The Ed O’Bannon versus NCAA case has changed the way that companies do business. After the District Courts ruled that the NCAA was in anti-trust violation for profiting from the likeness of athletes without compensation, the door was opened for new and innovative forms of payment for student-athletes.
Founded in August of 2014, FanPay is a crowd-funding service, where friends, family, and fans can donate money to a student to encourage them to stay in school. Operating independently of the NCAA, the third-party platform is available to all enrolled in a university.
The money donated goes into a non-interest earning Escrow savings account, and is held onto until the student graduates or completes their athletic eligibility. Then, once the student completes those requirements, the money is deposited as a lump sum into their savings account. If the athlete does not fulfil those requirements, the money is refunded to the donor.
On the site, there are lists of donations for star athletes, such as Marcus Mariota and Willie Cauley-Stein as well as regular students (There aren’t any donations for myself, I checked.)
However, not everyone is on board.
Since launching on Christmas Day of 2014, FanPay has received more than 160 cease and desist letters from colleges and universities, as well as a formal response from the NCAA. The controversy comes from the belief that FanPay was profiting from the likeness of NCAA athletes by putting their names on their website for users to donate money to. FanPay, also, goes against the NCAA’s policy of not paying amateur athletes.
In the NCAA’s response, the governing athletic body would go on to explain that, “Once the student-athlete accepts the promise of pay, the student-athlete has jeopardized his or her eligibility for intercollegiate athletics, even if the funds will not be disbursed until after completion of his or her intercollegiate athletics participation.”
However, because the money is being collected by a third-party organization and held in an Escrow account until graduation, it’s questionable if the NCAA has the authority to go after athletes who would no longer be under their jurisdiction.
In an interview with SportTechie, FanPay’s Co-Founder, Tony Klausing, said that he believed the letters came because most universities are not eager to go against the NCAA.
“There’s a strong culture of compliance among the NCAA schools, so it’s easier to send cease and desist orders than deal with eligibility rules,” Klausing said.
Klausing is part of a four-person team, all graduates of Notre Dame who knew college sports were a huge, untapped market and realized how unfair it was for athletes to get just compensation for their commitment.
FanPay’s foundation coincided at the same time as the ruling of the O’Bannon vs. NCAA, where a District Judge ruled that the NCAA was in anti-trust violation by using athlete’s likenesses without compensation, and suggested a compensation of at least $5000 per year.
“The judge proposed a solution that we were already working on, so that really encouraged us to continue working,” said Klausing.
In the future, Klausing plans to implement a few more features to FanPay’s model. One thing considered was to add in a financial literacy course to ensure those receiving the gift make the most of it. Also, he said they were considering giving the option to allow for annual payments over a five or ten year period as opposed to a student receiving the whole amount at once.
Klausing said that the biggest hurdle for his organization to clear in the immediate future would be to gain the faith of both athletes and backers.