Are escrows good for fantasy football?

[Greg Ambrosius]

Originally posted by RiFF:
quote: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]Correct, that's what I said. In both cases, they told me they used the money to pay programmers to build their own back-end. It's what I've been saying for awhile on our NFBC boards, the industry has now gotten to the point where there are fewer companies willing to do the back-end for you as a third-party provider and thus it makes sense to do it yourself. That's what we're doing rather than pay STATS for everything we do. It makes sense.

But using prize money to build that engine is LUDICROUS. I don't know for a fact if that's what happened, but if so that's reckless and foolish. You can't save enough in one year to pay for that expense. We are doing it as part of our company's already built back-end system and once it's done it's ours to keep. Other games may struggle to find that right partner to run their games and even if they do it's a pretty big expense.

As I stated on the NFBC boards, five years ago you found STATS, Allstar Stats, Fanball and CDM all battling for third-party services (running the game engine for you). They all built commissioner products or game engines and it made sense to just add on by running EA Sports or SI.com or NBC Sports or NFFC or WCOFF. STATS isn't doing as much of that now, Allstar Stats isn't doing that at all and CDM and Fanball have merged. There are fewer reputable companies who can do this now at a reasonable price. So that's why some guys chose to build their own...unfortunately at the expense of their customers when it failed.

Oh, and Rich, in BOTH cases you mention above, they had five years history of paying on time. I'm not sure both games had comfortable margins, but at the end of the day you are right they used the money for something other than prizes and couldn't pay off their winners. Just unreal.

[ May 11, 2010, 01:46 PM: Message edited by: Greg Ambrosius ]

[TamuScarecrow]

Regardless of anything you would do to appease the leary player, it would still all come down to trust. 6 years of you and Tom doing what you say with both the games you put on and the money handling in the NFFC are good enough for me.

[BillyWaz]

Originally posted by Tamuscarecrow:
Regardless of anything you would do to appease the leary player, it would still all come down to trust. 6 years of you and Tom doing what you say with both the games you put on and the money handling in the NFFC are good enough for me. I think everyone who has played here know what Greg and Tom bring to the table, and that iswhy there are ZERO trust issues about getting money (at least from me! )

However, it isn't the "seasoned vet" they have to convince...it's the "new guy". I think escrow SOUNDS official, and why I fully admit I don't know exactly what it does, it sure sounds like my $$ will be safe. Honestly, PERCEPTION is what it all comes down to, because GUARANTEEING prizes is simply "your word".

The scumbag crooks at Fantasy Jungle guaranteed their prizes as well.....now they are probably laughing their arses off with everyone's $$$!

[Greg Ambrosius]

I never did give my opinions on escrows Wayne and that wasn't intentional. I was proofreading everything on the new NFFC site and got caught up with that most of the afternoon. It's looking good and should be live tomorrow night if all goes as planned. Tom and I will post about each event, location, idea after the site is live. No sense teasing things you can't see or read about.

Obviously, ANYTHING that provides more security for the players is a good thing. That's why the perception of an escrow for any of the prize money is a good thing, right? It doesn't solve everything, but if it makes the participant feel better it can't be bad, that's for sure.

Now, escrowing just the grand prize or just part of the prizes doesn't solve what we're all looking for: Making sure EVERY winner gets paid. Right? That's the goal. So to ensure that you'd have to escrow all of your prize money. Imagine the cost for us escrowing close to $1 million this year or WCOFF escrowing maybe $2 million? I know what insurance costs per $25,000 and I assume it's less than that but still an expense.

Again, what we want is EVERYONE getting paid. We've done it for 6 years in 2-3 sports and done it in good times and bad. How did we do that without an escrow account? Again, we didn't overextend ourselves, we have a business plan that makes a profit each year and we're backed by major companies.

In 2004 when Krause Publications started the NFBC, it was a company that generated $80 million a year in revenue. The NFFC was less than one-half of one percent of the company. It started early in all hobby fields, invested early to be a leader in those fields and had a three-year business plan to be a leader in the live events business. F+W Publications later bought KP and the company more than doubled in size and later F+W was bought out again by an investment company for a sale in the hundreds of millions of dollars. The financial security was always there, but of course we were already making money.

Now Liberty Media owns us and I feel secure in knowing that we are backed by a publicly traded company with many resources. But our business plan is still solid and we are coming off our strongest baseball season ever. Everyone would like to see our profit margin better, but we're starting in the right direction by building our own back-end system. That's a huge savings right there.

So, could I convince Liberty Media to escrow all of our prizes? Likely not. It would be an expense that would have to be passed on to the consumer and I'm not sure if it's needed if other competitors aren't following suit. At KP and F+W, we never put the prize money in a CD to make money off the interest or anything like that. But I always knew it was set aside as it is now with accounting knowing exactly what date prizes would be paid out.

Does our past history mean anything today? Like Billy said, yes with NFFC vets, but maybe not quite as much with newbies. But having the escrow for all of our prizes and paying out the lowest amount to cover that expense wouldn't bring them in, either. So we have to be smart here.

If I was a new company with a couple of entrepreneurs and not the backing of a major company, yeah, it would make sense to escrow all of the prizes. That's the assurance everyone needs. It won't sell out the event if the game isn't good, the customer service isn't good and the prize payout isn't good, but it's a good first step. But when I first started in 2004 as the only competitor to WCOFF, I felt building the trust of my customers was the most important thing at the time. I never really considered an escrow account.

I totally understand why folks are on pins and needles in this part of the industry. I would be too in some cases. Not all games, but some. My advice would be to know the company backing each company inside and out, know the game operators like they are your league commissioner, look at the game and if the prizes are too good to be true they might be, and know the game format. After that, it comes down to trust more than anything else.

It's probably not the answer you wanted, but it's from the heart. Hope that's worth something.

[Route Collectors]

Greg thanks for being so frank about a very touchy subject to a lot of FF owners. I'm glad you guys have set a good example for the industry and I am very confident in any game that you personally run doing what it promises.
The good thing about this thread is it gets us talking about a topic relevant to our hobby and maybe.... like times past...we will improve our industry through this sort of diplomatic brain storming.

[Greg Ambrosius]

Originally posted by Route C:
Greg thanks for being so frank about a very touchy subject to a lot of FF owners. I'm glad you guys have set a good example for the industry and I am very confident in any game that you personally run doing what it promises.
The good thing about this thread is it gets us talking about a topic relevant to our hobby and maybe.... like times past...we will improve our industry through this sort of diplomatic brain storming. I totally agree. NOT talking about anything that can help our industry means you have something to hide. I've always wanted what's best for the industry and keeps us moving forward. Not only with my games and products, but industry-wide.

Unfortunately, I've always compared the fantasy sports industry to the sports card industry, 15 years behind. If this is 1995 again, we're at a critical stage. Let's make the right decisions so that we don't end up where the sports card industry is today.

[Coltsfan]

It's probably not the answer you wanted, but it's from the heart. Hope that's worth something. [/QB]Actually Greg, that is exactly the answer I wanted. I really only wanted to know your thoughts and they make sense. I definitely wouldn't want any huge expense for an escrow but it's something that is free in my industry so the huge cost associated with it confuses me. But the last thing we need is something else that is a drag on players winnings.

Thanks for the response.


Wayne

[Greg Ambrosius]

Originally posted by Coltsfan:
quote:It's probably not the answer you wanted, but it's from the heart. Hope that's worth something. Actually Greg, that is exactly the answer I wanted. I really only wanted to know your thoughts and they make sense. I definitely wouldn't want any huge expense for an escrow but it's something that is free in my industry so the huge cost associated with it confuses me. But the last thing we need is something else that is a drag on players winnings.

Thanks for the response.


Wayne [/QB][/QUOTE]Find me a free escrow service and we may have a deal.

[bald is beautiful]

Originally posted by Coltsfan:
quote:Originally posted by Trust In Bill:
Better alternative than having your lawyer run off to the Cayman Islands with the prize money! No wonder Jack Haan suggested that he should hold the escrow money for no charge!


Wayne [/QUOTE]I just revoked your Christmas card for 2010.

[Glenneration X]

Originally posted by Greg Ambrosius:
Does our past history mean anything today? Like Billy said, yes with NFFC vets, but maybe not quite as much with newbies. I'm not quite a newbie, but not far off. Either way... yes, your past payment history means something. Yes, Fanball's past payment history means something. Being backed by a financially strong conglomerate like Liberty Media means something. Even the confidence & recommendations you've personally earned from all of the "NFFC vets" means something.

Even with all that, it's really up to each individual consumer to determine what he or she needs to feel secure in their investment. For some, they might need escrow. For others, all of the above may be more than enough and escrow an expense whose ultimate worth in providing additional security is marginal when compared to the cost & inevitable effect on payout percentages.

At the moment, I feel like I've seen enough to feel secure & trust you and the NFFC with my money. Don't let me down.

Glenn

[ May 13, 2010, 06:19 PM: Message edited by: Glenneration X ]