Escrow in sports sponsorship allows a third party to manage payments between two entities that are involved in monetary transactions with each other. The system acts as a medium where money can be kept safely while an agreement is being fulfilled, and only once the full terms of the agreement are met, will the money be delivered. Here at OpenSponsorship, we are the first business in sport sponsorship to employ this system, and have witnessed vast success through it.
Escrow is a system used internationally by many large organisations. Not only does escrow in sports sponsorship allow a transaction to go through smoothly, but it also gives both parties a piece of mind that their end of a deal will be fulfilled. The size of the system has seen a rapid growth with more and more organisations realising the effectiveness of it. Here at OpenSponsorship, we use an escrow service called Stripe. Stripe is a globally trusted platform, which processes billions of dollars worth of payment each year, from thousands of companies. Furthermore there are also many web and mobile businesses that trust stripe to process their payments, such as Twitter, Lyft and Shopify to name a few.
One recent example of the success we have seen through Escrow in sports sponsorship was just last month when Chasella held a charity event at Madison Square Garden. They requested the appearance of an NBA player at the event, which did indeed come to fruition. Although the athlete was slightly late to the event, through using escrow, we were able to ensure that the athlete got his full payment, while also providing tickets for the up and coming NBA season to make up for any lost time at the event. Escrow in sports sponsorship is unique, in that it does not only deal with monetary rewards. On many occasions, deals involve rewarding athletes with a certain amount of product from the company they are in collaboration with.
Escrow is typically used by companies involved in real estate due to the large amounts of money involved in the transactions, whereby down payments and closing fees will go through the service. Here at OpenSponsorship, we are taking this concept and applying it to the world of sports sponsorship.