|
By:
Betfair should be run with only 1 principal aim :-
...to maximise profits. End of. Over what term? The current mgmt. wd be delighted w/ three years. This creates a misalignment with the interests of long-term owners and players. |
|
By:
Who would you back to be right?..the directors who have all the facts and figures available...or a bunch of aggrieved punters on a forum ?
The implied price of bf when Softbank bought their stake in 2006 was £1.5 billion. Since that time the company has lost roughly 40% of its market capitalisation. It's hard to say that the company has been run well since the founders left. Supposing that it was always going to find it harder to clear regulatory hurdles outside the UK and to break into the non-online and recreational pound, bf shd have handled expectations before and after its flotation much more carefully or have had more realistic projections of its revenue growth and translation to the bottom line. |
|
By:
In introducing the pc, I wd guess that bf misestimated or failed to measure a number of things:
1) the implied monetary value to the company of the goodwill and word-of-mouth advertising of successful bf customers; 2) the amount of money that different classes of losing bf customer had to shed before they went stale and quit. The likelihood here is that the conmpany had too low an estimate for some people's losses, because they inferred a number from conventional online books and esp. poker sites; 3) the likelihood of a previously stale losing coming back to bf when they returned to betting, on the basis that bf prices or functionality was better. They wd have underestimated this again, since there is more choice in e.g. the poker market and losers on sites w/out bf's features tend for psychological reasons not to go back to where they had a bad experience; 4) the implied monetary value to bf of pc payers' 'always-on' liquidity, even if it was at such a price that it ensured wins for pc payers. How often do bf miss out on the share of the recreational pound they want b/c part of it is matched just after the punter logs on w/ the pc payer in a thin sub-market?; 5) a robust estimate on loss of liquidity due to pc and the carry-through of this to revenues; 6) the effect on the profitability of incumbent layers like Betting Promotions of pc payers' moving into their markets looking to make no more than breakeven bets--plus the effects of this activity on revenue from existing 'suppliers'. All of these items can be answered by a number but terms like the loss of goodwill and the loss of custom due to empty markets needed to be estimated--and would need to be estimated now. The company's accountant-like preoccupation with measurable items overlooked a lot of more significant intangibles. The company shd focus itself on getting a bigger share of the market and trust the P2P mechanism to keep enough of all bettors' activity. Let's take the case of an old-style casual bettor, an old guy who goes into a betting office to meet his friends on lunchtime say four days a week and bets a fiver four times a day. Let's say he goes 50 weeks a year and is careful with his money, a discerning favourite backer losing 10% of the value of his bets. This person loses more to his bookmaker than bf's ARPU (revenue per user) in their last accounts by a double-figure percentage. Even w/ bf's margins, pricing, interface etc. (w/ classic, pre-pc betfair) this antediluvian small-time enthusiast w/ a thoroughly sustainable habit wd be a better than average customer for the exchange. Forgetting mobile, games, pc, sportsbook, all their often ****-eyed innovations, they shd have a strategy for attracting the ordinary losing punter's money. Bf have moved away from--thought they had to look beyond--their utterly simple core activity far too quickly. |
|
By:
On 3) they have seen the light, in that the proportion of revenue coming from existing customers (89%--what others might see as a lack of growth) has become a metric in the company accounts.
|
|
By:
Premium Charge is bad because 1.It is seen as unfair and unpopular by existing customers. 2.Potential new customers are put off by it,even though many would never be paying it. 3.Its existance makes advertising the betfair product difficult. 4.The PC is much too complicated,with very few really understanding fully how it works(this includes both staff and customers). Surely it would be better to scrap it entirely and charge different commision rates for users,there being standard figures for the average customers and betfair charging higher rates for more successful ones.These rates could be very flexible at betfairs discretion-depending how much they do/don't want any particular customers business.Such a strategy would allow betfair to make loud noises that they had scrapped the unpopular PC whilst allowing them enormous flexibility in controlling their customers percentage contributions.Betfair could closely monitor the changes and adjust the higher rate contributions at any time to maintain a balance between profitability and customer satisfaction/loyalty.
|
|
By:
I regularly paid the PC and left BF completely because of it. I only came back when Purple closed all Australian accounts. I'm pretty much exclusively a cricket trader. What I do isn't rocket science, but it is crucially dependent on liquidity. What I see is liquidity has shrunk and appears to be still shrinking.
What a lot of people don't realize is much of BF's cricket volume is laying off by Asian bookies. They come to BF because the liquidity is here and because their aim is to lay off, they are not too concerned about 1 or 2 ticks, which allows people like me make a profit. They don't pay the PC, but they do pay the 5%. Which is substantial when your gross margin is probably less than 15%. I see much less of 10k and 20k chunks going through the cricket markets, than I did 2 or 3 years ago, which tells me BF already has a competitor for the Asian bookie wholesale business. While BF drove away many liquidity providing cricket traders with the PC, I actually think the 5% commision is an equally big problem for BF, because it drives away the wholesale volume. There is a saying in financial markets. Liquidity begets volume and volume begets liquidity. BF's current commision structure seems designed to reduce both. What is needed is commission discounts for volume and turnover (ie providing liquidity). FYI, this is from BF's own educational material 'It is also quite often that bookmakers will 'lay off' on betting exchanges, so even though you believe you are betting against other punters, you are in actual fact also betting against other bookmakers on the exchanges.' |
|
By:
On one of the best days of the year in the stock market,Betfair's share price still manages to fall yet again.
Way below the offer price now.The PC charge has a negative momentum of it's own an is continuing to drive the stock price down. This is the greatest thread I have ever read on my 12 years on Betfair.This summer will be my last time ever on Betfair unless something is done to remove the PC charge.I bet millions of pounds a year on here so expect that liquidity to be gone soon. |
|
By:
This the latest TV ad in Australia. I thought it was really lame.
http://www.adnews.com.au/campaign/power-to-the-punter |
|
By:
Very lame.Will lose customers not gain them.
|
|
By:
the creators of betfair played a blinder and sold at the top of the market - you hjave to question the ability of the fund managers who piled in,never mind it will only be some low paid public employees pensions that loose out - so no harm done eh.
|
|
By:
Yeah the people on here who gave a great deal of their time helping Betfair
will never forget what they have done to them and the exchange model. |
|
By:
we all help betfair because we love them - we dont expect any reward ,its a labour of love.the share price cant grow because theres not enough new customers - the big boys want their market share and will fight to keep it,but theres good profit in the repetative punter churn - betfair just need to hold their own market share - which is easy given their prices and products ,plus the forum,which in itself is probably the best un tapped attraction its got - the forum was technically twitter before twitter started.
|
|
By:
Totally disagree.The liquidity is down that is a fact and the forum is a shadow of it's former self.
As soon as the PC charge came out the numbers started dropping.Betfair's future is in serious doubt. I should know that as I personally helped build the company up alongside flutter in the very early days. |
|
By:
comingupthehill
08 Jun 13 20:50 Joined: 10 Jul 05 | Topic/replies: 4,056 | Blogger: comingupthehill's blog the creators of betfair played a blinder and sold at the top of the market - you hjave to question the ability of the fund managers who piled in,never mind it will only be some low paid public employees pensions that loose out - so no harm done eh. Not sure if this is true - I think they could have got even more if they had gone ahead with their original float in c.2006? |
|
By:
wow
|
|
By:
Isn't the liquidity down because the exchange has been banned in many a country? PC payers talking out their pockets here. Can't blame them though but I'm sure if the people at the top thought removing the PC would raise the share price they would have done so by now, they can't be that daft. They should have innovated the exchange, rather than going the sportsbook route. Messing the forum up was a bad idea as you are literally driving away thousands of people away from the site, why would want to do that I have no idea.
The only solace we can take is that an exchange will always exist in some form or another, you would think. I object to people using API and bots anyway creaming and skimming prices. They should be hammered. |
|
By:
Fair points, Ham. The concept is p2p, not b2b. Bot and (to a lesser extent) API users should be charged more than manual entry punters. They are, after all enjoying an enhanced user experience.
Sadly though, if Betfair followed this logic, I've no doubt they would just keep PC the same for manual users and ramp up the charges on botters to 70 or 80%. Now BF is publicly owned, trying to get them to think long term is hopeless. I would only expect them to react when the falling liquidity becomes a crisis which, as even the bluntest minds already know, will be too late. |