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NCAA Challenging Crowdfunding Company’s Attempt to Pay Athletes

FanPay is a for-profit company that was started by three Notre Dame students. The idea behind the company is to pay current student-athletes money once they have graduated. The money comes via the crowdfunding model that allows normal citizens to offer up donations on the site.

And while FanPay has yet to take any real donations, it did run a test in which hundreds of people pledged fake money to athletes. At that point, the company started to receive cease-and-desist letters from universities all over the country.

NCAA rules indicate that student-athletes cannot take pay while playing at an amateur level. These rules are also clear as it relates to the acceptance of being promised future pay. And that’s exactly what FanPay would be doing if it were able to clear the legal hurdles that come with taking on a body as big as the NCAA.

Interestingly enough, the NCAA might not have any ability to stop FanPay from accepting donations on behalf of student-athletes.

As indicated in this Sporting News article by NCAA compliance expert John Infante, the situation becomes less clear the further you delve into it (h/t CBS Sports). 

Is a student-athlete’s eligibility affected if a crowdfunding entity solicits funds during the student-athlete’s collegiate enrollment that are earmarked for the student-athlete upon graduation or exhaustion of athletics eligibility?

Once the student-athlete accepts the promise of pay, his or her eligibility for intercollegiate athletics is jeopardized, even if the funds will not be dispersed until after completion of his or her intercollegiate athletics participation.

But what if there is no promise to pay certain students and FanPay holds on to the funds until said students graduate, at which point the company pay out money to those invididuals who are no longer amateur athletes?

As the CBS article points out, FanPay founders have picked up on this loophole.

Technologically, we can design any type of software platform we need to get around the NCAA rules,” Klausing said. “So if that means making it [so] the donors are anonymous even to us, we can design that. If it means putting a form in where a person types in the student’s name and university and expected graduation date, we can do it that way. All of this cloak-and-dagger stuff of what’s acceptable seems kind of silly because we’re trying to get guys to graduate.”

That last point is extremely interesting. FanPay isn’t going out there and looking to pay student-athletes who are going to leave school early for the riches of the NBA, NFL, NHL or MLB. Instead, it acts as a carrot for those who aren’t going to make it pro, which represents a vast majority of student-athletes today.

The concept is pretty amazing here. And while FanPay has a ton of legal hurdles to clear, NCAA’s own bylaws seem to be on its side. It will be interesting to see how this plays out, because it could have wide-ranging ramifications for amateur athletics moving forward.