On Friday night as I prepared for the Live Blog I was expecting a fairly straight forward announcement. A flat-ish rise across the board, probably a 40-50% increase.
I reasoned that with all the difficulties going on with the transition to the Matching Engine, and the large spreads on many players, FI might not want to rock the boat. This is why they dodged any performance scoring changes after all.
But that wasn’t how it went down! My jaw hit the floor when they introduced Team of the Month (TOTM from now on) and Goalkeeper dividends. We knew TOTM was a long term ambition but FI hadn’t mentioned it at all recently.
We ended up with a less than expected dividend increase which is hard to put an exact percentage on but it’s closer to 30% than the hoped for 40-50%. Now that’s not actually too far below expectation.
But a lot of people were hyping a 100% increase and as I said before the announcement – this is a dumb thing to do. It doesn’t pressure FI into doing it against their better judgement, it just means anything less is seen as disappointing which is bad for everyone.
So Friday night’s Live Blog ended up being exciting and went on long into the night as there was so much to talk about. But the event was tinged with a little disappointment. For some, there was clear anger on display too.
But on reflection, I think people will eventually start seeing that this is no bad thing at all.
Over the weekend, I have actually come to the view that the smaller dividend increase at this point is actually better than a large one for the longer term health of the product.
That may sound like an odd thing for a trader to say, but let me explain why.
Ok FIT. Explain your madness.
To understand why FI did what they did we have to step back and think about why dividend increases happen at all. And a little of FI’s process.
The purpose of a dividend increase is to rebalance the incentives for traders once market growth outstrips the dividends available.
Basically, all being well, prices will eventually hit a point where dividend yields are too low for traders to rationally keep their money in FI much longer.
If FI are doing their job right, they will time an increase at least a few months before that happens.
So when Adam Cole and his top lieutenants sat down and worked out the new dividend structure they will have paid very close attention to the realistic returns available and how much value there is in the market.
Now, as I have been saying on repeat for weeks now – I can’t remember there ever being this much obvious value sitting right there in the open screaming at us.
On Blue Button prices before the Matching Engine value was getting quite difficult to come by. But the ME flipped that on it’s head – not because FI dictated the prices but because traders did.
Traders are creating value in the market by selling good players for much less than they are worth. This is out of ignorance or panic or financial neccessity or all of these things.
If you sit down and look at the rational dividend yields in many good players you could still expect them to return 20-30% of their price in dividends in one season even before the increase.
This is primarily because lots of good players are available on very cheap bids.
A player in my site ratings at for example could reasonably be expected to return 40-70p in performance dividends if they are in decent form and playing consistently. So even paying £3 for that player you might get 20% back per season. Maybe 30-40% if paying £2.
And many of these or or level players are available for £3, £2 or even £1 in some cases on cheap bids.
This is all before you factor in the recent increase and TOTM. Those returns are going to get higher.
The hard reality is that the vast majority of good players did not need a dividend increase to make them value. They already were.
They have just got one anyway though, and this means that FI have just made a whole swathe of players incredible value. This is one reason why I remain very optimistic for the 4-6 months ahead particularly for site Key Strategy.
And the incredible value available is almost certainly why Adam Cole didn’t give a bigger increase right now.
So who did need a huge dividend increase?
There are some players though that badly needed a big dividend increase to make them good value again. They needed at least 50% and in some cases up to 100% to bring them back into the realm of reasonable value.
They tend to be some of the most popular players that people have clustered into out of hype or just that tendency to follow crowds or social media pushed garbage.
Now some players out there are at high prices that they can justify. Bruno is the best example. Neymar is another. They’ve earned their prices through demonstrating consistent strength – and there are rational reasons to expect that to continue for them into the future.
But many aren’t. Lots of pricey players live on hype and speculation.
It’s large holders of these overpriced players that are going to be most upset and angry that they didn’t get the big increase. This is their fault though – not FI’s. In trading, when you stick in overpriced players too long on some false premise like “career dividends” you put yourself in a weak position that invites disappointment.
You can pay too much for good players and it’s a really common mistake that stifles profits even at the best of times. Yes some keep rising but most go on to drop.
Whilst you get those rare pumps that do very well over months and just seem to never stop, the strategy as a whole leads you to more big crashes than it does big gains if you follow every hyped player going.
Because the market has been constantly rising, powered by large dividend increases and bonuses, this kind of bad trading has become a habit for many. Even routine. Worse – lots of people actually think this is good trading and the veterans can be more vulnerable to it than the newer traders.
Why bother getting any better if FI will just come along and compensate for your bad decision with a huge dividend increase?
And in the past, if something bad happened FI would take that bad bet off your hands for a small spread anyway. Not anymore – you have to sell that bad bet to another trader and they won’t be anywhere near as generous as FI used to be.
These old, lazy habits of holding overpriced players too long are going to be punished in the world of the Matching Engine. People who cannot adapt will simply end up giving a big chunk of their money to better traders. They will then get frustrated and have to sell up what they can and leave the platform.
This has always been inevitable once FI matured. And the Matching Engine is going to speed that process up a hell of a lot.
In short, when FI introduced the Matching Engine, they took the training wheels off the market.
I don’t think I’ve ever seen so much value out there but it’s on us to find it – we shouldn’t wait for FI to hand it to us.
We’re out of nursery. We’re in Big School now.
The "Bottom" of the Market
Cheap players have had a particularly rough ride from the Matching Engine. But this isn’t always because cheap players are bad – it reflects trader nervousness about any player that seems unfashionable at the moment.
But if that player is good enough they will eventually prove it and the collective view on them will change.
A common narrative on Friday night was “this does nothing for the bottom of the market and everything for the top“.
This isn’t quite it.
The dividing line between winners and losers is not just price. It’s quality and price.
If you have a cheap, high quality player at under £1.50 this dividend increase is fantastic news. They were great value before. They are even better value now.
If you had a high quality player at a reasonable price, maybe the £2-5 range (not including any bonus value for media etc) it’s good for you too.
Potentially very good for you if your players have Champions League/Europa League involvement and have high average scores to go with their high peak scores.
If you had a poor quality player that was never likely to win anything anyway yes, it is very bad news for you. Not because that player particularly changed in value they haven’t really – a 30% increase on nothing is still nothing.
But because there is now a greater incentive to stop holding bad players and push your money towards better ones. This is as it should be.
This is another lesson that the Matching Engine is going to drum into traders again and again.
In a world where you will always need someone else to buy your bet once you are done – we will have to stop making bad bets.
We can and should shop in the bargain basement but highly selectively. You have to be pretty damn sure through good research that you know something very few other people do.
We should stop holding bad players and expecting someone else to take them off our hands for a good price. FI used to do this and it’s why this bad habit could form – but they won’t do that anymore.
And other traders almost never will either unless they are getting a rock bottom price.
Why I think smaller was better on reflection
Bearing in mind the above – it makes me think how unhealthy a 100% dividend increase would have been right now.
Obviously as existing traders we always want an immediate easy gain.
But it would have powered the overpriced players even further, further skewing the market. And further reinforcing the idea that you can keep getting away with bad decisions and FI will vindicate you eventually.
Yes, the other players would have caught up with them later. The top does drag up the rest.
But overall I think given the extreme value that is out there it is no bad thing whatsoever to put the emphasis on us as traders to go and find it.
People are eventually going to have to learn to profit without just riding the coat tails of massive dividend increases anyway so why keep kicking the can down that road?
We’re also being more than a little spoilt with sniffing at a 30%+ increase. Any other investors in any other form of trading I can think of would rip your arm off for that.
It also creates scope for further increases later when the timing is right. Adam Cole has not signed in blood that there will be only one increase per year.
And the subtle phrasing of the announcement leaves wiggle room for this:
“We’ll update the Dividend Table annually and based on market growth“
The addition of and leaves it open. If FI deem a dividend increase is needed because value in the market is exhausted I would fully expect them to do it.
But we aren’t even close. There is so much value out there it is stunning.
The main problem I think most of us have is the growing pains of the Matching Engine plus it being close to the off-season making it currently difficult to sell anything.
That is the real frustration we have right now.
Needing a huge dividend increase to create value is just not a problem we have unless you hold too many shares in overpriced players.
I expect the selling issue to settle down over the next few months and the “offer” side of the Matching Engine cannot come soon enough to help that along.
I can laugh about it. But this is the element of the announcement that still leaves me a bit nonplussed.
It may be an opportunity to realise a long term goal of fixing the slight oddity that nobody ever cared about goalkeepers.
But who really cared about that? When was the last time you heard anyone say “That Saturday Gold Day was alright. But it’s a shame about the keepers.”
Absolutely nobody cared about this. Ok there were always a few keeper fetishists out there but in tiny numbers.
And the timing? Pretty dire.
Nobody needed this to happen and it really amplified the impact of the lower than expected dividend increase.
Most notable early on is that Goalkeepers absorbed all of that immediate dumb money that people spend after the announcement.
Without the Goalkeeper change that money would have likely piled into Team of the Month players – popular and high quality performance picks.
That could have gotten them some momentum and eased a lot of people’s anxiety.
And nobody really benefited other than the handful of idiots/geniuses (I can’t quite work out what they are) who put big bets on goalkeepers before the announcement.
As well as a few who got lucky in the “fastest finger and working app first” game.
And second of all – the dividends that will now go to goalkeepers could have been used to boost the payouts further in the existing categories – i.e another 1p on the Gold Day wins or similar.
That to me would have been a far better use of the cash.
I may be wrong. FI may be sitting on customer research that tells them they’d have a ton more customers if goalkeepers were more relevant.
But I can’t see it.
Ah well. Some people will enjoy finding some value here and there will be some. The payouts may be small but the competition is weak in this category as there are so few of them.
I don’t mind the change but I am surprised/nonplussed with the timing.
Team of the Month
This is great. Love the addition and it further rewards some high quality players.
And will lessen that blow/disappointment of your player being pipped to the dividend by a point or missing out just because they didn’t get the matchwinner. That decent score will still count for something.
And it’s another exciting thing to watch as the month progresses and then concludes.
It’s fantastic news for the “Core” player I describe in Key Strategy. High quality and with the additional chances to win that the CL/Europa bring.
There is the multiplier as well which should be a cheat code for these players in CL/Europa league months.
“the Champions League and Europa League Match Day score multiplier will be applied to Team of the Month match scores.”
The boosted CL/Europa scores will count towards Team of the Month for the players who get them.
This is good for these high quality players not just because they score more points in these games but they have more chances to put up their 3 biggest scores too.
5 rolls of the dice rather than 3 for example. And particularly in the early stages they are often facing weak opposition and can hammer them 5-0.
So we are going to see big CL/Europa players dominating TOTM. They tend to be the better players anyway and they will have more chances to win.
If I pick good players it’s like I am rolling a dice that goes from 1-9 and have 5 rolls where as someone with bad players has a normal 1-6 dice and can only roll it 3 times. Whose going to win almost all the time?
We will see players without European games winning TOTM occasionally in months with CL/Europa league in play – but not very often. It is just not a fair contest at all.