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Lots of reaction yesterday to the latest machinations from @footballindex. Having slept on it, I thought I would share my own reflections via a special one-off #footballindex Saturday thread.
Firstly, I completely understand the upset and anger of so many traders to the announcement that IPDs are to be scrapped with only 30 days’ notice.
There’s so much that was wrong about the way this change was communicated; the timing of it and the level of regard it shows for customers.
I wanted to get that out of the way first because despite feeling strongly about all of that and the further evidence it provides that @footballindex are not a quality-driven, customer focused organisation, I vehemently believe that overall here they have done the right thing.
This is not about whether IPDs are “good” or “bad”. To distil this topic into such a simplistic view is I think to miss the point - IPDs cannot be split out and judged seperately. This must be seen through the lens of where all of #footballindex is today in an orderbook world.
As I said on the @FIGuide ExtraCast last week, a low price environment is the disease which is slowly killing football index. With prices this low, there is no minting revenue, commissions are suppressed and short term trading mentality sets in.
We also cannot pretend there hasn't been collusion between traders to refresh for everlasting IPDs. I say this without judgement, for many it became the only way to recoup their paper losses. But this has lead to FI’s ongoing liabilities massively exceeding their revenues.
Again, to be clear, IPDs are not the underlying cause of the problem. But with low prices throughout the market, IPD payouts are the main symptom which would have strangled FI to the point of extinction in time.
Usually, I would argue to treat the cause rather than the symptom, but short termism has set in so strongly that has now become impossible. It will also take months / years to get prices back to ATH – FI may not survive this long with the money IPDs are taking off the books.
From a business sustainability perspective I therefore believe that what FI have done is absolutely correct. They have now created a big chance to set us on a more sensible path where this product actually works and real world football events are reflected in market dynamics.
There is something larger at play here though which I also wanted to touch on. For the first time in a very long time I am starting to feel more faith for FI as a company and its management.
Yesterday was the first public sign of admission that they have a serious problem that is going to require brave and significant business decisions to get out of. We are now beyond the point where short term promos are going to get us through difficult patches.
Arguably, the plethora of these has only served to make things worse throughout the Autumn. I look at the statement yesterday and see new leadership which has acknowledged an existential threat and is setting a new strategy to get out of this mess.
Yes, I would have liked to know what that IPD cash is going to be used on as an alternative. As a comms strategy, it was probably sensible to save the good news for another day rather than see it drowned out by the backlash to the IPD removal.
But what comes next – the next 29 days – genuinely has the chance to be a new chapter for FI.
An opportunity to realign the product to the core underlying concept that rewards knowledge, incentivises a long term mindset and provides underlying yield value is the open goal staring @MikeB_FI in the face.
As a new CEO, he’s done the hard bit of grasping the nettle and executing an unpopular but essential decision. Now for the critical next step – convert the opportunity into meaningful results.
