The football player stock exchange has seen investors leave after reducing the dividends plates for each player transaction.
UK.- Investors are reportedly leaving Football Index after the football player stock trading platform reduced the dividends it pays for each player transaction, causing a significant drop in player prices and values.
The platform has reduced player dividends from a maximum of 14p per player to 3p.
Some users claim to have lost tens of thousands of pounds due to the changes on the Gambling Commission-licensed site, which pays out dividends based on players’ performance.
It’s believed the decision was taken because the current dividends were not being covered by the operator’s revenues.
Responding to criticism, CEO Mike Bohan said the changes were made to maintain market liquidity and that the company is reviewing all options to mitigate against the negative impacts of its decision.
He said: “We’ve set the objective for our primary market maker to trial a bottom-up approach to liquidity that I believe will add some confidence to traders and encourage more users to come on board.”
Football Index was launched in 2015 by entrepreneur Adam Cole, who stepped down as chief executive at the end of last year.
It raised £1.1 million in venture capital through a Seedrs crowdfund launched in 2016 and has sponsorship arrangements with EFL Championship football clubs Nottingham Forest and Queens Park Rangers.
The firm has come in for criticism from the Advertising Standards Agency (ASA) for marketing its services as an investment opportunity rather than a form of gambling.
The company said in a statement: “In consultation with our legal and financial advisors we have had to make the very difficult decision that in order to ensure the long-term sustainability of the platform we simply must reduce dividends.
“As such, in accordance with our terms, we are giving 30 days’ notice regarding this change.
“This decision is not one that we have taken lightly. The Board deliberated at length, and we have taken a number of other steps before reaching this decision: we have restructured, reduced costs, including taking directors’ salary cuts and have tried our very best to keep the dividends at the level that they have been.
“Unfortunately, however, the current yields are just not sustainable.”