Football Index Share Split Dissected

Monday 18th March was always going to be a pivotal moment on Football Index that helped shape the future of the platform and thankfully, I think I speak for most of us when I say it went as well as we all had hoped. Sure, not everyone was 100% satisfied, but in the main, the reaction was positive.

In case you’ve been stuck under a rock for the last week or so, the basics of what happened are that we found out that the share split factor will be three and that the new dividend structure after the split will see substantial increases in the Football Index dividends relative to the current structure, along with a couple of other nuggets of information which I will also touch on below.

So shares will be splitting by three, which the below image explains, but that was not really the part people were concerned with. It was all about the dividends...

Dividend Changes 

The biggest news to come from the announcement was the increase of all dividends during the share split transition. Some statistics on this:

-    Average of 28% increase across the three types of Football Index dividends.

-    The weighting of Match Day and Media dividends was relatively unchanged, with Match Day dividends increasing their weighting from 61% to 62%.

-    In-Play dividends saw the biggest increase with a 100% increase on average across the four types.

-    Single Match Days saw the highest increase of dividends with a 50% increase.

You can see the full Football Index dividend structure (valid from 26/03/19) below:

In-play dividends appear to have increased substantially more than other types but this is an instance of percentages obscuring the true monetary values. For example, positional wins on treble match days are only up 25%, but that is a 3p increase per position compared to a 2p per assist increase which resulted in a 200% increase. Of course, a player is much more likely to get an assist than win a treble match day dividend, and of course, a player could score or assist multiple times in one day so the increase in in-play dividends is definitely a significant one.

How did the market react? 

The market was evidently very happy with the news. We saw some huge rises and the footie climbed 2182 points on Monday. The highest I can recall for a day without a deposit bonus. 

The biggest risers can be seen below with Lionel Messi the clear stand-out performer. After some ridiculously good returns and Match Day scores over the last month or so, topped off with a hat-trick against Betis at the weekend, we saw people ignoring the "he's too old" argument once extra Match Day dividends were announced. It will be interesting to see what happens to that price heading towards the summer, with a lot riding on the Champions League campaign.

As you can see, a lot of the increases came from players who are renowned for their Match Day scores (Messi, Neymar, James Rodriguez) or players who are expected to have good chances of winning in the remainder of the season because of their fixtures, especially those still in Europe (Van Dijk, Mane, Sterling, Hazard).

You can also see a lot of the players who saw the largest increases were the premium priced players and this is demonstrated more below. Obviously, it is key to remember this is a percentage graph, which therefore makes the lower priced players appear to be moving in price more, but I think the key here is looking at the more expensive players, 7/11 players above £10 increased, several of them substantially so. 11/17 above £8 and so on.

When you think about the sheer amount of cash needed to move those prices that much, it really emphasises the confidence that this announcement instilled in users. 

Finally, it is worth looking at the distribution of investment by position. Goalkeepers got a nice rise again since they had their in-play dividends increased by 50% and because a lot of them are just simply so cheap! Forwards were also increased across the board, again most likely related to the change in in-play-dividends as well as the likes of Messi, Neymar and Griezmann seeing rises due to the Match Day dividend increase. 

The split in defenders is interesting. Many purchased full-backs because of the large increase in assist bonuses whilst nothing really fell in the favour of defenders apart from those who have a high goal threat, hence the Virgil Van Dijk and Ramos rises. Make what you will of the rest of the positions.

Price movements 

Something which many traders were wanting to know was how many shares it would require to buy or sell in order to move a player’s price after the split.

At the moment, it is around 100 shares to move 1p and we have now had it confirmed that it will be roughly 300 shares after the split. This sounds logical, right? The shares are being split by three so you should multiply the number required to move a price by three and everything stays the same, correct? Well, not exactly. There is a reason many traders are so excited by this. It comes down to increased volatility and increased profits when prices move and below I am going to try and explain why…

Imagine Neymar is £21 right now and you own 100 of him. When someone else spends £2,100 on Neymar, they get 100 shares too and his price moves up 1p. In your portfolio, your profit is 100 x 1p = £1.

After the share split, you now have 300 shares at £7. Someone spends the same £2100 on Neymar and gets 300 shares, causing his price to increase 1p.

In your portfolio, your profit is 300 x 1p= £3. Therefore you’ve made three times the profit from the same amount of money being put into a player you own.

This doesn’t just apply to players you own before the split either. Imagine you are the person buying the 300 shares in the example above since buy max is also confirmed to be 300, you can buy your 300 shares at £7 and that caused the price to increase 1p which equates to £3 profit.

It is, of course, worth noting that this will also apply to prices falling too. So in effect, the change makes your profit more volatile.

Other Things To Note

There were a few other key pieces of information that were announced on Monday which went under the radar due to the dividend excitement.

The first of which is scrapping the distinction of Top 200 and The Squad starting in the 2019/20 season. This means that anyone will be able to win the media dividends regardless of their price. The effect of this on players who currently win a lot of media is unknown right now, you have to think they may lose out on a couple more days than they currently win but nothing too major as to reduce their value. The announcement stated that 7% of media dividends would have been won by squad members had the differentiation not been in place now but fails to mention a sample size. This could become valuable when a cheap player scores a goal-winning game in a big televised match for example.

This could also make transfer targets more valuable regardless of their price since they could now win the dividends regardless of their rank. However, that will not be the case over the summer since this change isn’t happening until next season. That’s good news for the big targets this summer, in theory at least.

The announcement also stated that “there are plans for a special media dividend pay-out increase over the summer.” This could be HUGE. Transfer targets are already coming into focus and they will definitely be the main movers in summer but with the chance of extra media payments, they will be even more valuable which will more than likely result in larger rises on breaking news and more opportunities to trade and profit!

The date to look out for this announcement is 15/04/2019.

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