Maximum value of a player

  • Ive seen some talk about the future and £7+ or even £10 players if the index keeps rising. My questions is; given the current FI model, whats people thoughts on the maximum value a player can realistically go to before its no longer a good investment?

    Im no expert on trading, but for me normal stocks on big companies rise based on millions/billions of £$ in turnover etc, which has no real upper ceiling. Realistically the index is never going to be that without more major change.

    As an example, if messi rose to £10 per future, is someone realistically going to buy 500 of them (£5k investment) to try and earn a couple of hundred pounds dividends? (just a crude representative example of combined buzz wins). Realistically not - there are far better investment opportunities around. Add into that 2% commission and a lower sell price.

    So are we already close to the natural ceiling for top players with regards to what makes a good investment? Interested to hear peoples thoughts...

  • @NewUser76802 interesting question. I thought a lot about this in the past. To make it short: In my opinion there is no limit for player prices. Why should someone not buy Neymar for 1000GBP per share if he think that the price will further rise? I think we are just at the beginning, and that this site and so the community will grow much bigger in the future. For me it makes much more fun, than every other kind of sport betting. And i assume a lot of other people feel the same. But its just my opinion....

  • I think there is a hypothetical historical max and then a realistic ceiling.

    The FI player of our dreams would be David Beckham in his celebrity heyday - he was an absolute media buzz magnet and could have feasibly picked up 1 in 4 media buzz wins. Over a year, that would be about £7 in buzz returns. If you're looking for a 15 to 20% return on investment, it would justify a hypothetical price of £35 per future.

    Obviously we aren't close to that now as there's no player close to that sort of celebrity status. But if we had a Ronaldo, Messi, Neymar in the Premier League, they would consistently and reliably bring in £2 a year in buzz returns (which I think would justify a price of about £12). Our current top of the index, Lukaku and Kane, have less media pulling power, but I think they can bring in a dozen or so buzz wins a year and in which case should be in the region of £7-8 eventually. If you think that they'll return more than that, they're probably worth more!

  • @playingcards1 there is a fundamental difference between your opinion and my. I think the growth in value is coming MAINLY from more customers using FI in the future. I do not think that Performence Buzz or Media Buzz is the main price driver in the future. But its a good side effect.....

  • That's not a matter of opinion though. Futures only derive their value because they offer a buzz return; otherwise there's no market because there's no incentive for anyone to buy anything.

    Even if you personally aren't chasing buzz returns and are instead playing for capital appreciation, you're making a judgement that a price will rise because that player still offers a good ROI to others.

    That's why you need to use buzz returns to judge a player ceiling. Even as the market grows, a future could never sell for £1000s each because traders aren't going to stake all that money for an 8p buzz return - they'd get better value from a savings account.

  • As the market grew, shouldn't the buzz return increase also?

  • When you buy a future, its not like shares in equity, all you own is the chance to win dividends. So the true value of a future is the predicted dividends they will earn over their career. It doesn't make financial sense to pay more than that and it doesn't make financial sense for anyone else to buy the future off you for more than that.

    With the dividends increase, the index has a bit of catching up - after that it should flatline.

    That assumes that everyone trades rationally on financial theory - fortunately they don't. Really every player should gradually depreciate (barring a change in their status) to reflect their reduced future dividend yield. What seems to happen instead is that players are holding their value before crashing and you have to hope you aren't holding the future when it nosedives.

  • @Mike78 but you seem to forget that with more and more users more and more money is on the market. This new liquidity injection leads to higher player prices. So there are two things that leads to higher player prices:

    • Media and Performence Buzz (= Higher dividends) and
    • More and more users on FI.
      = both things will happen, i m sure (= my opinion)....

  • The thing with the return on dividends is that, unlike FTSE etc, it's a fixed amount.

    You get 8p dividend on Matic, it's totally different from an 8p dividend on Lukaku. Your ROI with the former is around 6.9% compared the the latter's 1.2%.

    I fully agree with the comment that FI is a growing market and, as more players come in, the player prices will increase. But the more I look at it, the more there'll be a ceiling on player prices. In an extreme example, a player getting 8p dividend at £100 per future isn't going to stay at £100 because the ROI isn't worth it (bearing in mind, unlike normal markets, the dividend isn't guaranteed if you hold the share).

    I think you might find more growth if it was a % of the player value. The only issue is, I can't see it working well with the penny stocks then...

    A ramble, more than useful input.

    It's early.

  • @NewUser38991 said in Maximum value of a player:

    @Mike78 but you seem to forget that with more and more users more and more money is on the market. This new liquidity injection leads to higher player prices. So there are two things that leads to higher player prices:

    • Media and Performence Buzz (= Higher dividends) and
    • More and more users on FI.
      = both things will happen, i m sure (= my opinion)....

    From a financial ecenomic perspective, this doesn't really make sense. If traders act and trade rationally then the amount of advertising SHOULD be irrelevent to a players price.

    For a very high risk investment like FI, you should be looking for a 15% ROI minimum to be worth buying.

    Lets say a player is expected to return about 50p a year and is relatively young (around 25) then a reasonable price for the player is £3.33. Any less than that and the player is under-priced and everyone should invest until they reach £3.33 and any more than that then they are over-priced. The amount of new users doesn't change that. If the player is £3.50 then they are not worth the price and people shouldn't buy.

    20 million new users can join but the player is still over-priced at £3.50 and people shouldn't buy the player based on expected financial returns. You can advertise something all you like but it doesn't make something that was worth £3.33 worth £3.50.

    In reality of course if 20 million new users join then ultimately they will want to buy the player because in part FI is as much a game as it is a way to make money (like betting). The player will therefore rise in value but will be artificially over-priced. What you will then see is people seeing the player rise and buy because they think the player will keep rising so the player becomes more and more over-priced creating the bubble. Of course once the player stops rising there is no reason to hold the player - they aren't going to make capital gains and the price doesn't justify the dividends so logically the player should crash back down to £3.33.

    Of course - if the devs double the dividends again then suddenly the real value of every player doubles. You could argue the £3.33 player is worth more than that on the basis that maybe the devs will increase dividends in the future.

    Its interesting to watch to see what happens when you combine a financial market with a game. The index seems to be torn between trying to follow economic principles and between following what happens when people throw money at a game.

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