Football Index Company Income

  • Amongst all the uncertainty over the last 5 weeks and the temporary relief the deposit bonus provided I remembered looking at the football index seedrs post from 2017 where they confirmed how their income is generated.

    "Monetisation strategy
    We believe our business model is significantly different from anything that has preceded it in the gambling sector. Please request a dedicated document that goes into this aspect of our business in more detail.

    In summary:
    Every Virtual Share in existence is a fixed odds bet that has been issued by us at whatever the purchase price was at the time of issue. We receive all that issue price as gross profit.

    From Gross Profit we deduct dividend payouts that will be due on that Share over time - an estimated 20%."

    I thought it was interesting that the overall yield of every share issued is 20% over 3 years. I appreciate it is old data but the monetization is the same. Therefore, football index need to reinvigorate the top of the market as if nobody trades a Neymar or Pogba then the only way a trader can recoup their bet is to IS which is a massive obligation for them.

    So FI need to sustainably reinvigorate the top of the market as they need to increase demand over supply in that sector to generate new futures at top prices. The only way to do that is a dividend increase which benefits the top end as IPDs are not attractive given the prices.

    But the top end of the market attracts the more passive investor who are patient and happy to sit on the futures longer term rather than the short term gambler. Therefore, how would traders feel if FI were to increase dividends by a healthy percentage but, like your pension or stocks and shares ISA, introduce a small Annual Management Charge percentage charged monthly.

    Would that attract and retain funds in the top players which I assume must be costing FI money hence the change to the IPD model? I would be interested as I believe I could generate more than the proposed AMC by using my football knowledge.

    I look forward to being shot down on this one!!

  • Their model is now self sustaining, with positive EBITAD according to their latest shareholder reporting with Share volumes 5x increase in Jan 2019 against Jan 2018, monthly trading volumes of £25m+ (not clear if that was an average or a peak month but certainly very healthy) & positive EBITDA free cashflow even after accounting for all future dividend commitments. Dividend increases are inevitable to sustain future platform growth but probably not until the start of next season IMO.

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