Friday, March 26th, 2010 by Bill Swadley.

First published at Huffington Post on March 25, 2010

An article in the New York Times yesterday revealed that the MPAA (Motion Picture Association of America) is up in arms at the prospect that the Commodity Futures Trading Commission might approve the creation of a futures market that would deal in movie box office receipts.

I say, let ‘em try!

Futures markets have traditionally been reserved for raw goods. In futures trading sugar is a commodity that is traded through futures contracts, but not salt water taffy. Sugar is the raw ingredient, candy is the resultant product after manufacture. Same with oil. Crude oil futures are traded, not gasoline. Why is that? Mainly because there is an inherent standardization to a raw commodity, but also a question mark as to how much that commodity will bring once it’s brought to market. It’s that question mark that becomes the gain or loss for the futures trader. Once the raw commodity becomes its final product, price fluctuation is severely limited so there’s not much to bet on.

Perhaps this is what fooled the Einsteins at Cantor Fitzgerald and Veriana Networks (the two groups proposing the exchanges) to think that trading box office futures could work. The complete unpredictability of a film’s performance. But it’s an entirely different manner of unpredictability, and I wonder if they understand that.

To further disconnect this idea from true futures trading: while it’s true that the value of futures contracts fluctuates according to many factors depending on the commodity, there’s a best/worse case scenario that can be estimated as a basis, barring unforeseen events like a natural disaster, unexpected blight, economic crisis, etc. In any given contract period the trader calculates the risk involved going in and may gamble that a certain crop’s yield will do well or poorly based on what’s known about that commodity, interest rates, weather patterns, even political climate for less stable countries. The “gamble” is a calculated one.

Being a gambler and investor and having worked in entertainment finance for over 15 years, the last thing I would ever advise anyone to bet on or invest in is film box office grosses. Why? Oh, I don’t know, let’s ask renowned screenwriter/playwright/author William Goldman:

“Nobody knows anything.”

You said it, Bill.

Mr. Goldman’s statement, which has been quoted ad nauseum (including by me with great frequency) and attributed to all manner of people about pretty much anything that’s unpredictable in life, was in fact a statement about show business, Hollywood in particular, and the unlimited surprises (both good and bad) awaiting any individual or company venturing into the entertainment industry. Yes the rewards can be great, but they’re so sporadic and impossible to predict that even big movie studios often lose their nerve in the face of an expensive, potential flop.

Entertainment finance people spend untold hours and sleepless nights trying to figure out the monetary potential of any given film and the closest anyone in this business ever comes is to approximate a best-guess based on a virtual house-of-cards of assumptions. When something hits a mark we set or, thank the heavens, exceeds it, you never hear the words, “I told you so.” No, the wise man or woman who made that prediction is too busy worrying that the other 10-15 films in that year’s slate will miss the target. Like good ol’ Charlie Brown, one minute you’re the hero, the next you’re the goat.

Here’s the thing, people with a lot of money and/or people with access to a lot of money almost never have the slightest understanding of how the movie business works, especially from a finance point of view. But they almost always find out.

The hard way.

But go for it, boys, and don’t worry. As long as you hit that wire with the connecting hook at precisely 88mph the instant the lightning strikes the tower… everything will be fine.

Posted in Family, Humor | No Comments »

Thursday, April 23rd, 2009 by admin.

Posted in Politics, Humor, Blogroll | No Comments »

Wednesday, April 15th, 2009 by Bill Swadley.

Back in the heat of the election last year, TV and online reporters forayed courageously into crowds of Palin/McCain supporters to  interview them about why they loved the Republican ticket and hated Obama. Never very clear about either, these sign-wielding, slogan-spewing, demonstrators rarely had more to say than the misinformed and/or disinformational talking-points issued by Rush Limbaugh, Fox News, and the GOP leadership.

Today, teabaggers out in fairly meaningless numbers all over the country stand in impotent protest against a president who only took office a few months ago about problems in our economy that have been brewing  for 10+ years. As far as I can tell, these are the same people who blindly supported Sarah Palin last fall because she said the “right” words and all the anchors at Fox News all had a crush on her.

Never mind that the unfortunate term “teabagging” could have easily been avoided had anyone at Fox News or in leadership of the conservative groups hosting the so-called tea parties held even a 5th grade knowledge of the Boston Tea Party.

Like when it occurred.

In 1773.

Over 125 years BEFORE the tea bag was invented.

Remember American History class? Remember your classmates who didn’t do the homework, slept in class, doodled, traded notes, etc., and barely passed with a C? This is for them:

Now class. As I said, there were no tea bags back then. The tea at Boston Harbor was thrown into the water by British colonists from chests commonly used for tea exportation. That’s right,British colonists, not United States citizens. Why? Because the American Revolution was just being birthed and wouldn’t come to fruition for several years.  The colonists responsible for the Boston Tea Party were protesting taxes levied by their sovereign, King George III, without the consideration of colonial legislatures. That’s what set them off. Taxation without representation.  Is any of this ringing a bell? Oh, I forgot, you were asleep.

So, is there any significance to be drawn from a parallel between the Boston Tea Party of December 16, 1773 and the Washington Teabagging of April 15, 2009? Let’s see…

1773 -  Dictatorial monarch in desperate attempt to raise revenue  levies taxes on remote colonies only to elicit a profound outcry from said colonies. Monarchy greatly concerned, but steadfast.
2009 - Democratically elected president in cooperation with representative legislature cuts taxes for 95% of all citizens only to elicit a profound outcry from those who stand to benefit. Federal government puzzled.

1773 - Protest motivated primarily by taxation without representation and the iron-fisted rule of a monarchy and ocean away.
2009 - Protestors mostly unclear why they’re protesting except that it has something to do with socialism and maybe fascism, but not sure how.

1773 - Some protestors disguise themselves as Indians to deflect potential legal repercussions from themselves onto an oppressed minority.
2009 - Some protestors dress as Indians because they don’t understand the bigotry behind the original motivation for the  Indian garb worn by some Boston Tea Party participants.

1773 – Colonial leaders know the gravity of their situation and understand that their actions will likely be met with serious consequences.
2009 – Any real impact or important message is lost in the snickering of pretty much everyone because of the use of the term “teabagging.”

1773 - Word of the protest and the monarchy’s extreme reaction gets out in a few weeks to other colonies and the American Revolution is under way.
2009 - Minute-by-minute coverage of the non-event fills the airwaves, cable news, and the Internet for endless hours.  Almost everyone loses interest by the close of the day.

It might have been much more effective to mirror a different tea party to draw attention to the current situation.

Wonderland – Alice sits, uninvited, at a tea table after a long and tiring adventure only to find it occupied by three psychotic characters. She attempts to apply logic to the insane jabbering of the Mad Hatter and the March Hare. Gives up. Leaves.
2009 – Obama brings to the table exactly what he promised during an extremely long and tiresome election only to find it dominated by the same jabbering, psychotic characters who opposed his presidency on unclear grounds all along. He tries to use logic to reason with the loudest opposing voices…

Posted in Politics, Humor, Blogroll | No Comments »