How is the platform sustainable?



  • Hi, a new user with about 5% roi in the last 4 weeks or so.
    I love the index but if everyone is in the green how on earth is the platform making money and therefore sustainable? Surely it can only operate in such way because more people are depositing money than actually withdrawing ( when I say withdrawing I don't mean selling and re investing) any thoughts would be appreciated I know I've probably got quite a simplistic view and do not understand the platform fully. thank you



  • Pretty much what you said , more people are depositing than withdrawing.

    At some point , it will even off because they have reached their target audience and people have put in what they are prepared to. Or because dividends don't keep up with prices.

    At that point, it will be like a normal bookie in that there will be more losers than winners. In meantime until they get to that point, new users are joining every day as a result of ads so there is more deposits than withdraws.



  • Football Index makes money out of the commission they take for every time someone sells shares in player. This is 2% if you sell to market, or even more if you instant sell due to the spread. Also if someone sells to the market, it means someone else has bought, so the amount of money invested in the player remains the same, but FI have just taken a 2% cut and will take another 2% when the the second buyer sells.

    Shares are only valid for 3 years, so everyone will have to sell at some point ensuring FI take their commission.

    As long as this commission is bigger than the amount they have to pay out in dividends then FI are in profit. Now they will lose money on some players, but considering there are over 2,000 players, there are a lot of players who will never win dividends but FI will still take commission.

    Hope that makes sense.



  • The 3 year cycle helps. People will have to sell and buy again if they want to continue.
    Capital gains may slow down when it has reached its customer market. But dividends could keep it all going- people betting that Kane etc will earn them so much over the time they hold him.
    Also to play you have to be 16? 18? So naturally it will always have some new custom year on year.



  • There are still plenty of losers. Look at the ISing of ronaldo, there are examples like him.
    Commision on everytrade.
    FI pay out dividends but most people just put it back in, more commision from trades.



  • @NewUser257214 said in How is the platform sustainable?:

    Hi, a new user with about 5% roi in the last 4 weeks or so.
    I love the index but if everyone is in the green how on earth is the platform making money and therefore sustainable? Surely it can only operate in such way because more people are depositing money than actually withdrawing ( when I say withdrawing I don't mean selling and re investing) any thoughts would be appreciated I know I've probably got quite a simplistic view and do not understand the platform fully. thank you

    Good question and welcome to the forum 👍

    I agree with what @mike778 says. There is lots of green about simply because there is more money being deposited than withdrawn. At some point that will stop and dividend returns will become a much bigger factor. Although the market keeps growing, I'd say there are a few important things to remember:

    • Even though there are lots of people seeing the boom, there are people losing, they're just not as vocal
    • As @mike778 says, at some point it will become more about dividend returns rather than capital appreciation
    • Capital appreciation only counts when you've sold and it's banked in your balance

    I joined in April 2018 so I am approaching a year on here. I have made deposits all the way along that time. At the moment, I have positive net deposits (I've put more into FI than I've withdrawn). As I saw the market was flying, I most recently deposited in January 2019 - these January deposits count for more than 50% of my entire net deposits. Despite the recency of this deposit, I've got over 100% ROI from all of my net deposits, in less than a year from starting on here. I am under no illusions that I'm a master trader. I think I'm decent but I know I've joined at a good time and ridden a wave. Given the size of the remote gambling market in the UK and all the potential ways to grow the platform FI still have (including going outside the UK) I don't think we're getting close to the peak yet, but it's important to remember it will come at some point.

    In answer to your question about how the platform (FI) make money - just take a look at the activity ticker, especially when Man U play. Rashford appeared to be injured against Liverpool and as the game was going on, people were instant selling him. If someone buys him at his current price, (£12.63) then all that money goes to FI if nobody else has him in the sell queue and Rashford's price increases. If the buyer holds him for 3 years, FI only pay out on the eligible dividends. For starters, it's unlikely they will amount to £12.63 over that 3 years. But hardly anyone holds for 3 years, and if the person panics and hits instant sell currently (£11.71) then FI are banking that 92p profit per share (minus any dividends). It's actually more than that though because FI put a 2% commission on that instant sell price, so the punter actually gets £11.48 back, meaning FI have made £1.15 on that one future (less any dividends they've paid). Then when you multiply this by the hundreds of Rashfords and every other player that's being sold you realise how much FI are coining it in. Even if players sell to one another, FI are taking a 2% commission. So selling is good for FI, they make money on every sell, be it between traders or when they release new futures.



  • @Yellow Well put. The other aspect is if there is mass selling the spread widens, IS can be suspended, and the players value drop rapidly so our green becomes red. It's a very sustainable model for FI - liquidity/stability from that point of view is fine.

    It's us buyers that need to always be aware the bubble can burst (therefore remembering, whilst CAP AP is exciting and perfect if you get out at the right time, that dividends are the only real value... by which the dividends model works for everyone at low risk … capital appreciation is high risk model with winners and losers).



  • @Weggers83 Stupid question, if you have shares in a player for example, and you then sell your shares at the 3 year point, you can obviously buy back into that player once you have sold if you wanted to right? (I said it was probably a stupid question).



  • @gball1975 said in How is the platform sustainable?:

    @Weggers83 Stupid question, if you have shares in a player for example, and you then sell your shares at the 3 year point, you can obviously buy back into that player once you have sold if you wanted to right? (I said it was probably a stupid question).

    Correct...this is why when you look at capital appreciation you should ALWAYS reduce the player current valuation by 2% to give you the true value to you, as you will have to sell at some stage...ie if you use a spreadsheet to track your trades(very advisable) then you should have both a gross portfolio valuation and net portfolio valuation(-2%) for each player and for the portfolio in total



  • @CraigM Told you it was a stupid question!!!



  • @gball1975 said in How is the platform sustainable?:

    @CraigM Told you it was a stupid question!!!

    Never a stupid question if you genuinely aren't sure...



  • What most people don't realise is that in the grand scheme of things, the current dividend yield of 5% isn't very high and Football Index should be able to invest the money themselves at a better return. The chances are , if they know what they are doing then they can afford to pay dividends BEFORE commission and IS.


Log in to reply
 

Looks like your connection to Forum was lost, please wait while we try to reconnect.