FI feels in limbo this week as we eagerly anticipate FI’s announcement on the replacement of IPD.

It’s about more than the replacement of IPD, though. We have enough ways to win and the value proposition is generous enough even as things stand. 

What we’re really looking for is an announcement that logically fits together and tells a good story. It’s got to signal that FI have a confident, clear direction for the product that the vast majority of traders can get behind and take heart from.

Confidence is the real problem FI has right now. When you strip it back, it’s not a lack of dividends. It’s not platform problems although they do exist. It’s confidence

If confidence rebounds, so will prices. And it could happen fast. FI can turn this situation around with some relatively straight forward changes that settle people’s nerves and give people cause for optimism.

Let’s hope they get this one right.

We also had a certain Guardian article this weekend which is more of an distraction than anything game changing. The issue with this, and the whole campaign from the “Pro Betfair Traders” is that it distracts from the discussions that need to take place. 

Some of what they say is just misinterpretation due to their lack of detailed knowledge on the topic. Some of it unfortunately just seems to be the peddling of deliberate falsehoods. And any reasonable points made in the original video, and there are some, are now just lost in all the noise.

We all know that there are problems and risks on the platform. FI has no shortage of people who have been discussing issues like the viability of the FI business model for years. 

It is no bad thing that those issues are discussed, they should be. But any content creator worth a damn has an obligation to make sure that they are highlighting the genuine risks, and also presenting it alongside the potential positive outcomes too. That’s how someone already on FI or thinking of joining FI can make up their mind sensibly.

Let’s look at the market behaviour as usual and recap on strategy for dealing with the announcement. But I’m going to keep this one short today as I’m expecting to do a more detailed and probably Live State of the Market once any announcement is made.

That should be by next week at the latest, given the commitment to have any new mechanic in place before IPD ends on the 7th February.

Market Analysis

A host of popular players have dropped on the Blue Button in the last week, often without any obvious relevance to the real ability or quality of that player. 

Looking down the list I can pick out Kane. Robertson. Mahrez. Rashford. de Paul. Son. Ousmane Dembelé. Dybala. TAA. All decent players that can have a bright future and could rebound very strongly if and when the market does in general. 

There have also been a few rises for players who perform well i.e Mount and Insigne. But often short lived.

This is a problem at the moment – we look at Blue Button prices out of habit – but they are just telling us so very little about what is actually going on right now. 

Actually, it’s the Red Button that gives a better indicator of market health. 

If you are buying Mount, Kane, Robertson, de Paul, Son, Dybala or any of these on that low Red Button price, you might be doing very well indeed and seeing incredible price rises when they perform well on a match day.

Think of the profit you could have made on Stones, not even counting the monstrous dividend which is returned on a player that cheap? 

Volatile markets like this present huge opportunities when we get it right. And it’s been a week where we’ve been getting it right often. 

A lot of quality players have won this week from Scouting and Explosion Imminent and that is bringing rich rewards. De Bruyne twice. Zinchenko. Alberto. Yedder. Mount. Stones. Insigne. Even Saka has been coming out of Scouting well recently after a long time on my naughty list. The gangs all here.

Dividends these days are no joke. In the past they were almost a sideshow to getting rapid capital appreciation. For years, prices were too high and dividends were too low. We’re now in the opposite situation. And that is a force that inevitably pushes people towards players who actually win dividends rather than the garbage.

In theory, we should pay very little attention to the Blue Button price right now. It’s unreliable and not even reflective of general opinion or sentiment. 

However this is a key problem FI have that I’ve hammered at a few times recently – the Blue Button still dictates how people feel. The way this is calculated needs to change as discussed in previous articles so that it is more reflective of overall sentiment (not to mention real value) rather than just one large or a few medium sized traders.

Yet it’s hard to ignore the Blue Button even though we know it’s so volatile. It is the single thing most people look at to tell them how well the market is doing. Yet it’s a very poor measure of market health. It’s more a measure of how the most angry or stressed or manipulative person feels.

Interestingly, real values by now, and probably the general judgement of value, are probably starting to be reflected by the Average Offer Price much more than the Blue Button. Perhaps people have got bored of gaming the AOP or realised it doesn’t work. This was the original intent of the AOP, after all. But still, I think because it started out life being heavily gamed traders never came to trust it. And still don’t.

One easy fix for this is for FI to bring down the ceiling of the AOP so that people cannot set artificially high prices that pump it up. Then people could start having confidence in the AOP where as right now they ignore it because it’s not seen as credible. Restore credibility in that number and people might start looking at something other than the volatile Blue Button when deciding how well the market is doing.

If however we look at the Red Button and spreads – the picture isn’t so bad. Most top 200 players who deserve a Red Button price have one. And most spreads are acceptable if not exactly tight, certainly amongst the most popular players.

If we didn’t know prices used to be (and should be) a lot higher for strong players, you’d look at it and see real opportunity and some acceptable if not brilliant liquidity.

That’s an encouraging sign and a decent base to build from if FI can get the next steps right.

The New Mechanic

I covered my thoughts on what this might be and how to prepare for it in last week’s State of the Market, so I won’t repeat that here. My full analysis of all the credible options I can think of is here.

However I want to reinforce one point I am looking for in the announcement, discuss “Team of the Week” which has gained traction on social media, and quickly recap on strategy too.

How many relevant players should FI have?

One thing which I really hope FI understand is that the trader base is just not big enough yet to provide liquidity amongst a very wide group of players. 

I suspect this is why they realised IPD needed to go, along with the short term behaviour it encouraged. Though they can’t openly admit to just abandoning a big section of the market for obvious reasons. 

It’s feasible for traders to provide liquidity organically for 200-300 top players of the big 5 leagues and then maybe limited liquidity in 300-400 penny stock types of potential future stars or one hit wonders. FI just won’t handle more than that, at least not without a few seasons of growth. And yes, that leaves not far off 3,000 fringe players with pretty much no value at all

On social media, some people’s measure of success for a new mechanic seems to be a need for the new mechanic to specifically bring in a very wide bunch of players, just as IPD did. This fundamentally overlooks one of the main problems that FI has in an Order Book system.

If FI make a very wide group of players relevant again with a new mechanic – it will be a sign that they bumbled into removing IPD as a big part of improving liquidity rather than planned it. That would be very troubling.

Clearly, people who have a lot of fringe players are going to want that. But that would be good for them, and bad for the platform longer term.

One of the most important parts of the announcement to me is not so much exactly what the win mechanic is. It’s that it encourages a market that is narrow and deep rather than wide and shallow. 

Fundamentally, that is the only way FI at this stage can realistically provide liquidity. And further, 5 leagues is intimidating to new users as it is. There a host of reasons why narrowing the pool to hundreds not thousands to simplify matters is a good thing for the long term success of the product. It is just bad if you currently hold fringe players. 

FI have a difficult choice to make here as they will be forced to upset a significant group of traders who hold some of the very obscure fringe players. But there really is only one option that makes any kind of sense for the health of the platform longer term.

If FI want to get this right, I think they will have to pick a side rather than trying to please everyone. 

By removing IPD they pretty much already have – they’ve got to double down on that direction that favours holds of at least days, weeks and months rather than minutes and hours. Which is in line with the whole original intent of the product.

If they try to tack back to please the very short term minded crowd – they may well leave us wondering who the platform is actually for.

Team of the Week

This is one option for replacement of IPD I didn’t specifically discuss last week. And it seems to have some supporters on social media in recent days.

I don’t think TOTW would be a bad thing, but I’m not in favour myself.

The positive is that it makes use of the existing scoring system. So is relatively simple and passive. 

I’m not convinced it’s a particularly “fun” mechanic. It will end up often duplicating winners from a match day or Team of the Month. With a bit more variance as any old mug can have a good week or just get two fixtures in a short space of time.

Team of the Month smoothes it out a bit more so that the real quality gets up there.

Team of the Week would be quite interesting in a CL/Europa week, since involved players would be getting boosted scores. So again, it will duplicate winners most likely as they will perform strongly in match day dividends and TOTM too.

This could be quite punishing for FI and great for traders. If a popular player just keeps stacking wins on top of wins for the same performances (i.e winning match day and Team of the Week and Team of the Month) that could be expensive/rewarding depending on which side of that equation you are on!

I just don’t think it really adds much to the match day experience and it will primarily be about what games fall on which days rather than which footballer performed the best. 

I’d prefer a strengthened TOTM with tiered PB or threshhold scoring with a reasonably high bar of say 200 or at least 175.

TOTW would not be a terrible thing. But it’s just not something I’d pick and there are better options on the table that don’t duplicate wins, are better at rewarding genuinely good performances, and are less dependant on the fortune of the fixture calendars.

We also don’t want too many ways to win. Everytime we create something new like TOTW we split the dividend pool further and create yet one more thing a new user needs to understand. 

If we shoehorn in TOTW then TOTM or tiered/threshhold scoring would obviously pay out less. I’d make the case for keeping things as simple and focused as possible.

Strategy Recap

As per my fuller thoughts on this last week – I think despite all the confusion and excitement and wild expectations – we are best served by keeping things simple ourselves.

We already have win mechanics that more than generously reward current high quality players many of whom are available for well under their true value.

I would strongly suspect that any new mechanic will be based on the existing scoring system, and therefore the chances of the best performance players being rewarded by a new mechanic are very high. 

So we can buy players that we know are very likely to be great value as things stand. And put ourselves on the likely right side of any new win mechanic at the same time.

For this reason, I am not adopting a “wait and see” approach and will be getting money in my balance into the premium/core end of the market as discussed.

In the event of a “wildcard” scenario where FI do something we don’t expect, this approach still leaves us with players who suit the existing win mechanics. So we shouldn’t end up too unhappy even if it doesn’t fall our way.

We could speculate on FI doing something unexpected. Various theories will float around on social media in the build up. 

We could for example build a case as to why FI will want to make mediocre or worse former “IPD players” relevant again and buy them all for a rock bottom current 20-30p perhaps, hoping you can then sell for 80p for a huge profit.

But why take that risk? There is a low chance of being right. And then you are stuck with players you may never shift if you are wrong. And if you are right… well any mechanic that benefits mediocre players probably benefits good players too. So you won’t actually win that much more than someone who didn’t really take a huge risk at all.

There are times when things are very complicated and a variety of approaches could be considered. 

The current FI situation is complicated to get our heads round. Yet when considering what we actually do about it – there is in my view only one optimal option that offers the chance of a significant gain without an unacceptable risk.

Final Thought

We should have an interesting week ahead and we had an interesting weekend too.

The Guardian article, planted by Caan Berry who has quickly descended from “Expert Pro Betfair Trader” to FI pantomine villain, caused quite a stir. But it was not as bad as it could have been.

This is probably the most negative bit of “bombshell” press that FI has ever received yet it’s market impact was quite limited.

But things like this do have an impact, particularly for those just glancing over it, or if they are already feeling down about the situation.

I am not really bothered by things like this though. It’s just noise at the end of the day – what really matters is whether FI can actually get things right in the weeks and months ahead. 

There is certainly no shortage of FI users who love the platform and want it to succeed. One of the most interesting aspects of the drama of the last month is that it has caused a lot of people to loudly rally round the product. 

I think when the “Pro Betfair Traders” started this campaign to kick FI whilst it’s down, for whatever reasons they have, it’s actually been quite difficult for them and caused them no small amount of grief.

What they found is a strong community that has intelligent people well capable of shooting down the false claims. One thing that people eventually develop when using FI for a length of time is the ability to recognise when people are talking nonsense!

Lots of people try to generate content for FI but the community is quite good at bouncing out the poor quality stuff, and you don’t survive for any length of time by peddling garbage. Caan Berry’s stuff may frighten the inexperienced or reactionary but informed people see through it easily.

It’s amusing actually that in an FI community that can be quite factional, I’ve never seen more community spirit than the last week! Is there anything better at uniting a group other than someone that everyone finds irritating?

The thing is – there are problems and risks on FI. We should never gloss over that and they should be aired in public. But we do want a balanced discussion based on fact and rational thought, not shock jock campaigns that misinform people and actively contribute to people losing money for no good reason. That doesn’t help anyone.

In the upcoming announcement it is less about exactly what it is. It is more about confidence and the direction they set for the platform. Are they creating incentives that facilitate a healthy market, that isn’t so wide that creating enough liquidity is impossible?

If FI can convince the majority of traders that they have a sustainable platform and a clear plan then prices for quality players can rebound back towards true value within a very short space of time. The same volatile mechanics that make prices drop quickly can make them rise quickly too.

Look out for a Live Blog from me whenever FI drop the announcement, that should be an interesting one. 

The big question on my mind is this – the value proposition is currently more generous than ever. Can FI really afford to knock it out of the park with further generosity? Are we actually not better served by a little caution if that gives us a more stable FI?

Or is this a situation where FI can’t afford not to be generous. They took away IPD so do they need to redistribute it generously to restore the feel good factor and power the product on? And does that open up risks for them and therefore us if it doesn’t work? 

A tricky balance and I am sure that discussion is going on inside FI towers. 

We may end up with a slightly underwhelming sum of money behind any changes. Traders on social media will be pumping up those expectations. And that can mean FI’s announcement can fall flat despite actually being reasonably generous. It’s happened before.

I could actually understand a financially prudent approach in these circumstances. 

What I’ll really struggle with however is if the changes don’t provide a clear direction for the platform. It’s all got to come together in a sensible story about why IPD was removed, why what comes next is better, and where FI is going next.

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