As a startup in the sports sphere, Citizen Sports has a simple, but annoying problem: They’re not ESPN. And it’s simply hard to compete with the name that has basically become synonymous with sports. Yahoo might be able to do it because, well, they’re Yahoo, but for a startup, it can be frustrating when, on many levels, you’re beating your competitors in innovation, but still trailing by so much.

That’s the basic gist I got after a meeting with Citizen Sports’ Jeffrey Ma and Brian Mead. The fact is that they are doing some innovative stuff in the space, but still getting overshadowed, and that means it can be hard to make meaningful money. For example, their fantasy sports options are hugely popular thanks to their Facebook app (Ma thinks they have a shot at being the overall number 3 fantasy option behind Yahoo and ESPN in the business), but this hasn’t translated into the types of ad deals that ESPN sees because they are able to leverage their television network, and Yahoo can leverage all its other properties.

Citizen Sports recently released a “pro” version of their iPhone app Sportacular. It’s great; for Push Notification junkies like myself, it’s a dream come true. Not only can you get final score updates pushed to your iPhone, you can get an update every time the score changes, when an inning ends (in baseball), after every third inning, etc. ESPN, despite promises of push on stage during Apple keynotes, still doesn’t have the functionality.

But Citizen Sports is running into a problem that many iPhone app developers run into: How do you monetize an app? They’ve been trying the advertising model with the non-pro version for a while, but the returns aren’t great. So now they’re trying the paid method, but it’s hard build an audience to a level that can pull in any meaningful kind of money. Sometimes it doesn’t matter how good an app is, all that matters in moving it is something like if Apple features it. And while ESPN can afford to promote its app (and certainly does on its own network), Citizen Sports can’t match that.

So Citizen Sports is thinking about what else it can do, perhaps in-app purchases of some kind, Mead says. But while those seem like they’ll work for iPhone games, the jury is still out as to just how well the option will work in other kinds of apps.

It’s not like Citizen Sports is totally going it alone, they have a partnership with Sports Illustrated on their popular Facebook app. But despite being a very well-respected name in sports, SI doesn’t have the kind of pull online that ESPN does.

“The next 6 months in the ’sports 2.0 space’ will be interesting,” Ma tells us. “How will startups deal with the ad sales challenge — how do you compete with Yahoo and ESPN?”

He notes that if they absolutely needed to, they could probably cut costs and get to profitability at some point next year, but that would mean cutting a lot of the things keeping them ahead of ESPN in terms of innovation.

Instead, Citizen Sports plans to continue the march forward. They’re working on Android apps, and looking at the other mobile platforms. The problem is that all of that development is expensive, but Ma notes that their backers have been very supportive.

And they have some big names both in the VC space and the sports space, funding them. They include Kevin Compton, a partner at Kleiner Perkins, Jeff Moorad, a former sports agent and now owners of the San Diego Padres, and even former Cowboys QB Troy Aikman is an investor.

You can find the Sportacular Pro app here in the App Store. And here’s the free version.

(And yes, Ma is the same guy who the main character in Bringing Down The House and the subsequent movie 21, is based on.)

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.