Introduction to Football Index
Stock exchange-type products that are linked to sports is not a new concept – Betfair being the most obvious example – but the concept of linking the value of a footballer to an investable stock certainly is. Football index launched a product among friends and family in late 2015 and hopes to fully launch in the first quarter of 2016. Initially dreamed up by serial investors Adam Cole as a celebrity index, the company opted after initial soundings to focus on football. Keith McDonnell, ex-online head at Totesport and now a consultant to the gaming industry, is an early-stage investor and he says he finds the concept and exciting one. “I’ve been in the industry for 16 years and it’s not very often that something so easy to understand comes along that hasn’t been done before,” he says. “It’s encouraging.”
Gamcrowd: Can you set the scene for us on Football Index?
KM: The company was set up by Adam Cole. Three years’ ago he had an idea for a celebrity index; a stock market-style listing of celebrities, Hollywood film stars and that kind of thing. He then set about getting a licence, and while he was doing that he brought a coupe, of guys in with gambling experience. One of those was Mike Bowen, now the marketing manager for Football Index, and the conversation was that actually it would be better to start with football and potentially tag on celebrity after that. Because there would be more media appetite initially and is slightly more focused.
Gamcrowd: And it gives it a more obvious link to sports-betting presumably?
KM: It’s got a link, but it’s very different. You are buying into a player rather than just an event. A player’s value within the index can be affected by a number of things including his performance on the pitch but also things off the pitch. Rumours about transfers, anticipation for the weekend fixtures. There are a lot of off-field factors that go into the value, and then supply and demand as well. I think the focus on football is a smaller step away from sports-betting, and therefore easier to understand than going straight to celebrity index.
Gamcrowd: How do you measure the index?
KM: There is an in-house developed algorithm, which has been tested and the testing has been approved by the UK and Alderney for licensing purposes. It takes into account a number of things. We know the saying there is no such thing as bad PR, but we will not allow particularly bad things to inflate the value of the player. We manually override that. We are about good PR. Numbers of name mentions in the media, it’s related to the performance on the pitch.
Gamcrowd: How do you calibrate value, as a participant on the index?
KM: The value is affected by supply and demand. That is a very real factor.
Gamcrowd: So the customer is rewarded in having knowledge of the sport?
KM: There is definitely an element, that if you sit down and study the form, look at the fixtures coming up, anticipate events such as Rooney getting his 100th cap and breaking the goalscoring record, you can foresee an increase in the share price. What I like about it is all that stuff – Sky Sports news all day for instance – it feeds into it. Everyday there is the potential for something that could drive the share price. Reading the papers every day can become more interesting.
Gamcrowd: Can you go into details about who is behind the company?
KM: Adam Cole is the founder and initial investor. I came on board as a shareholder and non-executive director. We have raised in the region of £500,000 from external sources, including one group from America. It was something they quite liked. It’s now live with friends and family – every day is our best day, which is what you hope for. We are about to go with a new tranche of marketing, and beyond that we are going to look for additional funding again.
Gamcrowd: So what is the next stage for getting the next level of funding?
KM: We need to paint a positive picture. As long as we are showing a curve that looks attractive and that shows that can be done, it makes the conversations about the next level of funding much easier. Players are depositing funds. Posting a positive picture and applying metrics to those real numbers. I’ve been in the industry for 16 years and it’s not very often that something so easy to understand comes along that hasn’t been done before. It’s encouraging. Also what is going on with DFS and eSports – maybe some people are looking at that and thinking whether there is something else they can consider.
Gamcrowd: Does having a wholly regulated market strategy help with investors?
KM: Yes, it certainly opens the net in terms of who we can speak to. If you talk grey markets, some investors will say no. Right now, everyone we have spoken to is interested. I’m realistic about the UK, not so much for our product but for betting generally, is hugely competitive, so we have very realistic expectations. If we can get proof of concept in that market it puts us in good shape to scale that market and look at other markets and variations of the product. We’re at the classic stage now that we have the roadmap that is being tweaked by initial user feedback.