An unexpected Friday statement from Mr Cole! Worth running through this swiftly.
This is the most insanely underhyped confirmation of a dividend increase I can ever remember! Wow.
It says in black and white a new dividend table will be published on July 9th and it will mark an increase in payouts.
IPD will continue which did have a question mark hanging over it.
There is no hint of any kind of jiggery pokery with how the dividend table works. Sometimes we can get some things boosted and not others. For example, in a new dividend table they may choose to boost Gold Days at the expense of Bronze or IPD at the expense of Star Player or whatever.
I expect minimal tinkering with this. If anything, I would expect IPD to be downplayed and not increased whilst the bulk of the money will probably get lumped into increased performance and media dividends.
Possibly as a flat increase across the board – something simple like 20% on top of the existing structure. I expect something simple because the whole tone of this announcement is clearly about steadying the ship.
Can we speculate on how much they will increase by? Dangerous game! But I will.
I’d say 20% as a minimum. Less than that and it will not have the impact they hope for and this is not their first rodeo. They’ll want to make a good offer.
Combined with the fact that the Matching Engine takes a huge liability off FI’s hands (because they no longer have to buy our bad bets) it would be logical that traders share in some of that bonus.
Traders are taking on more risk now – so it follows that FI should follow through and up the potential reward. They should have some spare cash to do so now.
So I’d set my expectations at 20% minimum. 30-40% sensible. Optimistic estimate? 50%. And if I literally had to bet I would go towards the optimistic end – 40 to 50%.
It seemed quite likely we would see some changes to the Matrix. This was probably the plan. But the chaos of coroanvirus, and the last minute introduction of the Matching Engine has caused waves.
They are, probably correctly, recognising that the introduction of the Matching Engine is a lot of change in itself. Some of us can cope with that but not everyone can so they are probably doing the right thing by slowing down the pace of other changes.
The survey results actually shows a clear majority in favour of changes (49% for 39% against).
There are some good tweaks that could make the matrix better. Our Forwards in particular get a rough time, punished as they are for their riskier but often more useful play higher up the pitch. I’d like to see this fixed at some stage and I am mildly disappointed we won’t get them soon.
But overall, it really isn’t a bad system. FI can roll on another year with the matrix as it is just fine.
And there are always more than enough changes between seasons/weeks/months/matches to keep things interesting. Even in the same matrix we know that who is good this month is wildly different from who looked good in January or October.
I’d expect matrix changes next Summer, though.
They are pushing ahead with changes here and this is fairly low risk as over 80% of traders in the survey wanted change. The same number wanted foreign news sources including too so that seems likely.
When it comes to wording changes and the impact of reducing repetitive poor quality tabloid sources – it is quite hard to say who will benefit consistently. Overall, like they say, I wouldn’t expect it to throw up any crazy results. Media is obvious – we know who gets discussed often.
The real change to look out for is the introduction of foreign news sources. This we can predict an impact from.
This will be a long predicted erosion of one reason why EPL players get a premium. It is bad, but not the end of the world, for high priced EPL media magnets like Pogba or Bruno. It is good for foreign stars like Lewandowski or Haaland.
We may see this as a gradual thing at first. A small number of really high quality sources like Bild in Germany.
But it is worth bearing in mind and it is one more reason I think holding non-EPL players will work in our favour going forward.
An acknowledgement here that they are aware of the pain at the lower end of the market and they will look to reduce the number of players for which no Red Button price is available.
This specifically, and carefully, does not say they will tighten spreads at the lower end. They can’t even if they wanted to. The whole discussion at the start of the NASDAQ article is about how they can’t mess with the prices.
They might (might) be able to instruct their market maker to help out these spreads at the lower end. Maybe.
But they are basically giving away money if doing that. It doesn’t seem smart.
Maybe if they felt it was a good gesture/favour to help out anyone caught out by the change holding a lot of trash. But that would be seriously generous and I wouldn’t bank on it.
We have Offers coming in at the end of August, possibly moved across to being NASDAQ backed. As the man says this will be a big step and this whole pitch from moving from “quirky bookmaker” to “alternative asset class” is bold and sounds great to me.
And he finishes with a brave intention of seeing a £1bn FI market in future! Don’t let me distract you Mr Cole.
That would be incredible but FI getting this far was incredible too. It is brave but acheivable based on past performance.
I always try to end on “what can we actually do with this?”.
The dividend table and associated increase: as we are anticipating a flat increase with no tom foolery with the categories… the only real question is how much? 20% is fine, anything above that would be great.
Either way, the answer is the same. All you can rationally do to prepare for a dividend increase is hold players who are known to win dividends. Good strategy is not always complicated.
This will specifically include elite veterans who will suddenly look a lot more tempting. It can also include bad players that people seem to think are good – and we can flirt with that if we want as long as we know when to get off.
And it will include players that are good but haven’t proven it yet – but they will need to win to prove it first. And that is what Scouting is for.
Media. It may take a bit of a slice off EPL big media hitters like Pogba and Bruno as they compete with foreign stars. But in context, if they are big dividend returners they are about to get an increase. I would not overally freak out about this when you have a proven returner.
And if you hold foreign stars, someone like a Lewandowski as the obvious one, or an Immobile or Chiesa in Serie A – these could well become more competitive for media in future and start attracting a premium too.
If I was holding garbage at the lower end of the market? I may be slightly more tempted today to hang on and see if that spread will eventually tighten a bit.
But. We live in a grown up world now without comfort blankets and to be honest, if that player is just bad why would anyone, FI Included, pay you money for them?
As for the ambition of a £1bn market to come that carries us all to fame, wealth and glory?
Well it’s a nice ambition and I wouldn’t spend so much time on FI if I didn’t believe Adam Cole and his team could pull it off.
But it’s best just to focus on our own game – if we put ourselves in a great position anyway then we will be in the best place to profit from any future surges in the market.
Hopefully this market update signals brighter times ahead and lifts the recent gloom!
Although I think really, given where we could have been with coronavirus, we really haven’t had a bad time on FI!
Have a good weekend folks 🙂