulated and it's the R.E. Company's fiduciary responsibility to escrow funds, and they must follow a fairly strict adherence to the various laws and regulations regarding escrows. If they deviate from those laws/regulations and comingle escrow funds with operating funds and escrow funds are lost....someone is probably going to go to the pokey and the Company will be fined and possibly lose their licences. It's no different when a mortgage servicing company collects insurance and tax payments with a client's mortgage payment. The servicing company, in conforming with escrowing regulations, must escrow those insurance/tax payments until they are paid. Those funds can NOT by regulation be comingled with operating funds.
Obviously, there isn't a regulatory body overseeing the Fantasy sports industry, so unless a company such as Fanball/NFFC decides to escrow prize money there is nothing "forcing" them in that direction. Futhermore because there isn't any regulatory oversight; setting up an in-house escrow account serves no real purpose because there would be nothing to prevent the company from using the escrow funds for operating purposes. That's why an independent escrow account/agent or surety bond would be necessary.
I guess in my business everything is done with escrow accounts and they just make sense to me. It's not a matter of trust - just what I'm used to.
Wayne Wayne, you are probably talking about Real Estate as your business. And, of course, Real Estate is heavily regulated and it's the R.E. Company's fiduciary responsibility to escrow funds, and they must follow a fairly strict adherence to the various laws and regulations regarding escrows. If they deviate from those laws/regulations and comingle escrow funds with operating funds and escrow funds are lost....someone is probably going to go to the pokey and the Company will be fined and possibly lose their licences. It's no different when a mortgage servicing company collects insurance and tax payments with a client's mortgage payment. The servicing company, in conforming with escrowing regulations, must escrow those insurance/tax payments until they are paid. Those funds can NOT by regulation be comingled with operating funds.
Obviously, there isn't a regulatory body overseeing the Fantasy sports industry, so unless a company such as Fanball/NFFC decides to escrow prize money there is nothing "forcing" them in that direction. Futhermore because there isn't any regulatory oversight; setting up an in-house escrow account serves no real purpose because there would be nothing to prevent the company from using the escrow funds for operating purposes. That's why an independent escrow account/agent or surety bond would be necessary.
Are escrows good for fantasy football?
Originally posted by Greg Ambrosius:
quote:Originally posted by Route C:
Jeff, this really isn't that hard and that's why we're all confused that some people have taken the money and run. [/QUOTE]Are you joking? In one case they were just f'king crooks; and in the other case they(he) was just an idiot or a combination idiot/f'king crook.
And in the case of FJ, they had a stellar record for prize payouts prior to their take the money and run. And from all appearances they had a comfortable operating margin. So, imo, it wasn't a matter of promising more than entry fees could deliver. They obviously just decided to use the prize monies for other purposes.
quote:Originally posted by Route C:
Jeff, this really isn't that hard and that's why we're all confused that some people have taken the money and run. [/QUOTE]Are you joking? In one case they were just f'king crooks; and in the other case they(he) was just an idiot or a combination idiot/f'king crook.
And in the case of FJ, they had a stellar record for prize payouts prior to their take the money and run. And from all appearances they had a comfortable operating margin. So, imo, it wasn't a matter of promising more than entry fees could deliver. They obviously just decided to use the prize monies for other purposes.