- Odds are against the individual in Buffett's Billion Dollar Bracket Challenge, yet heavily favor sponsors Warren Buffet, Quicken Loans, and Yahoo.
- Yahoo's online platform for the contest will draw an anticipated 15 million potential users (and ad-clickers).
- The contest could initially boost Yahoo shares prior to the Alibaba IPO, in which Yahoo holds a 24% stake.
With the men's NCAA college basketball tournament about to start, a world-famous investor, a mortgage company, and a search engine giant are about to pull off one of the biggest publicity stunts in the history of free advertising.
In the March Madness bracket, anyone who can pick the winner of the NCAA's college basketball tournament has a chance to win a billion dollars. Ostensibly, it's a madcap contest; in actuality, it could be a perfect pitch.
The major players in this contest are sponsors Warren Buffett (NYSE:BRK.B), the multi-billionaire insurance man, and Quicken, a private mortgage company. Search engine giant Yahoo's (NASDAQ:YHOO), sports division is handling technological support for an anticipated 15 million sign-ups.
Anyone who enters needs a Yahoo account. Yahoo will enjoy significant marketing benefits by offering a user-friendly platform. Besides exposure to Yahoo and its large selection of products, the company could also profit by millions when visitors click on Yahoo's ads.
Rules of the Game
With no cost to enter and a chance to win a billion dollars, what's the catch? Well, the chances of winning are one in nine quintillion - a nine followed by an astonishing 18 zeros. If you think a one-in-a-million chance is pretty low, then one-in-a-quintillion is so low it is almost guaranteed that no one will win.
According to DePaul University math professor Jeffrey Bergen, it is much easier to pick the winners of 7 consecutive World Series in baseball than it is to pick the perfect bracket. Another analogy he gives is that someone is much more likely to predict which political party will win the presidential elections up to the year 2160 than it is to pick the perfect bracket.
Although the odds of a grand prize winner are statistically improbable, those who enter still have a chance of profiting handsomely. Twenty people with the most accurate brackets will receive $100,000 each. Additionally, Quicken will donate $1 million to an educational charity in Detroit and Cleveland.
Real Winners Already Chosen
The winners, then, will almost certainly be the contest's three sponsors, and not a fortunate sports fan.
Warren Buffett can sleep well at night. His billion is most likely safe. What's more, he will actually make money, receiving a fee of an undisclosed amount for providing insurance for the contest.
Quicken, meanwhile, has the chance to make 15 million people aware of its business and its offers; a small percentage of whom will become mortgage customers.
It is not clear how much Quicken paid Berkshire Hathaway (NYSE:BRK.A) to insure the colossal-yet-impossible prize money, but it is clear that both Quicken's Dan Gilbert and Berkshire's Warren Buffett are enjoying keeping the numbers to themselves. Gilbert did disclose he paid too much, while Buffett says he did not receive enough.
The final, less obvious winner is Yahoo, who will benefit enormously from the exposure of its business to 15 million people. This could be of particular interest for YHOO shareholders as a lead-up to the Alibaba IPO, in which Yahoo holds a 24% stake, and which could also potentially boost YHOO shares in the near term.
(Source: Yahoo! Finance)