A story in last week’s Business Journal was troubling. It was the article about how the TV show “Shark Tank” could take a bite out of the contestants.
In case you haven’t seen the show, entrepreneurs go on air to pitch their business ideas to investors called “sharks.” But regardless of whether they get funding, the article said, the contestants are obligated to sign a contract that lets the producers as well as the ABC network get a piece of their business going forward. One contract posted online said producers can choose either a 5 percent equity stake or 2 percent of operating profits. Forever.
Producers wouldn’t really talk about such contracts. But one analyst basically excused it. TV shows are no longer the moneymakers they were, he explained, and networks and producers now must be creative about finding new revenue streams. And since the entrepreneurs can benefit hugely from what amounts to a big, free national ad just by appearing on the show, the producers might as well get theirs.
In other words, there’s nothing to see here. Move along.
But wait. There is something to see here. There’s something deeply troubling about being forever indentured to those who, yes, might help you at a critical moment but who are only doing their job.
I mean, by the analysts’ logic, you could be forced to sign a contract to give 2 percent of your wages forever to the cop who saved your life. Or 5 percent equity in your business to the fireman who saved your office. Or a portion of your earnings to the counselor who gave you life-changing advice.
(Judging by the LABJ Poll results below, most of you agree.)
Note to ABC and the producers of “Shark Tank”: Don’t be greedy. You shouldn’t force people to pay you to be on your show. Instead, you should be grateful that they are performing without pay on your highly rated reality show.
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Pepperdine University’s Graziadio School of Business and Management in Malibu last week put out an overview of the coming business trends that certain faculty members see. OK, so it came out a few weeks later than the usual what’s-ahead-for-the-year predictions. But the prognostications are more informed and insightful than most.
• Obamacare will make 32 million additional Americans eligible for health care coverage next year. At the same time, we are aging; by 2030, we’ll have twice the number of Americans ages 65 or older than in 2000. Given that many health care professionals are nearing retirement, Gary Mangiofico, an associate dean at Graziadio, believes we are entering what the overview called “a prolonged era of underskilled health care workers and understaffed health care operations.”
• Remember the weird price spike for gasoline last fall? California motorists can expect more price volatility for gasoline and diesel, even though underlying prices have been relatively stable. Warren J. Hahn, assistant professor of decision science, explains that the state requires a unique blend for gasoline and has “permitting requirements that render enhancements of refining capacity infeasible and/or uneconomic.” Oh, and don’t expect that 30 cent- or 40 cent-a-gallon premium in California to go away, he says.
• Economics professor Demosthenes Vardiabasis predicts that “China aims to take major stakes in Hollywood properties in the coming months.” China has ambitions to be the top financier of entertainment properties; the Dalian Wanda Group’s purchase last year of the AMC Theatres movie chain is “only the beginning.” China, the report says, “brings the willingness, focus, money and full support of a centralized communist country.”
• This could be a banner year for business sales. John Paglia, an assistant professor of finance, said many small and midsize business owners have been riding out the recession so they could sell when times are better. And, well, this might be the time.
Charles Crumpley is editor of the Business Journal. He can be reached at email@example.com.
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