A surprise development over the weekend caused customer discontent at Football Index after the company announced it would be slashing player dividend payouts just days after it placed shares in new players.
Announcement Caught Customers by Surprise
The licensed by the UK Gambling Commission company announced Friday it was giving 28 days’ with regards to a decision to cut down on dividends, limiting a previous maximum of 14p to a mere 1p-2p payouts.
Players at the platform buy and sell “shares” in football players, effectively betting on their price movement over a period of 3 years, while based on media popularity of a player and on-field performances these shares accrue dividends.
Following the announcement from Football Index, trading on the platform was suspended until Saturday morning which led a series of price crashes as the value of players on the platform sank. The company justified the decision with the “long-term sustainability” of the business.
“While we take the concerns of our customers very seriously, we want to stress that our decisions have been guided by a desire to help customers achieve the best outcomes and receive the best possible returns, while also having the long-term sustainability of the business front-of-mind.”
Statement, Football Index
Infuriated customers lashed out on social media and posted one-star reviews of Football Index on Trustpilot, frustrated by the amount of losses their player portfolios suffered after the price of some players fell more than 10 times.
While some revealed how they have invested five and six figures at the platform, others were complaining they had to share information with their life partners regarding the extent of the losses they suffered.
“We see our business plan as a sustainable one for growth and, eventually, for improved returns to customers, as soon as this becomes viable once more. As we have previously outlined to our customers, yields had become unsustainably high compared to the level of activity on the platform, which has made this decision an unfortunate but necessary one.”
Statement, Football Index
The company which is also the main shirt sponsor of QPR and Nottingham Forest, was initially in the spotlight last year after its decision to remove the opportunity for customers to instantly sell their players back to the platform by introducing a peer-to-peer exchange.
Order books were introduced to facilitate the transition to an exchange model, but the lack of liquidity led to a series of market crashes and caught many customers unable to exit positions and heavy losses.
Football Index also signed a deal with the Nasdaq in the summer of 2019 to provide a cloud-based trading engine for its platform, yet the integration was put on hold according to a recent announcement by the company.