No doubt about it, the focus has been on young attacking players in the last few months. At the same time, defenders have been getting very little attention and in most cases have seen sizable drops.
It wasn’t long ago that defenders were the hype craze. Various people on social media started plugging them as undervalued, the theory being that given that attacking player values had risen, the defenders had been left behind and were now relatively cheap.
Almost overnight, defender values went soaring. But for the most part, holders ended up disappointed and the prices started returning towards previous levels over the coming months.
So for the last few weeks defenders have been in the back of my mind and I knew I needed to dig into them a bit further. With defenders dropping and the focus back on attackers, are they now undervalued again or is the pricing fair? Or is there something fundamentally wrong with defenders that puts people off?
This article is based on an analysis of performance scores, dividend wins and yields. But it’s not a purely “scientific” piece as much of a practical piece. It’s based on my experience as much as the numbers. I heavily use averages and assumptions throughout.
It started as an article about defenders, and it is, but it felt like a good opportunity to share more of my practical thinking about buying and selling which I do not normally share in public. I’ve included that too. So, it’s a long article! But useful, I hope.
I looked at the performance scores and dividend yields of strongly performing players from this season so far. The type of player that might get at minimum a and over in my performance ratings.
Specifically, I was looking for players who scored above 160 multiple times (which is round about the minimum score needed to win on a soft day usually).
For defenders, midfielders and forwards, I took note of how evenly spread the big scores and dividend returns were in each category. For example, are just 3-4 players hogging most of the dividend wins, or is it more evenly spread? Is this different for defence, midfield or forwards?
How are average yields looking in each category amongst the stronger players? are defender yields weaker this season?
How much is the market generally willing to pay for a known strong player in each position right now? (What I am now calling the ‘touchstone price’.)
When it comes to the number of defenders, midfielders or forward players who have 2/3+ big scores this season already, there is very little difference in the categories. Around 80 different players in each position so far this season have put up at least 2 big scores. Tighten the requirement to 3 big scores and it’s the same, about 40 in each position.
The only difference was that if a forward posted a big score, they were more likely to get a win as a result.
I am chalking this up simply to the fact that there are far fewer of them on FI than defenders and midfielders. They usually have less competition.
So, the three positions can post big scores as often as each other, but forwards will be more likely to win with their big score, midfielders in the middle, and defenders significantly last.
Another factor is that defenders win significantly fewer star player bonuses. So not only are they less likely to win with a big score, they are likely to win weaker payouts than both midfielders and forwards when they do.
Outside of performance, there are also other elements that heavily favour forwards that are worth noting.
The lions share of media dividends goes to forwards, or midfielders who regularly score. As I frequently say the media generally only want to talk about goal scorers. You may get the odd event like a huge transfer, or a one off story, but in the main, nobody cares about defenders.
Second of all, the introduction of goals and assists dividends is another thing that favours goal scorers. Yes, defenders can sometimes score and do get a higher payout when they do, but again, this is another factor that overall tilts things in favour of attacking players.
Touchstone Prices and Yields
Next, we turn to average yields. And first, we need to find out the cost of a well known strong player. The word known is important here. Market prices reflect the information available.
Once a player puts in a string of consistent strong performances, everyone becomes aware he is a good player and the price moves to match. This is the main reason right now to know who the strong performers are going to be. Winning the dividends is a side bonus (that may change in future).
So, by roughly averaging the prices of the players the market knows are strong dividend returners (i.e because they have historically won a number of times) and then factoring in my own judgement, I came up with the following numbers.
These are what I believe the market is currently prepared to pay on average for strong dividend returners provided they align with some positive trends:
£3 for a strong defender;
£4.75 for a strong midfielder and;
£6.50 for a strong forward.
I then thought about what those prices would be if I removed players that I know are over inflated because of noise like transfer speculation. If I do that, I get to:
£2.25 for a strong defender,
£3.50 for a strong midfielder and;
£5 for a strong forward.
These prices assume that there is little media potential or real hope of a big transfer etc.
I am now calling these “touchstone” prices and I will probably use this phrase a fair bit from now on because I think it is a helpful marker. They are very rough averages but they feel about right to me. It is not their “true value” (i.e their current and future potential dividend returns) but rather what the market is prepared to pay in general for a known strong player in each position.
And of course, depending on “feel good factor” and how many positive or negative trends the player is hitting (see the new trendomter!) that price will move up or down from there. Feel good factor is hard to quantify but if a player is being reported positively in the press and is rising in price people will feel good about them and the opposite is also true. (Even though players who are dropping are often better value!).
The touchstone value constantly evolves, usually going upwards in the (reasonable) belief that dividends will increase in future.
So, when you compare a known good player around the rationale value to their average yield, you will be underwhelmed. They are strong dividend returners but because everyone knows that, the performance yield is usually weak, beyond a few outliers. We are talking 2%-12% on average for the season so far depending on luck / form, possibly pushing up towards 4%-16% by season end.
And there is little difference between the performance yields across the positions for strong players. Forwards may be better but they are also a lot more expensive. People know that instinctively. So it is worth noting that defenders are not significantly worse in terms of yield alone.
So what can we do with this?
My biggest conclusion as a whole from this is actually about every player, not just defenders.
I think the “touchstone” values above are key to the practical application of this thinking and knowing what other people are prepared to pay for your players in certain circumstances. (This should not be confused with “true value”, that’s a topic for another time though).
At this very high level, the market seems to have a reasonable idea of what a player should cost. Which is interesting, because on an individual player basis, the market is truly terrible at working out true value at the moment. But when judging player values as an overall average the market is actually pretty good (I’ve never said that before!).
Of course, those prices are just averages. And surrounding them is a lot of noise. Potential. Form. Hype. Hope. Fear. Trends. Bad decisions by both experienced and new traders. All of these things cause a price to fluctuate depending on the circumstances.
In extreme cases like an Mbappé, Kimmich or Sancho, a price can fly far away from the “touchstone” values, usually when “next Messi/Neymar” and media potential are involved. But for most good players, it will stay in the same ball park as the touchstone value.
But like I say, when it comes to working out which players are actually good and which are built on sand, the market is awful. It will get better, but right now, it is dire. And, this is why it is possible for those with better information to make crazy amounts of money.
To illustrate this, you can look at a player like Parejo. Everyone knows he is a solid performance player. He routinely outscores the hype buys and leaves them in the dust. But he has no “noise”. No hype, no expectation of being anything more than a solid, reliable performance winner. And so his price stays stubbornly around that £4 mark even when in good form. Why? Because £4 is near the no hype touchstone price. Aguero is in the same boat at £5.
A Practical Portfolio Exercise
I did this exercise this morning and I recommend it. Go through your portfolio comparing each players price to the touchstone value. Then compare them to the market trends (trendometer!). If the price significantly overshoots the touchstone values, does the player match enough positive trends to justify it?
For example, I am well aware that Joao Felix is likely to be overpriced. He is just shy of £7 playing in an ineligible league currently and may take a long time to establish in a first team when and if he gets a summer move. I could cash out now for one of my biggest profits ever having got on so early. However, I believe the trends for him remain strong enough that the market may push him towards £10, so I will stay in for now.
If I had a player well above or at the touchstone price that did not particularly hit any hot trends however, I would likely to be selling. Someone like Parejo for example who is a reliable returner I would probably be wanting to offload at an opportune time over the next month. He will probably win but he does not hit the trends, therefore is unlikely to rise significantly in value soon.
If the price is significantly under the touchstone value, and they are rated strongly as a performance player, they may be undervalued and are likely either a) waiting for a dividend win to start catching attention of the market or b) hitting some of the negative trends which is dragging down the price.
If I think that player is very close to a win and getting the attention he needs, I may stay in. If I know they are good but I feel they are off trend, or not particularly close to winning (maybe they are benched or in weak form) and that will not change anytime soon, I may sell and make a note to rebuy at a better time.
Last Thoughts on Buying/Selling
So, when I talk about seeking out dividend players, I am not actually seeking dividends. Dividends are a fraction of my profits.
I make the bulk of my money from unearthing strong dividend returners that most people don’t know about. This season, Thorgan Hazard, Havertz, Pepe, are the headline examples but there are many more. I am finding them when they are still highly undervalued and then waiting for them to win so that the market learns that they are good players and sends them towards the touchstone price and beyond.
At that point, I may decide to cash in, or if there are strong noise factors like a big transfer that leads me to believe that he will fly even further I may stick in. For players that I think are absolute solid gold dividend returners, I may decide that they are just 3 year holds and keep them come what may because I believe dividends will increase in future.
There isn’t a right way to do it that works every time, it’s what fits with your strategy, your skills and the specific situation. The key is finding the players before the market become aware they are good, because once they do, the capital growth potential is weaker and the dividend yields can be near pitiful.
Eventually, over the next year or two capital growth will get harder to come by. Things will toughen up. You will need good information just to make some money at all. And traders that don’t have good information will start to lose big money too.
At some point, my strategy may shift more towards long term accumulation of strong dividend players. But not anytime soon.
Final Thought on Defenders
Writing this article actually got me thinking about every position. But let’s end with a few thoughts on defenders specifically.
I think defenders in general are more fairly priced now after the drop than they were before. I think the hype for them was an over reach and it has now corrected.
However, that can create opportunities. The more toxic the asset the better the bargain. The good defenders will have been sold along with the bad. So, there will be good defenders out there who are now under priced.
As a rule, the best defenders are the defenders who are not defenders! 🙂
And, I am going to significantly alter my strategy on defenders going forward to reflect this. Ball playing defenders are fine and it used to be that a strong player like Otamendi would win regularly. Now, I don’t think so because there are so many other ball playing defenders competing.
What we need is an edge with a defender. A statistical freak.
Out of position defenders like Alves at the moment, or Kimmich in December who are actually in midfield are usually going to do well if they are quality and in a good side. Likewise, a Raphael Guerreiro (or very attacking wing backs) type who is a defender but actually a right winger (as mentioned in the members area on 11/02) will have an advantage. Or Ramos, who has penalties. Or someone like Alonso if he was showing high threat again. Basically, something which gives them a significant edge.
A high baseline alone from a ball playing centre back without goal threat may not be enough to carry the win. Despite an immense performance, our big club elite centre back may still get beat by another elite player who passes the ball 5 more times or by Johnny McNoname who happened to score a match winner.
Another thought I have been having recently is that the wins for defenders are harder to predict. It is much easier for me to tell when a player is on a hot streak and likely to score than it is to pick out which ball playing defender playing a weak team is going to get the most passes on a big treble day. With these types, they probably will pop up with wins but they are probably better as season holds so you don’t miss their big scores.
There will also be opportunities in significantly undervalued defenders in the under £1.50 range. Particularly attacking or ball playing defenders with links to big clubs and big international teams. This will probably be something I look harder for in a month or two’s time as we start to think about next season preparation.
I found setting this down on a page quite helpful and it particularly got me thinking about the touchstone values which I am finding a helpful quick and dirty guide when thinking about what people are willing to pay for what. I am even considering adding these to the Dashboard and keeping an eye on them to help members put prices in context. If you like that idea, let me know. And if you hate it, definitely let me know :).
I hope you find this useful and stuck with me during what has been one of my longer posts!