If it was costing them money rather than making it, why would Forza still be around? Wouldn't they just call it sunk cost and move on?
I'm not necessarily disagreeing with you. I think Forza would cost MS a lot of money - just in licensing alone. I can imagine that would be an astronomically high number. I do think Forza actually makes a lot of it back, eventually. They do a lot of things differently to what EVO and PD have done, however.
Forza has a $100 ultimate edition that well over 400,000 (closer to 500,000, using the early access leaderboards as a reference) bought for just FM6 alone (Not sure about FH2, but the numbers would probably be similar if not more). While 400,000 isn't an impressive number at all by itself, if you account for the extra $40 on top of that, it really does make a difference for those licensing/modelling costs. It's also why you see a Forza every year that uses the same assets between the titles. Why wouldn't you cash in on all the expensive licensing and 3D Modeling your doing for 100's and 100's of cars by releasing a game year instead a game every second year? (This is from MS's perspective). So yeah. I think a lot of the perceived annoyances of Forza (Lot's of DLC, games every year, $100 Ultimate Editions, $20 Porsche Expansion) are due to the insane cost behind their games that we just don't get, being in the general public.