>>5291753We need to talk about this concept because it's important to the wider story on AEW.
Let's say you have 100 million dollars. You can put that 100m dollars in a conservative financial product such as a bond or a hedge fund, and receive an almost guaranteed growth rate of 2% up to perhaps even 6% with almost no risk at all of losing your initial capital.
If we are conservative ourselves and say that your $100m gives 5% interest (which wouldn't happen in reality because your portfolio would have a wide variety of products with different risk profiles attached), then you make $5m a year guaranteed by doing absolutely nothing and you still have your initial $100m. Which goes to 5% of 105m, 5% of 110.5m, 5% of 126m, etc. So within that period, you've added 25m on top of your 100m. And you still have your 100m.
>AEW needs to make a profitGoing back to this now. AEW has had major investment into it as start up costs - when you consider the losses over the 3 years and the investments made then a $200m estimate is not a bad figure. So for AEW first has to make back about $100m (because they have a 100m asset, the company) in order to break even for Shad. AEW will be looking at profits in the low millions initially. 100m is a big gap to close.
>Tying it upBut here's the problem. You can't just measure your money like that - you have to measure it based on what you could have made. So if Shad would have taken this investment and dumped it into a product listed at the start, that's his expected profit. That's what AEW has to chase to even be worth it. Not a black figure on a P/L, but a comparison to just sticking the money in the bank and generating that profit.
This is why nobody invests in wrestling but marks. There's no money in it compared to even the most conservative bond scheme imaginable. It will be a great money printer in terms of annual P/L but you'll never actually make any money long term and especially not comparative profits.
