Originally posted by RiFF:
As it relates to FFPC, for anyone interested, this topic was debated ad nauseum on the FFPC MB's last summer. You can go there and read a thorough discussion on it, including a thorough explanation of it from FFPC's viewpoint.
What I came away from the that discussion with was, what FFPC is currently doing under the "banner" of esc row; is not escrow in the sense most people would define as escrow; i.e. an independent 3rd party holding the funds and then disbursing those funds at the agreed upon time to the appropriate party.
But what I also comcluded is that what FFPC is currently doing with prize monies for its ME, that is placing it with an attorney until the end of the season when it is returned to FFPC for distribution, is a step forward in the right direction for the handling of prize monies. And is an improvement over how other contests are handling prize monies
I agree with this post. While the FFPC's escrow may not offer true protection, its more protection and piece of mind than I get here or anywhere else. They have been the gold standard as far as fast payouts go.
I feel very good about the safety of money I spend with the FFPC. I also feel good about playing here.
I wouldn't feel good about playing in the WCOFF even with "True Escrow"
[ July 04, 2011, 08:59 AM: Message edited by: The Yellow Line is Unofficial ]
What Is Going To Happen To High-Stakes Fantasy Football?
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texasducks69
- Posts: 73
- Joined: Sun Jul 04, 2010 6:00 pm
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Greg Ambrosius
- Posts: 36413
- Joined: Tue Apr 06, 2004 6:00 pm
What Is Going To Happen To High-Stakes Fantasy Football?
Originally posted by DoubleG:
quote:Originally posted by Greg Ambrosius:
I think "escrow" is the new buzz word in our industry, but how it's being escrowed is more important than just saying some prizes are escrowed.
How escrow should work:
An independent and trusted third party receives money from the high stakes fantasy contest and holds it until the season is over and winners are identified. The independent 3rd party disperses the money directly to the winners.
Curious if companies that are (or will be) advertising "escrow" actually follow that. if the high stakes fantasy companies have access to the money during the season or after the season, there is nothing preventing them from "taking the money and running", ie, hoodwinking the fantasy community on how they are using the term "escrow" [/QUOTE]Mark, the escrow topic has been brought up by others, too, and it's an interesting one. Honestly, it's unfortunate that this area of our industry has been damaged by unscrupulous game operators to the point that there seems to be a need for companies to escrow the funds. We now are at a point where customers only feel good about a contest when they hear the word escrow, not even knowing all of the details behind the escrow. They just want ASSURANCE now, any type of assurance.
But here's the only real assurance: Can the company backing any high-stakes fantasy game pay the prizes EVEN BEFORE ANY SIGNUPS COME IN? This is the question that should be asked by the players. Are the game operators and the company backing each game financially sound enough to escrow the money BEFORE entries come in? That should be the standard going forward, not a statement that someone will take the entry fees in and then escrow that money for prizes.
Why do I say that? Because it's easy for anyone to say they are guaranteeing prizes based on x amount of entries. And it's easy to escrow that money once it comes in, even if it's just a portion of that money. It looks safe and it looks good, but if prizes are based on $1 million in entries and you only get in $700,000 and all of that is escrowed, what happens to the other $300,000 that is owed? Obviously the game operators have to dig into their pockets for the rest and if they don't have it then it doesn't matter if the total was escrowed or not; there still isn't enough to pay off all of the winners. Granted, maybe the game operators have enough personal wealth to pay off the remaining $300,000, but again that's the key. Knowing the financial strength of the backers of each contest is more important than paying a third party to hold onto the money.
Every contest should be able to back up the prizes before taking entries or trouble could lie ahead. But that doesn't always happen in our space because the biggest companies aren't in HSFF where the profit margins are extremely slim, so it's left up to entrepreneurs to guarantee hundreds of thousands of dollars in prizes. And history has shown that once they get started, expenses build up and they try to get too big and bad things can happen to consumers. It certainly doesn't have to end that way, but our road is certainly littered with game operators who couldn't manage expenses above revenue and good customers got hurt in the process.
I'm all for ensuring that prizes are paid no matter how we have to do it, but escrowing revenue after it comes in isn't fail-proof. In 2004 when we started the NFBC and NFFC we could have escrowed every penny that came in and we still would have been tens of thousands of dollars short. Thankfully we were backed by a huge company in Krause Publications and they paid in full, knowing that this was an expense for an upstart project. It was like an acquisition cost and by 2005 both contests were profitable and each contest has been profitable every year since 2005. But it's still good to know that the NFBC and NFFC are backed by an even bigger company in STATS LLC, which has the backing of News Corp and the Associated Press. There isn't any loss from our contest that we couldn't cover, although we'll never make our grand prizes too high to force us into that situation.
That is another key to this whole mess. You can escrow all revenue once it comes in, but if your stated prize pool is too high you still might not have enough after expenses to pay the bills. So game operators can't overshoot when guaranteeing the overall prize pool, although we have seen that this is the biggest problem in HSFF.
"Escrow" is the new buzz word here because it's needed in some cases. Some companies definitely need to show their customers that paying a fee to a third party to hold onto their entry fees will guarantee payment at season's end. I don't think it does guarantee that entirely, but it's a good first step. Still, if they those companies could show that they have the funds to finance all of the prizes BEFORE any revenue comes in, that would be an even better step in the right direction. Then everyone would know that no matter how bold the plan, this big company can pay in full and on time.
quote:Originally posted by Greg Ambrosius:
I think "escrow" is the new buzz word in our industry, but how it's being escrowed is more important than just saying some prizes are escrowed.
How escrow should work:
An independent and trusted third party receives money from the high stakes fantasy contest and holds it until the season is over and winners are identified. The independent 3rd party disperses the money directly to the winners.
Curious if companies that are (or will be) advertising "escrow" actually follow that. if the high stakes fantasy companies have access to the money during the season or after the season, there is nothing preventing them from "taking the money and running", ie, hoodwinking the fantasy community on how they are using the term "escrow" [/QUOTE]Mark, the escrow topic has been brought up by others, too, and it's an interesting one. Honestly, it's unfortunate that this area of our industry has been damaged by unscrupulous game operators to the point that there seems to be a need for companies to escrow the funds. We now are at a point where customers only feel good about a contest when they hear the word escrow, not even knowing all of the details behind the escrow. They just want ASSURANCE now, any type of assurance.
But here's the only real assurance: Can the company backing any high-stakes fantasy game pay the prizes EVEN BEFORE ANY SIGNUPS COME IN? This is the question that should be asked by the players. Are the game operators and the company backing each game financially sound enough to escrow the money BEFORE entries come in? That should be the standard going forward, not a statement that someone will take the entry fees in and then escrow that money for prizes.
Why do I say that? Because it's easy for anyone to say they are guaranteeing prizes based on x amount of entries. And it's easy to escrow that money once it comes in, even if it's just a portion of that money. It looks safe and it looks good, but if prizes are based on $1 million in entries and you only get in $700,000 and all of that is escrowed, what happens to the other $300,000 that is owed? Obviously the game operators have to dig into their pockets for the rest and if they don't have it then it doesn't matter if the total was escrowed or not; there still isn't enough to pay off all of the winners. Granted, maybe the game operators have enough personal wealth to pay off the remaining $300,000, but again that's the key. Knowing the financial strength of the backers of each contest is more important than paying a third party to hold onto the money.
Every contest should be able to back up the prizes before taking entries or trouble could lie ahead. But that doesn't always happen in our space because the biggest companies aren't in HSFF where the profit margins are extremely slim, so it's left up to entrepreneurs to guarantee hundreds of thousands of dollars in prizes. And history has shown that once they get started, expenses build up and they try to get too big and bad things can happen to consumers. It certainly doesn't have to end that way, but our road is certainly littered with game operators who couldn't manage expenses above revenue and good customers got hurt in the process.
I'm all for ensuring that prizes are paid no matter how we have to do it, but escrowing revenue after it comes in isn't fail-proof. In 2004 when we started the NFBC and NFFC we could have escrowed every penny that came in and we still would have been tens of thousands of dollars short. Thankfully we were backed by a huge company in Krause Publications and they paid in full, knowing that this was an expense for an upstart project. It was like an acquisition cost and by 2005 both contests were profitable and each contest has been profitable every year since 2005. But it's still good to know that the NFBC and NFFC are backed by an even bigger company in STATS LLC, which has the backing of News Corp and the Associated Press. There isn't any loss from our contest that we couldn't cover, although we'll never make our grand prizes too high to force us into that situation.
That is another key to this whole mess. You can escrow all revenue once it comes in, but if your stated prize pool is too high you still might not have enough after expenses to pay the bills. So game operators can't overshoot when guaranteeing the overall prize pool, although we have seen that this is the biggest problem in HSFF.
"Escrow" is the new buzz word here because it's needed in some cases. Some companies definitely need to show their customers that paying a fee to a third party to hold onto their entry fees will guarantee payment at season's end. I don't think it does guarantee that entirely, but it's a good first step. Still, if they those companies could show that they have the funds to finance all of the prizes BEFORE any revenue comes in, that would be an even better step in the right direction. Then everyone would know that no matter how bold the plan, this big company can pay in full and on time.
Founder, National Fantasy Football Championship & National Fantasy Baseball Championship
Twitter: @GregAmbrosius
Twitter: @GregAmbrosius
What Is Going To Happen To High-Stakes Fantasy Football?
Originally posted by Greg Ambrosius:
quote:Originally posted by DoubleG:
quote:Originally posted by Greg Ambrosius:
w" [/QUOTE]The second area of transparency is as concerning to me as the first one and it should be to the players, too. By transparency I mean that players have no idea how much money is being rolled over by game operators who pay this way and thus they don't know how much money is allowed to remain with the game operators. The rollovers can make the appearance of a strong company when in fact it might not be so financially strong. As a hypothetical example in our industry, let's see how this could work:
Company ABC has hundreds of thousands of dollars in rollover prize money it doesn't have to pay out at the end of the year. It makes prize payments each year, but the rollovers keep getting bigger and bigger. In fact, now prize rollovers are equal to the prize money owed and people get afraid of this contest and they ask for prize money instead of the rollover entries. In essence, it's a run on the bank and the cash isn't there. Company ABC looked financially strong for several years, but now it doesn't have the cash and the rollovers are due what their value is. What happens? The money runs out and it's possible that people are again convinced with discounts to keep their prize money in rollovers and enough money is raised to pay off the rest, thus saving the contest for another year. But the players have no idea how big of a "risk" these rollovers are.
Heck, Company ABC could even "escrow" the rest of the funds going forward, but with that huge rollover figure now hanging over their head, the players have no idea how much risk the contest has. Without rollovers, ALL CONTESTS would show their cash flow ability by taking in entry fees one year and paying out all prizes the next. Contests that can do that each year -- and some of us do that -- are the ones that will never have a "run on the bank" later and are financially sound.
The example above is just hypothetical, but it's obvious that it could play out this way in our industry very easily. The rollovers appear to be designed to help the consumers avoid a tax hit, but in essence they become this beautiful gift to the game operators, who wind up keeping a large percentage of the prize money year round. And that's what is concerning to me and some others.
[/QUOTE]Of course "hypothetically" there could be a "run on the bank" as you suggest and it's just as "hypothetical" that all monies are safe and sound and are paid out on demand as expected.
I believe the issue with the "failures" in this space to date have been the game operators collecting entry fees at the beginning of the contest year and then not paying out the prize monies at the end of the contest year. I'm referring to FJ and AFFL. I don't believe in either case that "rollover" monies played a part.
Would it be best to have audited financial statements, by a recognized CPA firm, to review, prior to entering a HSFF contest, as part of a participant's due diligence....absolutely; but based on the private ownership of these contests and the cost involved, I'm not sure that's feasible,
Tax issues aside, I believe it's to the participant's advantage to have the option of "rolling over" funds. It can allow the participant the flexibility of "managing" next year's entry fees; especially in the current interest rate environment. The primary advantage to the operator is the cost saved of having to disburse the prize winning as well as having to "pay" for receiving those same monies back in the following contest year. You can speak to this better than I can but aren't CC transaction fees in the 3% range? So in actuality and not "hypothetically" by the operator holding prize monies it can be a very positive financial occurence for the operator and "hypothetically" make that that operator more financially viable. ie avoiding the cost of disbursing and receiving prize monies and entry fees.
As you said NFFC has done the same/similar thing in the past by allowing the "rollover" of satellite winnings into next year's ME. I was the fortunate recipient of one of these "rollovers" and even though I didn't get 1099'ed for these winnings I did report it as income because that's how I interpreted the tax code. As it relates to tax issues, I believe the onus has to be on the participant and not the game operator. Ignorance of law or depending on the "implied" advise of others is a weak defense.
quote:Originally posted by DoubleG:
quote:Originally posted by Greg Ambrosius:
w" [/QUOTE]The second area of transparency is as concerning to me as the first one and it should be to the players, too. By transparency I mean that players have no idea how much money is being rolled over by game operators who pay this way and thus they don't know how much money is allowed to remain with the game operators. The rollovers can make the appearance of a strong company when in fact it might not be so financially strong. As a hypothetical example in our industry, let's see how this could work:
Company ABC has hundreds of thousands of dollars in rollover prize money it doesn't have to pay out at the end of the year. It makes prize payments each year, but the rollovers keep getting bigger and bigger. In fact, now prize rollovers are equal to the prize money owed and people get afraid of this contest and they ask for prize money instead of the rollover entries. In essence, it's a run on the bank and the cash isn't there. Company ABC looked financially strong for several years, but now it doesn't have the cash and the rollovers are due what their value is. What happens? The money runs out and it's possible that people are again convinced with discounts to keep their prize money in rollovers and enough money is raised to pay off the rest, thus saving the contest for another year. But the players have no idea how big of a "risk" these rollovers are.
Heck, Company ABC could even "escrow" the rest of the funds going forward, but with that huge rollover figure now hanging over their head, the players have no idea how much risk the contest has. Without rollovers, ALL CONTESTS would show their cash flow ability by taking in entry fees one year and paying out all prizes the next. Contests that can do that each year -- and some of us do that -- are the ones that will never have a "run on the bank" later and are financially sound.
The example above is just hypothetical, but it's obvious that it could play out this way in our industry very easily. The rollovers appear to be designed to help the consumers avoid a tax hit, but in essence they become this beautiful gift to the game operators, who wind up keeping a large percentage of the prize money year round. And that's what is concerning to me and some others.
[/QUOTE]Of course "hypothetically" there could be a "run on the bank" as you suggest and it's just as "hypothetical" that all monies are safe and sound and are paid out on demand as expected.
I believe the issue with the "failures" in this space to date have been the game operators collecting entry fees at the beginning of the contest year and then not paying out the prize monies at the end of the contest year. I'm referring to FJ and AFFL. I don't believe in either case that "rollover" monies played a part.
Would it be best to have audited financial statements, by a recognized CPA firm, to review, prior to entering a HSFF contest, as part of a participant's due diligence....absolutely; but based on the private ownership of these contests and the cost involved, I'm not sure that's feasible,
Tax issues aside, I believe it's to the participant's advantage to have the option of "rolling over" funds. It can allow the participant the flexibility of "managing" next year's entry fees; especially in the current interest rate environment. The primary advantage to the operator is the cost saved of having to disburse the prize winning as well as having to "pay" for receiving those same monies back in the following contest year. You can speak to this better than I can but aren't CC transaction fees in the 3% range? So in actuality and not "hypothetically" by the operator holding prize monies it can be a very positive financial occurence for the operator and "hypothetically" make that that operator more financially viable. ie avoiding the cost of disbursing and receiving prize monies and entry fees.
As you said NFFC has done the same/similar thing in the past by allowing the "rollover" of satellite winnings into next year's ME. I was the fortunate recipient of one of these "rollovers" and even though I didn't get 1099'ed for these winnings I did report it as income because that's how I interpreted the tax code. As it relates to tax issues, I believe the onus has to be on the participant and not the game operator. Ignorance of law or depending on the "implied" advise of others is a weak defense.
What Is Going To Happen To High-Stakes Fantasy Football?
*Attention Span alert:
I lost you guys two pages ago. Lol
I lost you guys two pages ago. Lol
*Ranked #1 Average Fantasy Football Player in the Nation 2004-2013
"Fantasy sports are all about LUCK. Except when I win."
"Fantasy sports are all about LUCK. Except when I win."
What Is Going To Happen To High-Stakes Fantasy Football?
Originally posted by Greg Ambrosius:
quote:Originally posted by DoubleG:
[QUOTE]Originally posted by Greg Ambrosius:
.
[/QUOTE" But here's the only real assurance: Can the company backing any high-stakes fantasy game pay the prizes EVEN BEFORE ANY SIGNUPS COME IN? This is the question that should be asked by the players. Are the game operators and the company backing each game financially sound enough to escrow the money BEFORE entries come in? That should be the standard going forward, not a statement that someone will take the entry fees in and then escrow that money for prizes.
Every contest should be able to back up the prizes before taking entries or trouble could lie ahead. That is another key to this whole mess. You can escrow all revenue once it comes in, but if your stated prize pool is too high you still might not have enough after expenses to pay the bills. So game operators can't overshoot when guaranteeing the overall prize pool, although we have seen that this is the biggest problem in HSFF.
"Escrow" is the new buzz word here because it's needed in some cases. Some companies definitely need to show their customers that paying a fee to a third party to hold onto their entry fees will guarantee payment at season's end. I don't think it does guarantee that entirely, but it's a good first step. Still, if they those companies could show that they have the funds to finance all of the prizes BEFORE any revenue comes in, that would be an even better step in the right direction. Then everyone would know that no matter how bold the plan, this big company can pay in full and on time. [/QUOTE]Let's not kid ourselves here. There is absolutely NO question that the backing of a strong financially stable parent is reassuring.
BUT, without an explicit parental guarantee that parent company has NO obligation to fund any financial shortfall at the subsidiary company. So, implying that prize monies for a contest are "guaranteed" prior to the receipt of any entry fees, simply because that contest has an ownership interest from a large financially healthy company is totally inaccurate. UNLESS that large financially healthy company has provided a guarantee of those prize monies to the contest company. Does the backing from that large financially viable company provide a nice, warm fuzzy feeling.....absolutely; but without a guarantee that's all it is.
Believe me I've seen many large well known companies "walk away" from a sinking subsidiary The next one won't be the first one...
quote:Originally posted by DoubleG:
[QUOTE]Originally posted by Greg Ambrosius:
.
[/QUOTE" But here's the only real assurance: Can the company backing any high-stakes fantasy game pay the prizes EVEN BEFORE ANY SIGNUPS COME IN? This is the question that should be asked by the players. Are the game operators and the company backing each game financially sound enough to escrow the money BEFORE entries come in? That should be the standard going forward, not a statement that someone will take the entry fees in and then escrow that money for prizes.
Every contest should be able to back up the prizes before taking entries or trouble could lie ahead. That is another key to this whole mess. You can escrow all revenue once it comes in, but if your stated prize pool is too high you still might not have enough after expenses to pay the bills. So game operators can't overshoot when guaranteeing the overall prize pool, although we have seen that this is the biggest problem in HSFF.
"Escrow" is the new buzz word here because it's needed in some cases. Some companies definitely need to show their customers that paying a fee to a third party to hold onto their entry fees will guarantee payment at season's end. I don't think it does guarantee that entirely, but it's a good first step. Still, if they those companies could show that they have the funds to finance all of the prizes BEFORE any revenue comes in, that would be an even better step in the right direction. Then everyone would know that no matter how bold the plan, this big company can pay in full and on time. [/QUOTE]Let's not kid ourselves here. There is absolutely NO question that the backing of a strong financially stable parent is reassuring.
BUT, without an explicit parental guarantee that parent company has NO obligation to fund any financial shortfall at the subsidiary company. So, implying that prize monies for a contest are "guaranteed" prior to the receipt of any entry fees, simply because that contest has an ownership interest from a large financially healthy company is totally inaccurate. UNLESS that large financially healthy company has provided a guarantee of those prize monies to the contest company. Does the backing from that large financially viable company provide a nice, warm fuzzy feeling.....absolutely; but without a guarantee that's all it is.
Believe me I've seen many large well known companies "walk away" from a sinking subsidiary The next one won't be the first one...
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Glenneration X
- Posts: 1704
- Joined: Thu Apr 09, 2009 6:00 pm
- Location: Long Island, NY
What Is Going To Happen To High-Stakes Fantasy Football?
Originally posted by Greg Ambrosius:
Glenn, I know this subject has been debated long enough on these boards, but I think people should realize there are two aspects about "prize rollovers" that should concern us all. One is the legal aspect of them and whether they are legal or not and the second aspect is transparency from the game operators. Let's look at both here.
Is it legal for game operators to allow prize rollovers and not report those winnings to the IRS? That's up for interpretation, according to some people. Some people say they have a legal opinion that taxes aren't owed until cash winnings are received in hand in full, thus allowing the rollovers until the game operator actually pays in cash. It's possible that's true. All I know is that I've asked four different sets of corporate lawyers and all four would not allow this practice to take place, stating that winnings are taxable in the year that the winnings are earned.
Greg, in last year's post-NFBC season 500 page debate on this issue, I looked up and found the following (quoted directly from my post during that thread)......
"....... I then went to the IRS.gov website and read their own instructions regarding this form.
There they note that "the payment of winnings is considered made when actually paid". They also offer both a Schedule C and Schedule C-EZ form which is specifically provided to list deductible expenses so that net income is what is taxed, not gross. "
This is from the IRS's own website and I don't know how much more clear it can be.
Regarding your 2nd issue about operators being able to allow customers to roll over funds indefinately and therefore never actually having to pay out the prizes, I believe that to be a different issue that goes to the moral compass of whatever company allows rollovers. However regarding the legality, it seems pretty clear.
[ July 04, 2011, 09:56 AM: Message edited by: Glenneration X ]
Glenn, I know this subject has been debated long enough on these boards, but I think people should realize there are two aspects about "prize rollovers" that should concern us all. One is the legal aspect of them and whether they are legal or not and the second aspect is transparency from the game operators. Let's look at both here.
Is it legal for game operators to allow prize rollovers and not report those winnings to the IRS? That's up for interpretation, according to some people. Some people say they have a legal opinion that taxes aren't owed until cash winnings are received in hand in full, thus allowing the rollovers until the game operator actually pays in cash. It's possible that's true. All I know is that I've asked four different sets of corporate lawyers and all four would not allow this practice to take place, stating that winnings are taxable in the year that the winnings are earned.
Greg, in last year's post-NFBC season 500 page debate on this issue, I looked up and found the following (quoted directly from my post during that thread)......
"....... I then went to the IRS.gov website and read their own instructions regarding this form.
There they note that "the payment of winnings is considered made when actually paid". They also offer both a Schedule C and Schedule C-EZ form which is specifically provided to list deductible expenses so that net income is what is taxed, not gross. "
This is from the IRS's own website and I don't know how much more clear it can be.
Regarding your 2nd issue about operators being able to allow customers to roll over funds indefinately and therefore never actually having to pay out the prizes, I believe that to be a different issue that goes to the moral compass of whatever company allows rollovers. However regarding the legality, it seems pretty clear.
[ July 04, 2011, 09:56 AM: Message edited by: Glenneration X ]
What Is Going To Happen To High-Stakes Fantasy Football?
Originally posted by RiFF:
quote:Originally posted by Greg Ambrosius:
quote:Originally posted by DoubleG:
[QUOTE]Originally posted by Greg Ambrosius:
.
[/QUOTE" But here's the only real assurance: Can the company backing any high-stakes fantasy game pay the prizes EVEN BEFORE ANY SIGNUPS COME IN? This is the question that should be asked by the players. Are the game operators and the company backing each game financially sound enough to escrow the money BEFORE entries come in? That should be the standard going forward, not a statement that someone will take the entry fees in and then escrow that money for prizes.
Every contest should be able to back up the prizes before taking entries or trouble could lie ahead. That is another key to this whole mess. You can escrow all revenue once it comes in, but if your stated prize pool is too high you still might not have enough after expenses to pay the bills. So game operators can't overshoot when guaranteeing the overall prize pool, although we have seen that this is the biggest problem in HSFF.
"Escrow" is the new buzz word here because it's needed in some cases. Some companies definitely need to show their customers that paying a fee to a third party to hold onto their entry fees will guarantee payment at season's end. I don't think it does guarantee that entirely, but it's a good first step. Still, if they those companies could show that they have the funds to finance all of the prizes BEFORE any revenue comes in, that would be an even better step in the right direction. Then everyone would know that no matter how bold the plan, this big company can pay in full and on time. [/QUOTE]Let's not kid ourselves here. There is absolutely NO question that the backing of a strong financially stable parent is reassuring.
BUT, without an explicit parental guarantee that parent company has NO obligation to fund any financial shortfall at the subsidiary company. So, implying that prize monies for a contest are "guaranteed" prior to the receipt of any entry fees, simply because that contest has an ownership interest from a large financially healthy company is totally inaccurate. UNLESS that large financially healthy company has provided a guarantee of those prize monies to the contest company. Does the backing from that large financially viable company provide a nice, warm fuzzy feeling.....absolutely; but without a guarantee that's all it is.
Believe me I've seen many large well known companies "walk away" from a sinking subsidiary The next one won't be the first one... [/QUOTE]Excellent post, Riff. If there is one thing we should have learned over the last few years it's that size and financial stability mean nothing when it comes to keeping promises. Corporations will do what is best for their bottom line, pure and simple. And many times events can move things out of control. Even guarantees aren't worth the paper they are written on. AIG guaranteed all those mortgage backed securities were good and "insured" them. How'd that wok out?
Add in the fact that corporations can change things on a dime. A change in management, change in philosophy, all can lead to instability. Take the NFFC and the number of times it has changed hands in the last 3 years.
I think it ultimately comes down to the people running the contest. Do you trust them? Escrow or not, big company or not, do you believe them when they say you'll be paid? Just like any other company it comes down to how you feel when you talk to the people out front. There are only two contests that you can look at and feel confident in giving your money to. At least for me.
quote:Originally posted by Greg Ambrosius:
quote:Originally posted by DoubleG:
[QUOTE]Originally posted by Greg Ambrosius:
.
[/QUOTE" But here's the only real assurance: Can the company backing any high-stakes fantasy game pay the prizes EVEN BEFORE ANY SIGNUPS COME IN? This is the question that should be asked by the players. Are the game operators and the company backing each game financially sound enough to escrow the money BEFORE entries come in? That should be the standard going forward, not a statement that someone will take the entry fees in and then escrow that money for prizes.
Every contest should be able to back up the prizes before taking entries or trouble could lie ahead. That is another key to this whole mess. You can escrow all revenue once it comes in, but if your stated prize pool is too high you still might not have enough after expenses to pay the bills. So game operators can't overshoot when guaranteeing the overall prize pool, although we have seen that this is the biggest problem in HSFF.
"Escrow" is the new buzz word here because it's needed in some cases. Some companies definitely need to show their customers that paying a fee to a third party to hold onto their entry fees will guarantee payment at season's end. I don't think it does guarantee that entirely, but it's a good first step. Still, if they those companies could show that they have the funds to finance all of the prizes BEFORE any revenue comes in, that would be an even better step in the right direction. Then everyone would know that no matter how bold the plan, this big company can pay in full and on time. [/QUOTE]Let's not kid ourselves here. There is absolutely NO question that the backing of a strong financially stable parent is reassuring.
BUT, without an explicit parental guarantee that parent company has NO obligation to fund any financial shortfall at the subsidiary company. So, implying that prize monies for a contest are "guaranteed" prior to the receipt of any entry fees, simply because that contest has an ownership interest from a large financially healthy company is totally inaccurate. UNLESS that large financially healthy company has provided a guarantee of those prize monies to the contest company. Does the backing from that large financially viable company provide a nice, warm fuzzy feeling.....absolutely; but without a guarantee that's all it is.
Believe me I've seen many large well known companies "walk away" from a sinking subsidiary The next one won't be the first one... [/QUOTE]Excellent post, Riff. If there is one thing we should have learned over the last few years it's that size and financial stability mean nothing when it comes to keeping promises. Corporations will do what is best for their bottom line, pure and simple. And many times events can move things out of control. Even guarantees aren't worth the paper they are written on. AIG guaranteed all those mortgage backed securities were good and "insured" them. How'd that wok out?
Add in the fact that corporations can change things on a dime. A change in management, change in philosophy, all can lead to instability. Take the NFFC and the number of times it has changed hands in the last 3 years.
I think it ultimately comes down to the people running the contest. Do you trust them? Escrow or not, big company or not, do you believe them when they say you'll be paid? Just like any other company it comes down to how you feel when you talk to the people out front. There are only two contests that you can look at and feel confident in giving your money to. At least for me.
You'll be fine long as your pretty face holds out, then it's gonna get pretty cold out...
What Is Going To Happen To High-Stakes Fantasy Football?
Good post 4D. I do not have any trust in the WCOFF anymore and will not play there this year no matter what they say or whatever promises they make.
[ July 04, 2011, 10:05 AM: Message edited by: da bears ]
[ July 04, 2011, 10:05 AM: Message edited by: da bears ]
Bauler Shot Caller
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texasducks69
- Posts: 73
- Joined: Sun Jul 04, 2010 6:00 pm
What Is Going To Happen To High-Stakes Fantasy Football?
Originally posted by Greg Ambrosius:
[qb] [QUOTE]Originally posted by DoubleG:
[qb] [QUOTE]Originally posted by Greg Ambrosius:
[qb]You seem to be saying, without saying that I should only play with the NFFC because Stats/Fox/ApPhas alot of money.
Your last sentence of "Then everyone would know that no matter how bold the plan, this big company can pay in full and on time." is intresting to me on a couple of levels.
1. How did the association with Fanball/Liberty Media do in getting everybody paid on time.
2.Several places you have talked about bold plans and not getting the required signups to cover your prize structure. I have read these as a shot at the FFPC's new prize structure and the number of players needed to cover it.
I didn't come in here to bash the NFFC. In fact I look forward to playing here this year. However I'm starting to see how Gambler felt on the FFPC boards. They have run a good contest and have been the first to pay every year. I look forward to playing there as well.
John, nobody needs to pit one contest against the other. If both are run well and both have sound structures and both pay on time, both will excel. I certainly hope both do. Again, we've played in the FFPC and Alex and Dave have played in the NFFC before. Nobody is looking to bash these two contests.
No shots at anyone by me, just stating that escrows are cool but to see that on the WCOFF boards and that folks are getting excited by THOSE funds being escrowed when last year's prizes still aren't paid is what made me make this post. People are excited that Jill said this year's prizes would be escrowed and I'm asking if that means they won't be used to pay last year's prizes. So you took my reference the wrong way, although I am saying that escrows aren't the end-all solution to our problems in the HSFF space.
As for Fanball, the payments were paid at the end of February, later than the NFFC paid under KP/F+W, but in a time frame that they say they always paid all of their contest winners. I can't speak for all of the reasoning for that; all I can say is that the NFFC paid in January in the past and we'll do the same again this year, with league winners getting paid before then.
Stay well and good luck in all the games you play in this year.
[ July 04, 2011, 12:24 PM: Message edited by: Greg Ambrosius ]
[qb] [QUOTE]Originally posted by DoubleG:
[qb] [QUOTE]Originally posted by Greg Ambrosius:
[qb]You seem to be saying, without saying that I should only play with the NFFC because Stats/Fox/ApPhas alot of money.
Your last sentence of "Then everyone would know that no matter how bold the plan, this big company can pay in full and on time." is intresting to me on a couple of levels.
1. How did the association with Fanball/Liberty Media do in getting everybody paid on time.
2.Several places you have talked about bold plans and not getting the required signups to cover your prize structure. I have read these as a shot at the FFPC's new prize structure and the number of players needed to cover it.
I didn't come in here to bash the NFFC. In fact I look forward to playing here this year. However I'm starting to see how Gambler felt on the FFPC boards. They have run a good contest and have been the first to pay every year. I look forward to playing there as well.
John, nobody needs to pit one contest against the other. If both are run well and both have sound structures and both pay on time, both will excel. I certainly hope both do. Again, we've played in the FFPC and Alex and Dave have played in the NFFC before. Nobody is looking to bash these two contests.
No shots at anyone by me, just stating that escrows are cool but to see that on the WCOFF boards and that folks are getting excited by THOSE funds being escrowed when last year's prizes still aren't paid is what made me make this post. People are excited that Jill said this year's prizes would be escrowed and I'm asking if that means they won't be used to pay last year's prizes. So you took my reference the wrong way, although I am saying that escrows aren't the end-all solution to our problems in the HSFF space.
As for Fanball, the payments were paid at the end of February, later than the NFFC paid under KP/F+W, but in a time frame that they say they always paid all of their contest winners. I can't speak for all of the reasoning for that; all I can say is that the NFFC paid in January in the past and we'll do the same again this year, with league winners getting paid before then.
Stay well and good luck in all the games you play in this year.
[ July 04, 2011, 12:24 PM: Message edited by: Greg Ambrosius ]
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Glenneration X
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- Location: Long Island, NY
What Is Going To Happen To High-Stakes Fantasy Football?
There's probably no reason now to bash either the FFPC or the NFFC. I think there's a bit of nitpicking going on by both sides looking for points that make one contest look better than the other. Both have done a very good job in their histories to date and both deserve the respect of the other and of those that support either side.
Unfortunately, in the current climate where fantasy companies are folding up or defaulting or having payment issues annually, the fantasy player has been left suspicious of the industry. The problem is the signs we're looking for to protect ourselves are not always there. While some may say we should have seen the signs of trouble ahead for the WCOFF or the FFOC before it, from what I understand there were no signs at all before the Jungle and AFFL-1 defaulted or Fanball deciding to close up shop. It appears to me that the evidence shows that for the most part, these fantasy companies will pay until they don't.
Where does that leave the high stakes fantasy player? As Mike stated, we have to go where we trust the operators for whatever reason that works for us. Everyone will have their own reasons.
The one thing I would suggest to the operators of the remaining legitimate contests out there, this culture of mistrust is not good for any contests. I'd suggest creating a calming and trusting atmosphere for the entire industry instead of this constant looking for what's wrong with every other contest but your own. I don't think that helps the industry and in the long run, won't help your specific contests. This is not meant for any contest specifically. I've seen enough of it from just about every operator, as well as those players who feel a biased loyalty towards any specific contest, to make this a general statement.
Unfortunately, in the current climate where fantasy companies are folding up or defaulting or having payment issues annually, the fantasy player has been left suspicious of the industry. The problem is the signs we're looking for to protect ourselves are not always there. While some may say we should have seen the signs of trouble ahead for the WCOFF or the FFOC before it, from what I understand there were no signs at all before the Jungle and AFFL-1 defaulted or Fanball deciding to close up shop. It appears to me that the evidence shows that for the most part, these fantasy companies will pay until they don't.
Where does that leave the high stakes fantasy player? As Mike stated, we have to go where we trust the operators for whatever reason that works for us. Everyone will have their own reasons.
The one thing I would suggest to the operators of the remaining legitimate contests out there, this culture of mistrust is not good for any contests. I'd suggest creating a calming and trusting atmosphere for the entire industry instead of this constant looking for what's wrong with every other contest but your own. I don't think that helps the industry and in the long run, won't help your specific contests. This is not meant for any contest specifically. I've seen enough of it from just about every operator, as well as those players who feel a biased loyalty towards any specific contest, to make this a general statement.