Maxie Zeus
09-28-2001, 05:18 PM
The thread on WE's future got me thinking about economic growth and compound interest, and led me to wonder: Just how rich is Bruce Wayne in BB?
Where should we start? Well, ultimately we're interested in Bruce Wayne's wealth, but since that wealth is tied up in Wayne Enterprises (WE, hereafter), we have to consider WE's growth.
A company's growth isn't a direct function of the economy's growth, but economies must be healthy and growing over the long term if a company's value is going to grow too. So we need to start with some assumptions about the global economy, and stipulate that there have been no catastrophic economic or natural disasters between BTAS and BB. (References to the "near apocalypse" some year or other, maybe, can be regarded as referring to an "apocalypse" that could have happened, and nearly did, but was avoided in the nick of time). Certainly Gotham does not look like a city that has suffered from 40 years of Depression or "No Man's Land." In fact, the skyline has changed so dramatically that there are only 2 explanations: The city was entirely levelled by a meteor and rebuilt from scratch (something that surely would have been mentioned, and wouldn't have left intact those precincts in "Shriek" that Wayne wanders thru) or the city has had almost 40 years of bustling commercial activity that has over time completely changed the architecture.
As for WE: There's lots of room for different growth rates to be factored in. Few companies achieve a long and consistent rate of growth; usually they have spurts and droughts. But let's smooth those out by talking about a hypothetical "average rate of annual growth." This is not how much the company has grown each year, but what it's total growth looks like when smoothed out into a straight line.
We need to start with WE's revenues, since it is out of those that profits and dividends are derived.
First, let pessimism reign supreme: Assume that the WE of BTAS was actually a pretty small company. Of course, it couldn't have been too small, because it was a substantial military contractor (see "Blind as a Bat" and "Off Balance") and had lots of ongoing research activity. Now, considering that Wayne was already a "billionaire," such a company could hardly have had revenues of less than $5 billion a year.
Project this into the future. Assume that, thanks to Wayne's distraction, his company's revenues grew at the meagre average rate of 4% a year over the following 40 year period. Then by the time of BB, it would have revenues of $24 billion a year.
Now to be optimistic (within reason): Assume Wayne was a major force in the realm of industrial technology; this would require at least revenues of $18 billion or so a year (most such companies would be at least 3 or 4 times larger). Now, assume an average growth rate of 10% a year (which would be highly remarkable, but not impossible). Then in BB time Wayne Enterprises would be generating . . . $814 billion a year.
Now, corporate revenues mean diddly as far as personal wealth--that's not Wayne's money, it's corporate money, all of it plowed back into expenses (employee salaries and raw materials, mostly), taxes, and dividends. What is Wayne himself worth?
Well, the answer is easy: He's a billionaire. Now, if his wealth is tied up entirely in WE stock, and if his proportion of the stock doesn't change (so that if he holds 10% of the stock in BTAS he holds 10% of the stock in BB) then his wealth should increase in proportion to the increase in WE's wealth. Then we need only assume that the rate of growth in WE's stock price mirrors the rate of growth in WE's revenues. On the pessimistic reading, his wealth would have increased by a factor of about 5; on the optimistic, by a factor of more than 45. So if he was worth only just $1 billion in BTAS, he would be worth anywhere from $5 billion to $45 billion in BB; if he were richer in BTAS (maybe worth $2 billion) his wealth in BB would be proportionately greater ($10 billion to $90 billion.)
* * * *
There is one potential complication: Dividends.
The problem with saying that Wayne is worth x amount of money, is that this wealth is highly illiquid; it can be released only if Wayne sells his stock (or borrows against it). It's paper wealth only, and Wayne needs cash. The only place to get cash is from his salary as CEO of WE, and from the dividends on his stock.
Now, if he takes those dividends and reinvests them, his future wealth and income will be that much greater in the future. But being Batman is expensive. Probably it is easiest to just assume that almost ALL his money flows into his Batman projects, leaving none for reinvestment.
Still, how much money might he be making?
Let's ignore salary and just look at dividends.
Dividends are usually pretty nominal; corporations don't pay out that much (unless they're utilities), but the dividend rate is still part of what the stock market looks to when it values a company's stock. An industrial company like Wayne's probably is valued such that its annual dividend is only about 4% of its stock price. Multiplied over his total holdings, that means that each year Wayne should collect about 4% of his billion in stock (in BTAS time) in the form of dividends. That is $40 million. If the taxman takes half of it (just to guess at a percentage--I don't know how good Wayne's tax attorney is), that gives him $20 million a year. Run the same assumptions in the future, and by the time of BB, Wayne may be taking home anywhere from $100 million to $900 million a year by time he hires Terry McGinnis.
* * * * *
Now, it is important to remember that these increases probably do not mean much. The Wayne of BB can probably afford much better equipment than he did in BTAS, but it doesn't mean, even on the wildest possibilities, that he can solve the world's problems. The fact is that $45 billion may not mean much in the world of BB, just as $1 billion doesn't mean as much today as it did back in 1960. This isn't because of inflation; when the economy grows faster than the population as a whole, necessarily on average the population will get richer (this the idea behind economic growth of any kind). There will be more people at the higher income levels than there were before because there is more money sloshing around. And this means that the relative impact of each rich person will be that much less than it was before. When Andrew Carnegie gave away hundreds of millions a century ago it was a huge deal because only he and few others had that kind of money to give away; today there are a lot more people in that position.
Still, it gives us some idea of the enormous power and responsibility Wayne would have to hand over at the time of his death.
Where should we start? Well, ultimately we're interested in Bruce Wayne's wealth, but since that wealth is tied up in Wayne Enterprises (WE, hereafter), we have to consider WE's growth.
A company's growth isn't a direct function of the economy's growth, but economies must be healthy and growing over the long term if a company's value is going to grow too. So we need to start with some assumptions about the global economy, and stipulate that there have been no catastrophic economic or natural disasters between BTAS and BB. (References to the "near apocalypse" some year or other, maybe, can be regarded as referring to an "apocalypse" that could have happened, and nearly did, but was avoided in the nick of time). Certainly Gotham does not look like a city that has suffered from 40 years of Depression or "No Man's Land." In fact, the skyline has changed so dramatically that there are only 2 explanations: The city was entirely levelled by a meteor and rebuilt from scratch (something that surely would have been mentioned, and wouldn't have left intact those precincts in "Shriek" that Wayne wanders thru) or the city has had almost 40 years of bustling commercial activity that has over time completely changed the architecture.
As for WE: There's lots of room for different growth rates to be factored in. Few companies achieve a long and consistent rate of growth; usually they have spurts and droughts. But let's smooth those out by talking about a hypothetical "average rate of annual growth." This is not how much the company has grown each year, but what it's total growth looks like when smoothed out into a straight line.
We need to start with WE's revenues, since it is out of those that profits and dividends are derived.
First, let pessimism reign supreme: Assume that the WE of BTAS was actually a pretty small company. Of course, it couldn't have been too small, because it was a substantial military contractor (see "Blind as a Bat" and "Off Balance") and had lots of ongoing research activity. Now, considering that Wayne was already a "billionaire," such a company could hardly have had revenues of less than $5 billion a year.
Project this into the future. Assume that, thanks to Wayne's distraction, his company's revenues grew at the meagre average rate of 4% a year over the following 40 year period. Then by the time of BB, it would have revenues of $24 billion a year.
Now to be optimistic (within reason): Assume Wayne was a major force in the realm of industrial technology; this would require at least revenues of $18 billion or so a year (most such companies would be at least 3 or 4 times larger). Now, assume an average growth rate of 10% a year (which would be highly remarkable, but not impossible). Then in BB time Wayne Enterprises would be generating . . . $814 billion a year.
Now, corporate revenues mean diddly as far as personal wealth--that's not Wayne's money, it's corporate money, all of it plowed back into expenses (employee salaries and raw materials, mostly), taxes, and dividends. What is Wayne himself worth?
Well, the answer is easy: He's a billionaire. Now, if his wealth is tied up entirely in WE stock, and if his proportion of the stock doesn't change (so that if he holds 10% of the stock in BTAS he holds 10% of the stock in BB) then his wealth should increase in proportion to the increase in WE's wealth. Then we need only assume that the rate of growth in WE's stock price mirrors the rate of growth in WE's revenues. On the pessimistic reading, his wealth would have increased by a factor of about 5; on the optimistic, by a factor of more than 45. So if he was worth only just $1 billion in BTAS, he would be worth anywhere from $5 billion to $45 billion in BB; if he were richer in BTAS (maybe worth $2 billion) his wealth in BB would be proportionately greater ($10 billion to $90 billion.)
* * * *
There is one potential complication: Dividends.
The problem with saying that Wayne is worth x amount of money, is that this wealth is highly illiquid; it can be released only if Wayne sells his stock (or borrows against it). It's paper wealth only, and Wayne needs cash. The only place to get cash is from his salary as CEO of WE, and from the dividends on his stock.
Now, if he takes those dividends and reinvests them, his future wealth and income will be that much greater in the future. But being Batman is expensive. Probably it is easiest to just assume that almost ALL his money flows into his Batman projects, leaving none for reinvestment.
Still, how much money might he be making?
Let's ignore salary and just look at dividends.
Dividends are usually pretty nominal; corporations don't pay out that much (unless they're utilities), but the dividend rate is still part of what the stock market looks to when it values a company's stock. An industrial company like Wayne's probably is valued such that its annual dividend is only about 4% of its stock price. Multiplied over his total holdings, that means that each year Wayne should collect about 4% of his billion in stock (in BTAS time) in the form of dividends. That is $40 million. If the taxman takes half of it (just to guess at a percentage--I don't know how good Wayne's tax attorney is), that gives him $20 million a year. Run the same assumptions in the future, and by the time of BB, Wayne may be taking home anywhere from $100 million to $900 million a year by time he hires Terry McGinnis.
* * * * *
Now, it is important to remember that these increases probably do not mean much. The Wayne of BB can probably afford much better equipment than he did in BTAS, but it doesn't mean, even on the wildest possibilities, that he can solve the world's problems. The fact is that $45 billion may not mean much in the world of BB, just as $1 billion doesn't mean as much today as it did back in 1960. This isn't because of inflation; when the economy grows faster than the population as a whole, necessarily on average the population will get richer (this the idea behind economic growth of any kind). There will be more people at the higher income levels than there were before because there is more money sloshing around. And this means that the relative impact of each rich person will be that much less than it was before. When Andrew Carnegie gave away hundreds of millions a century ago it was a huge deal because only he and few others had that kind of money to give away; today there are a lot more people in that position.
Still, it gives us some idea of the enormous power and responsibility Wayne would have to hand over at the time of his death.