Your analogy hits a snag here:<p>&gt;  In the meantime, the co-op grows 10-fold, but the contract with the management company doesn&#x27;t change (somehow, let&#x27;s just assume the co-op doesn&#x27;t require active management, they just need guidance occasionally or something)<p>The question isn&#x27;t what a &quot;normal management structure&quot; would cost. It&#x27;s what the affiliated entity would normally charge in the market <i>for the same service.</i> Vanguard&#x27;s sells its investment management services to the mutual fund <i>at cost</i> because it&#x27;s owned by the mutual fund. It wouldn&#x27;t do that otherwise.<p>So to make your example comparable, the co-op <i>buys</i> the management company, and makes it operate at zero profit. So the question is: would the management company be happy making zero profit if it weren&#x27;t owned by the co-op? The answer is: probably not.