Are escrows good for fantasy football?

[Glenneration X]

Originally posted by Trust In Bill:
The alternative to escrow is to be bonded. An insurance company would issue a surety bond that would guaranty payment of all prize money if the game operator fails to pay. Most construction companies on public projects are required to provide these bonds.

The bonds are fairly inexpensive to buy if the company has good credit, and they are easy to obtain from most insurance agents. The NFFC could then advertise that it is "bonded and insured."

Better alternative than having your lawyer run off to the Cayman Islands with the prize money! Typically construction surety bonds range anywhere from 1 1/2 - 3 points of the overall project cost dependent upon the rating of whoever is bonding the project.

If applied to fantasy football and the overall prize money is $1 million (and the contest can obtain the same rates...a big if), the cost of the bond would range from $15-30K. I'm assuming this would be paid from the prize fund.

That's also assuming a surety would even bond a fantasy football contest...another big if.

Glenn

[ May 13, 2010, 06:20 PM: Message edited by: Glenneration X ]

[Greg Ambrosius]

Originally posted by Glenneration X:
quote:Originally posted by Trust In Bill:
The alternative to escrow is to be bonded. An insurance company would issue a surety bond that would guaranty payment of all prize money if the game operator fails to pay. Most construction companies on public projects are required to provide these bonds.

The bonds are fairly inexpensive to buy if the company has good credit, and they are easy to obtain from most insurance agents. The NFFC could then advertise that it is "bonded and insured."

Better alternative than having your lawyer run off to the Cayman Islands with the prize money! Typically construction surety bonds range anywhere from 1 1/2 - 3 points of the overall project cost dependent upon the rating of whoever is bonding the project.

If applied to fantasy football and the overall prize money is $1 million (and the contest can obtain the same rates...a big if), the cost of the bond would range from $15-30K. I'm assuming this would be paid from the prize fund.

That's also assuming a surety would even bond a fantasy football contest...another big if.

Glenn [/QUOTE]All good information. Again, if one company escrows everything at that type of expense and another company escrows just the grand prize, is it fair and smart for that company to have an additional $25,000-$30,000 expense? And what if they are the only company to escrow prizes when nobody else does? That $25,000-$30,000 makes it tough to be competitive then with the league prizes and overall prizes.

I'm not saying it can't be done, but I can buy a lot of insurance bonuses with that kind of money or add hundreds of dollars to league prizes. It's not just a yes or no answer when there are so many other competitors running businesses in different ways.

[Roger]

Greg,

I think if you ever did it, the surety bond is the better way to go than escrow. Escrow is only as good as the name of the signatory(ies) on the bank account.

But after reading your comments, I have to agree with you. My NFFC plans this year will not depend on whether there is an escrow / bond. I will continue to invest my money with any game operator until I see a reason why I shouldn't do so. I did not purchase any FFOC teams in 2009, except for my free credit, because I could see that that game was in trouble. I don't have any such concerns here.

Newbies don't think about escrows, and don't they typically start in lower risk satelite leagues before they work their way up to the main event????

I have to agree with you unless and until you see an overwhelming outpouring of players who are not going to play unless they see an escrow.

[Team Legacy]

Greg, since you stated all contest operators are welcome here, I have secured for my Red vs Blue show tomorrow night, Alex Kaganovsky, owner of the FFPC, to answer ANY and ALL questions regarding Escrow.

It's time to bring the service of escrow into the light. Any question you've been wanting to ask but haven't, it's time to ask now!

I'll post the show link here: 11:00 EST Friday night.
http://www.blogtalkradio.com/redvsblue/ ... safe-is-it

[Greg Ambrosius]

Scott, good news and I'm sure Lou knows a lot more about escrow accounts than any of us do. Enlighten us Lou and let us know if industry-wide EVERYONE should do that.

Scott, I'm heading out right now for a mini-three day family vacation. But count me in for an upcoming interview to talk about escrows, the industry, the expanding NFFC and more. I'd love to discuss. Thanks.

[mikeybok]

Originally posted by FPA - Scott Atkins:
Greg, since you stated all contest operators are welcome here, I have secured for my Red vs Blue show tomorrow night, Alex Kaganovsky, owner of the FFPC, to answer ANY and ALL questions regarding Escrow.

It's time to bring the service of escrow into the light. Any question you've been wanting to ask but haven't, it's time to ask now!

I'll post the show link here: 11:00 EST Friday night.
http://www.blogtalkradio.com/redvsblue/ ... safe-is-it Escrow would mean VERY little to me as a player. I assume an escrow account needs a payee (or the payee would have to be the same as the depositor) either way ... at best ... it would only insure the main prize (if you can set up the payee to be the "winner of a contest") ... and probably only insure the money is set aside vs properly paid out. I would think bonding would be the way to go if this was needed.

With the payout percentage is already low enough to be near my go/no go point. The added cost of bonding would probably drive me away from an event. I once used escrow to receive payment from a Canadian company. It was pricey, and still didn't seem like a perfect guarantee for either party.

My question for your show/guest. Who is the payee of the escrow and how is it set up so winners get their money from the escrow account (What prevents the game owner from naming them self as the winner or payee at a latter date?).

[Team Legacy]

Originally posted by Greg Ambrosius:
Scott, good news and I'm sure Lou knows a lot more about escrow accounts than any of us do. Enlighten us Lou and let us know if industry-wide EVERYONE should do that.

Scott, I'm heading out right now for a mini-three day family vacation. But count me in for an upcoming interview to talk about escrows, the industry, the expanding NFFC and more. I'd love to discuss. Thanks. You got it Greg!

[Team Legacy]

Originally posted by Ugly Yellow Tomatoes:

My question for your show/guest.

Who is the payee of the escrow and how is it set up so winners get their money from the escrow account (What prevents the game owner from naming them self as the winner or payee at a latter date?). Got it, thanks! More guys more!

[Nag']

Originally posted by Greg Ambrosius:
Scott, good news and I'm sure Lou knows a lot more about escrow accounts than any of us do. Enlighten us Lou and let us know if industry-wide EVERYONE should do that. I will certainly do my best, Tom.

[RiFF]

Are all Main Event monies escrowed including League prizes and prizes below the $100,000 Grand Prize. Or is it just the Grand Prize being escrowed. If League prizes are being escrowed, how does the escrow agent audit the accuracy of the escrow deposit. More leagues would require more escrow. Under any circumstance does the FFPC have access to the escrowed funds? What if the amount in escrow is insufficient to pay all prize winners, is the escrow agent liable to make up the difference? How would he determine who to pay in the event of a shortfall? Is the escrow agent bonded? A number of ancillary leagues have signifcant payouts, why aren't those escrowed (cost I imagine)? Does the current escrow agent have any affiliation or working relationship with the FFPC principals outside of his working relationship as escrow agent? (any conflict of interest) When are escrow funds deposited with the escrow agent? Prior to the start of applications based on anticipated participation, as applications are received or after it is determined what the final escrow amount is based on participation? If it's the latter, what protection is provided for the prize monies prior to deposit with the escrow agent? If it's decided by the principals not to escrow monies how would the players become aware of it if the principals chose not to divulge this information? Would you still advocate escrowing if you were part of a large organization rather than just a couple guys with a good idea? If so, why; if not, why not?
Just a stream of consciousness...I'm sure I missed a number of other questions that probably should be asked.