What is a player worth?

  • To warn you all before you start, this is going to be a long post. It's not meant to be negative or positive, it's just my views and then inviting people to chip in with theirs.

    So I think we all agree that there is a significant price adjustment taking place at the moment. However should there be? What is a bet/share in a player actually worth?

    Let's treat them like an investment, when you're looking at an investment you should be interested in two things, the risk and the return. The recent dividend increases have increased the potential returns for your bets, but the removal of IS has increased the risk. Looking at player prices the sentiment seems to be at the moment that the increased risk outweighs the increased return and as such players prices are generally falling.

    But what should they fall to?

    The player price should have some correlation to their ability to return dividends, either now or in the future. The base price should therefore be some multiplier of their expected dividend return.

    You can calculate the expected dividend return for each player in a number of ways, historical data is useful as a starting point but obviously players circumstances change. You might think a player is on the upswing and you might think he's going to bring in more in the future, or the reverse might be true. Frankly this is something that needs to be done on a player by player basis.

    The multiplier however should be reasonably constant. Yes you probably should adjust it and use a higher multiplier for safer holds and a lower one for riskier holds but there should still be a base figure to use as a starting point. I'm going to suggest a few here and I'm interested to see what people think.

    The first two are pretty simple and just apply a set multiplier to their dividend potential.

    1. A three times multiplier (or less if the player is likely to retire sooner than that). This is probably the most cautious approach. You have a three year bet, so this approach allows you to break even over the three years. Effectively you'll break even from dividends and any thing you sell it on for at the end is your profit.

    2. A six times multiplier. Basically double the above. This takes into account some of the resale value, basically you are valuing your exit point at three times their div value (as this should realistically be the worst case scenario). Anything you sell the player for above worst case scenario is your profit.

    3. A multiplier equivalent to the number of years left in their career. I've seen some people suggest that players should be valued roughly in line with their dividend earning potential over their whole career. Personally I think this is over valuing the player. Here's an example why. So lets say you think a player is going to earn £1 a year in divs for the next 10 years (yes I know it won't be this straight forward and they will rise to a peak then tail off, rather than have a nice flat distribution but I'm simplifying for the sake of the example). So you buy at £10, after three years you've earnt £3 in divs. When you come to sell someone else values the same way, valuing them at £7 (as the player now only has 7 years left). So you get £7, added to your £3 dividends you've got £10. You've effectively broken even. People valuing this way are, I think, relying on either capital appreciation (which may well be unwarranted) or dividend increases (which seems more likely).

    4. Total Career earnings minus a bit. So this is basically number 3 but does actually allow for some profit as you're valuing him at less than his career earnings. Let's assume the person you are selling to does the same. But how much should you take off? Let's do a couple of examples using the same player as in example 3.

    30% - This seems like a decent reduction. Basically you'd buy the player with an earnings potential of £10 for £7. This gives you £3 dividends. You can then sell on. The player has a residual earnings potential of £7, but because the next person is paying £4.90 (they are knocking 30% off as well) you've only made 90p off your £7 investment in 3 years, 4.2% per annum (I'm not going to bother compounding this) not enough in my opinion for the hassle and risk involved.

    Let's try 50%. So I'll pay £5 for him. I earn my £3 and after three years I sell for £3.50 (£7 *0.5). I've made £1.50 profit on my initial £5 or 10% per year. This is a bit better but still not good enough in my view.

    Let's try 60%. So I'll pay £4 for him. I earn my £3 and after three years I sell for £2.80. Total earnings £5.80 or 15% per year. This is probably realistic and what I would be hoping to achieve.

    Interestingly this is more than method 1, but significantly less than method 2.

    I appreciate this is very basic and doesn't take into account potential dividend rises, the fact that dividends change over a players career, the ability to sell part way through a hold, promos, market sentiment etc, but I thought it might be helpful to have some sort of maths based discussion toward player values, rather than just one lot of people saying players are over valued and another saying they are currently bargains.

    Interested to get other peoples thoughts on both what I've said and your own approaches.

  • No. 1 for me.

    This is a very sensible approach and you’re unlikely to lose money long term with this method.

    I’m simply not buying any player unless I’m confident they’ll win enough dividends in three years to cover the whole price I paid for them. Any resale value is then a bonus and my profit.

  • What I do is, pick a number between 1 and 10, add my age, times by the number of days in the current month and subtract my year of birth......then throw that in the bin and then bid as low as I can 👍

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  • Number one for me too. But I would anticipate in that being able to sell for something around the same price as I've bought for (unless there's a significant age factor involved).

    So even in the most cautious of your scenarios it's double your money.

    In reality (and especially at these prices) given the growth of the market and future div increases which are reasonable to anticipate, the real return could be far higher.

  • @GDS

    I'm a bit of a finger in the air type when it comes to valuations. For me it is nowhere near as straightforward as just guessing how much a player will yield. There are far too many factors in play in a sporting arena let alone the FI arena where lets face it changes by the company can create different circumstances just like a transfer can...

    The valuation process for me tends to start with the question "who else is likely to want to buy shares in this player in the next month, 3 months, 6 months or year". I rarely look beyond a year as it is a process of constant re-assessment due to outside factors and internal ones such as PB matrix changes etc, but there are plenty who I buy expecting to hold for the full 3

    I'd value a player first in terms of what I am looking at in the short, medium or long term. If it is short then I don't value them in dividend return potential as such, I am just looking to make a quick return so the valuation is largely irrelevant it is fixture list or circumstance based decision..

    If I am looking at medium or long hold then I am looking at yielding 15% per annum in divs as a minimum requirement, and on top of that I would not buy if I did not think I can make decent capital appreciation to sell well above what I paid...

    It is not really a valuation method as such it is more just weighing up pros and cons of the player circumstances and guessing how the market will behave over that period... It is not very predictable at the moment as new to order books, but like everything in life once you learn the patterns it'll become instinctive making the right calls (I hope!)

  • It sounds a bit cliche but a player is worth what people are prepared to pay. Right now dividends are king to protect against uncertainty, in the future might be different, some other factors might drive player prices however can't see past dividends for a while. If you're not buying considering expected returns you open yourself to more volatility which might work for some

  • @Baydog

    To be honest that's exactly how I've been doing it up until now.

    However with player values falling and people uncertain as to whether it's just a blip or a new long term trend I was just trying to see if there was a more scientific method. I've actually run the numbers of a few players and the numbers aren't great for a lot of them, although there are also a few who look very undervalued.

  • @OldNewUser

    Yes ultimately that's exactly right. However I think with the removal of IS and the recent drops we might see people selecting their buys a bit more carefully. There will always be some people who buy just because they like a certain player, he plays for their team, or they just have a gut feeling so the market is never going to be perfect. However I always think the more info you have the better informed your decisions will be. Plus if you can get a handle on how other people are valuing players you'll have a better idea what you'll be able to sell them on for.

    A few people have said they value at no more than 3 years dividends, which would see a lot of players going for less than there current price.

  • @GDS Yes exactly right I just think we just have to see how this all pans out whether a more methodic approach prevails or something more chaotic. To be honest it is anybodies guess right now but good to see the market revert to a more rational direction imo

  • @GDS said in What is a player worth?:


    To be honest that's exactly how I've been doing it up until now.

    However with player values falling and people uncertain as to whether it's just a blip or a new long term trend I was just trying to see if there was a more scientific method. I've actually run the numbers of a few players and the numbers aren't great for a lot of them, although there are also a few who look very undervalued.

    During a slump valuations go out of the window and emotion dictates decision. Valuations also go out of the window when FOMO is in play, and what we are seeing at the moment is this in reverse. People have a fear of getting out not missing out, so when a player does well people are jumping on this as the opportunity to get out rather than hold... It is hard to say when this trend will be bucked but at some point it will. Sentiment will shift from FOGO to FOMO and then it can switch back again just as easily - it will be part of the order book game and the major difference with peer to peer trading - people will be forced to think a lot more about timing than they are used to - but it should not in theory affect valuations at all as yields remain true

  • @GDS The other thing is having dividends as the backbone of someones price is also good to determine whether someone is fairly valued, undervalued or overvalued and base your decisions on that rather than pure speculation

  • This is the big question everyone is trying to work out.
    My rules are players must be 25 or younger with a value of less then 5x there potential yearly yield.

  • Players are worth 0 cause they are not tied to actual property.

  • @OldNewUser people were prepared to pay 16 for jandon Sancho surely he was never worth that lol

  • @Doddy it does not matter because it was the only way of getting on him, it was an incremental system as AC mentioned. Now we have the ability to set the price and pay any amount we like

  • @Doddy he ain't worth half of that.! Poor fuckers who bought him have had their pants pulled down good and proper!

  • @Boss

    I'm not sure what you mean about not being tied to an actual property? But they clearly have some value as they generate a potential income stream via dividends. So their value is a multiplier of that potential income, with the multiplier determined by risk.

    Many assets in the real world are valued this way without having any tie to property.


    It's obviously hard to predict future dividends, but if Sancho continues to return dividends at the same rate as he has for the last year I'd value him at £12.62, which actual makes him good value right now.

    Of course that's a big if and I don't think he will return at that rate so I'm steering clear for now.

  • @NewUser218220

    That's interesting, who would you consider buying based on that method at the moment? There can't be many who fit that criteria as most under 25's don't generate a lot of PB.

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