As this is my first article writing for 90MAAT and one of the first articles that has been produced as part of Football Index Insight, I thought it would be appropriate to kick things off with something a little different, more of a reflective piece, aimed at getting anyone that’s new to the platform or considering joining up to speed with where the platform as a whole is right now and more importantly where it’s heading.
After just two years the platform has surged through some pretty incredible milestones, having recently announced they had paid out over £2 million in dividends, and over £100 million worth of futures had been traded since the site launched in October 2015. As well as more recently announcing a user count of 150,000, which, as user 5842 myself, is something that has happened far quicker than I could have imagined.
The company has done two rounds of Seedrs capital raising in the past which has mainly gone in the direction of advertising. The site has had an array of advertising techniques across various platforms and of varying length, the stand out ones being a partnership with Talk Sport for radio advertising and sponsorship of ITV2 football, including Europa League highlights and international friendlies.
An aggressive advertising period over summer is ahead of us, which should continue to attract attention to the platform through various channels. TV adverts will run during ten World Cup matches for those watching on connected devices, a partnership with The Times newspaper launched just before the competition kicked off and London will continue to be targeted through tube station adverts and one in ten London buses will also be occupying an Index ad on the side. This should all accumulatively aid the index’s aim of doubling their user base in 2018, a target which members of the index team appear confident on hitting.
Even more impressively, an announcement over the weekend confirmed a deal with Sky Sports for advertising in the coming season, details of which are expected to be released in the coming weeks.
Over the products short life, several fundamental adjustments have helped to shape the Index into the successful product it is today, and although these decisions have little impact on you as a trader now, it is worth being aware of how key decisions have been planned, managed and executed in order to assure you as a stakeholder in this company when other major decisions arise in the future, a couple of which we are already aware of, and I will come onto later on in the article.
Jump back in time to October 2015 and you’ll find an Index of just two hundred players and no “Sell” button to complement the “buy” button. This is because back then, the only way to sell your shares was to market-sell and wait for someone to buy them, as you can imagine, with circa 10000 users, liquidity was scarce and if a player got injured a large queue quickly formed, often collapsing that players price. Cue the first major change – the introduction of instant sell. Although this initial had some issues (namely that the instant sell price offered was around 35% of the player’s current price) it was, and still is, a raging success. Instant sell has created a much more liquid market and given users the confidence that, should the need arise, they can retrieve their investment instantly at a small cost.
The market continued to grow throughout 2016 and as the top players began to stretch the market, a decision was made to perform a four-way-share split, quadrupling all currently owned share quantities and dropping the media dividend from 20p to 5p per share. This was a very popular change with traders and the day of the share split saw record increases across the board. After this point, the Index remained relatively unchanged until the summer of 2017 when arguably the biggest and most successful change was implemented.
I am of course referring to the introduction of performance buzz and the expansion of the squad into purchasable players. The two changes come hand in hand, as without more players, performance buzz would have been as predictable as the media buzz, many games would have had few purchasable players and some days would have no interest at all, making the extra players essential.
Performance Buzz has been welcomed by many traders, especially with the increase in potential dividends from last season’s 5p per share, the change added relative value to all of the Index rather than just those at the top and resulted in many players who were previously rendered useless, like defenders and foreign players, gaining huge masses of value.
From a user point of view, the index is now in a position where the investment options are vast and strategies varied rather than just “buy and hold for media buzz”. From an Index point of view, this stops money being completely concentrated in just a few players, making the platform look like a more attractive investment and more importantly, it allows the company themselves to take in capital on lots of players who realistically may never win a dividend, giving a huge boost to the sustainability of the platform.
Now we’re all up to speed, let’s look at what we do and don’t know about what lies ahead. Firstly, I mentioned upcoming advertising earlier but something else set to get the index some attention is the 100K world cup give away,the basic premise is Football Index will be giving away one hundred thousand pounds in cash during the world cup, split into a range of prizes from £1000 all the way to £10000, and to be with a chance of winning, all you have to do is opt in to the offer and spend £100 on the index the day before the draw. Pretty generous if you ask me!
Focusing now on the changes to the actual product itself, we know for sure the dividend structure has no immediate changes in place- if it isn’t broke don’t fix it right? But the way we buy and sell players could be in for an exciting change as early as next season. It’s now been confirmed that the index is exploring ways of introducing order books to the site.
This could be a fantastic improvement for a number of reasons, mainly, it reduces the need to be constantly on the Index and checking prices, if you want to sell player X at a certain price, you can set up a sell order for that price and when someone is willing to buy at that price, they will sell. Conversely, if you want to buy a player at a given price you can do the same thing. Also, this will eliminate the need for instant sell and put to bed the spread argument once and for all and reduces the liability on the company for maintaining prices and having to buy back regardless of circumstance. Don’t worry though, Football Index has already expressed an appreciation of the need for liquidity and confirmed they will set in place some form of instrument to ensure that liquidity, and although no confirmation has been made yet of how this will all be executed, it’s a positive avenue to be exploring for sure.
Another potential change that has been discussed is second share split. This idea has had mixed reactions, but the majority of traders are for the split. Although no confirmation this will happen has occurred yet, one thing is certain, the index will not split shares and keep dividends the same as some people have suggested. Not if it wants to avoid running itself into the ground anyway. Still, though, it can psychologically make players appear attractive value, lower prices also mean lower commissions and spreads and barriers to entry to the market can appear reduced to potential new traders.
Overall the future seems bright. The index is by no means resting on its morals and continues to be improved and shaped into a very attractive investment opportunity while current users continue to reap the rewards of the growing platform.
If you have any thoughts on the potential upcoming changes feel free to have your say under the article on twitter and as ever my DM’s are always open for any questions or advice regarding the platform.
As CEO Adam Cole would say himself, onwards and Upwards!
Written by Liam McDonnell.