Youth has become a huge part of football Index in the past year or so and Dortmund’s Jadon Sancho has definitely played a huge part in that. Of course, good young players aren’t a new thing in Europe but the recent surge in home grown youth on Football Index can certainly be linked to Sancho’s rise.
You can see from the below graphic that as well as the general growth of Football Index, the rise of Jadon Sancho through his incredible season last year and inclusion in the England set up has really raised the ceiling for the young English based attacking players.
You can also see from the rises that some serious cash has been made by traders owning these players, but what will happen next and where will it stop are definitely pressing questions for many traders. I want to use this article to discuss some of the players above and how logical their prices are, not to pick on individuals but to emphasise some of the points worth thinking about when deciding to buy any youth player. Also I want to discuss the general youth trend, how we got here and what might happen next.
Firstly, every one of the above players, although they currently seem to be considered one and the same, are actually in very different circumstances, they all have their own probability of success and should all be considered a potential buy in their own right, however that clearly isn’t happening at the minute. We’ve seen such a trend of “comparable” young players rising as others do and usually the further down the reaction chain the players get, the more they’re scraping the barrel a bit. A good example of this can be seen below by the movement of arsenal youth players over the last couple of months.
Let's first look at some of the players mentioned above and discuss whether their prices are logical or not.
The Benchmark- logical
Jadon Sancho, the original youth prodigy of recent times on Football Index, he’s currently priced at £5.40 making him the 4th highest priced player on the platform. Had it not been for this youth trend you may think it’s a bit much to be over sixty pence more than Messi and Salah who returned £1.34 and £0.62 in dividends last year respectively compared to Sancho’s nine pence. However, I think Sancho is a player where the “future dividends” argument is very valid. Last season he played in everyone one of Dortmund’s league games, scoring 12 and assisting 14.
At just 19 he clearly has incredible potential and you can almost guarantee some big events in his career. A key place in England’s team in the Euro’s next year, for example and rumours of a big Premier League move. All of which will increase his value and he’s clearly got dividend potential which makes him the perfect benchmark of what you want from a “youth” player on Football Index. His price increasing further as we head towards these events is almost certain and of course winning a few dividends may also jump start this rise.
You can see he stacks up pretty well among the highest priced under 20's on the index, which are shown below.
The prodigy- illogical
Mason Greenwood is now the second most expensive player to fit into this category of player at over £4.40 making him the 10th most expensive player on the platform, This one is less easy to understand. Okay, at 17 years old he appears to have potential, he scored against Inter last week in a friendly and has had a decent amount of preseason game time. The key there is the word preseason. And yes, OGS has made comments suggesting he’ll get some game time next season which is a positive thing for holders but even if Lukaku leaves and no replacement is brought in (probably not that likely?), he’ll still be behind Rashford and probably Martial and even Sanchez for the role of sole striker.
The most interesting part of this is that he’s now more expensive than Rashford who is literally doing all that Greenwood can hope to achieve. The odds of Greenwood actually making it to Rashford’s position are extremely high, nevermind Greenwood surpassing him. If you think back to when Rashford burst onto the scene in that Europa League performance followed by the Arsenal double in the same week and then consider that timeline was lagged two years and he was making that debut today. If in two years from now he was in the position he’s actually in now he’s probably be top of the Index at £8 because of this craze but since it happened two years ago and he’s now the ripe old age of 21 people would apparently own someone who might one day make it to that level. Very Interesting.
Personally I think the novelty will wear off and if he becomes a bit part this season rather than scoring every time he comes on that he’ll eventually drop. Sure he’ll get a rise for his first Prem start at some point and for his first goal but once they’re out the way you can guarantee people will want to move money elsewhere if he’s not offering anything else that’s actually dividend-worthy. This is exactly what happened with Rashford, and yes he’s now up there as one of the most expensive players too but he had to fall back into line and prove himself for that to happen it wasn’t just one smooth rocket ride.
Definitely one of the most logical rises we saw during the youth trend and in the run up to the u21 World Cup. So much so that he almost has all of the attributes many look for in players not considered to be young. Not only does he play constantly but he's a big part of the Leicester team, including a set piece taker. He’s one of not too many from that u21 team that will certainly make the step into the first team in the next set of internationals which is always a nice way into the media and finally, although he’s not playing for a big team or in Europe, that can have its benefits because it sets him up nicely for a big move in the next couple of seasons, or at least speculation of one as we’ve already seen this summer. His stats for this season can be seen below and they're pretty impressive. His freekick effectiveness is definitely a standout.
Nelson et al - logical (maybe?!)
Nelson had a pretty impressive season last year at Hoffenheim and is probably one of the better, more established of the bunch. Critical to transitioning from the “youth” category into a well established player that still has value will be game time and with Arsenal having the Europa League to compete in, the chances of that are significantly increased. This will be the same for the likes of Willock and Saka, if they can get on the team sheet of course. You kind of expect a premium on some of these players because they’re English and have that possible pathway to dividends and further capital appreciation but again, you do have to look at their prices compared to their current position holders who actually win dividends and question it a little. Golden boot winner PEA £1.57, yet to start above professional game Saka £1.90?
How did we get here?
Interestingly, a lot of these holds are hugely built off the premise that they will perform in the future, for some that is a very distant future but many holders seem comfortable with that. In fact, I think it is often relied upon. Many seem to like the idea of these players hardly getting game time because that way there’s no real proof as to whether they’re actually any good or not, making it easy for holders to just say “he’s one for the future” and dismiss any argument against them. It’s a simplistic trading tactic which appeals to people who don’t want to spend too much time on the index or don’t want to get bogged down in the complexities. Often, as a new trader it appears to be the natural first thought of “who’s the next star?” and of course when you’re new, you don’t have much of a concept of value or the pricing so many are happy to buy because they expect them to go up in the future. No matter how you arrived at this strategy, it’s certainly been a profitable one, and I don’t think it’s going to disappear any time soon.
What happens next?
I think one thing people need to consider is that will happen as we get closer to the start of the season. A lot of money has gone into these players, much more than ever before and a lot of it was based simply of scoring or sometimes even just playing in friendly games. The reality for many of these players is that this is the majority of the game time they’ll get next year. That does not apply to all young players, of course and I think the ones who get regular minutes and actually impress have a much higher chance of maintaining a positive trajectory, but those who get found out or don’t play at all could be in trouble.
The thing is we’re yet to see too much of a drop in these players, that’s because many who bought them over the last year or so did so with the intention to “buy and hold” and that has worked fantastically for them. The reason this time may be different though, is that significant money has come into these players from trader who wouldn’t usually buy these players and that simply saw an opportunity to make a quick profit off the latest trend who will be looking to exit these positions before the season starts. It will come down to the reaction of those who are supposedly holding long term as to how much damage is done. If they really do “top up cheaper” then damage may be minimal but if we see a few begin to doubt their position as the green disappears we could see bigger preoccupations , amplified by the fact that many people will have no justification for owning these players other than “they will go up” and “they’re young.” Overall though, I think eventually we will see the real talent maintain prices and those who have risen off comparison really fall back. Definitely one to keep an eye on and definitely a trend that will still have money in it.
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