What Are Football Stock Markets?
A football stock market is essentially the same as a traditional stock market, where you are betting on the performance of an entity – that it will either increase or decrease in value, and your initial investment either goes up or down.
Football stock markets first came into public consciousness in 2015, when Football Index was launched, which, for all intents and purposes appeared to be a revolutionary and innovative initiative, designed to shake up the football industry, but which has since gone into administration.
The platform allowed those involved to essentially make investments in a player; betting on whether their performance would increase over time and as such represent, in theory, a monetary return.
For customers of Football Index, this worked on the premise that they would invest in players that they believed were undervalued, where they could see the potential to increase their initial investment.
Perhaps the most important factor associated with Football Index was dividends, which are basically indicators of what drives the value of players. There were two main types of dividends associated with Football Index.
These were generated by the media focusing the spotlight on specific players and as such, Football Index had an innovative aggregator that pulled in every media source on the internet about a player which then helped to determine how their media dividend would be valued.
The software used positive sentiment analysis to ascertain the particular tone of an article about a player and would derive the value accordingly, using statistics. Media dividends could be generated on a daily basis, even if there wasn’t a match being played and was based on the attention that a player received, which in turn influenced their value.
Match Day Dividends
Arguably the most relevant in terms of the direct impact that this would have on a player’s value, these were based on how a player would perform during a specific football match. Dividends were awarded for a particular action that a player would contribute towards on the pitch, such as scoring a goal, making an assist, recovering the ball, successful dribbles, clearances, blocked shots, and more.
In addition, there were actions that could be detrimental to a player’s value and as a result, have a negative effect on their dividend. For example, this could be conceding a goal or a penalty, receiving a booking or being dismissed, missing a penalty, scoring an own goal, and being offside.
How Is This Similar To Fantasy Football?
There is quite a lot of crossover between football indices and fantasy football, as you may have already realised, if you are somewhat of an enthusiast. For example, the indicators for which influence the value of dividends in football stock markets are essentially the same as in fantasy football.
This includes scoring a goal, making an assist, conceding a goal, receiving a booking or dismissal, scoring, conceding or missing a penalty, and so on. Similarly, the statistics work the same in terms of how a value is defined, using a set formula that has defined metrics.
What Happened To Football Index?
Despite initially receiving a considerable amount of interest when it first launched, there were glaring gaps in the business model of Football Index, some of which are being held responsible for its failure.
Staggeringly, the platform was not regulated by the FCA (Financial Conduct Authority), and, as a result, was the subject of much criticism from a number of investment banks and hedge funds.
Following its drop into insolvency, which saw customers lose in excess of £100 million, this has led to the UK government launching an investigation into its business model and professional conduct.
A government spokesperson said recently:
“This case further reinforces the need for our comprehensive review of gambling laws.
“This independent investigation into Football Index will feed into that work and if we need to make changes to regulation to protect people, we will.”
The lack of regulation clearly had a part to play in its decline and there has been a substantial amount of criticism about how the business operated, despite on the face of it, appearing to have a clever working model.
Are There Other Football Stock Markets?
Merely two weeks after the suspension of Football Index, another competitor, Footstock has turned over its license to the UK Gambling Commission. This operated in a similar fashion to its competitor, though used football playing cards, that was reminiscent of Panini.
A German company, the Footstock methodology saw players ranked into five categories in which they could earn customers a return on investment. The player values were essentially the same as the fantasy football model, while customers could trade and swap player cards, based on their performance, with the best performing becoming rarer.
Does This Spell The End For Football Stock Markets?
Like with anything, it is often timing that can determine the success of a business or a new idea and it could well be that this concept was introduced before its time.
What is clear, is that if new models were to be introduced into the market, then there needs to be tighter regulation in place and potentially underwriters involved to ensure that customer’s money is protected against any financial mismanagement of a company.