Back in the days before the 'tentpole' film-making where a production was expected to generate an additional two sequels, with the budget typically rising to incorporate more effects and stunts, sequels were rare, and typically worked on a reduced budget from the first film. This was because it was assumed that a sequel would only draw the hardcore fans of the original and so was in essence a niche product. The wisdom of this approach began to be questioned with the "Planet of the Apes" sequel, "Beneath the Planet of the Apes", which was made for half the cost of the original, yet made not much less than the first film. When Star Wars was nearing completion, George Lucas originally had a low budget sequel in preparation on the assumption that if it only performed moderately well the budget would necessarily be low.

The first real reversal of this practice began with the Jaws films, where the first only cost $12 million, and the now largely forgotten Jaws 2 had a $20 million budget, but went on to make $200 million largely on the strength of the original. The strategy now swung the other way, so film series like Star Wars, Indiana Jones, Mad Max, and all the other film series to the present day would increase the budget with each sequel, knowing that the audience already existed for the films, that the audience expected more, and would increase the long-tail profitability of the series as new fans were created along the way.

The old model of cheaper sequels still exists alongside the new model, for films that are moderately profitable within a niche and so generate countless made for video sequels. The wonderful cheerleading film "Bring It On", has produced about five such sequels in the ten years since it was released. I expect that something similar will happen for the Drew Barrymore directed "Whip It".

Avatar may be the film that undoes this new model; its budget is so high that whatever 'record profits' it's making are consumed by the production and marketing costs, estimated to be around $450 million, and given that a film must make about three times its budget in order to break even, it may not yet be in profit. And any sequel must replicate the takings of the first, which was a fluke to begin with, and this is just assuming the budget does not increase over the original. Financial restraint would be a difficult thing for a studio to demand of Cameron. So whatever profit Avatar does turn in could be lost again in a sequel.

I'm sure studio bosses are aware of this, and if they agree to fund Avatar 2, it'll only be against their better judgement.

Why would you post a picture from that to prove your point?
It is well known to have no credibility and is an entirely illegitimate organization used only by the Hollywood machine for marketing.

Balabans Law. Named for Barney Balaban, in 1926 Adolph Zukor merged his Paramount Pictures with the Balaban & Katz theatre chain and ran the new studio with the Balaban brothers, in 1936 Barney Balaban was appointed president. They continued in these positions until 1966 when the studio hemorrhaging assets and recording several yearly losses - United States v. Paramount Pictures, Inc. stripped them of their theatre assets in 1948 and the 1950s introduced television (which Paramount had in fact been an early investor in but fear of further anti-trust cases caused them to withdraw), as well as more than a few failed films - it was sold to Gulf+Western and they were replaced by the infamous Bob Evans.
1936 to 1966, three decades, 30 years. That requires profitability to be sustained.
His nephew is actor Bob Balaban.