Quicken Loans Inc. announced today that it is offering a one billion dollar prize to anyone who picks a perfect bracket in the 2014 NCAA men’s basketball tournament. In an interesting twist, the contest is being backed by Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B). According to the rules of the contest, if there is a winner, the lucky person will receive 40 annual payments of $25 million, or if they prefer, a lump-sum payment of $500 million.
Statement from Warren Buffett
In an interview on CNN this morning, Buffett said that if someone has a perfect bracket going into the NCAA final, he plans on attending the game himself. “I will invite him or her to be my guest at the final game and be there with a check in my pocket, but I will not be cheering for him or her to win,” Buffett said, smiling. “I may even give them a little investment advice.”
Odds of a perfect bracket
The mathematical odds of picking a perfect bracket are a stupendous one in 9.2 quintillion. In specific, the odds of picking 63 consecutive events at a 50/50 probability are 9,223,372,036,854,775,808 to one. That said, according to De Paul University math professor Jay Bergen, if you are knowledgeable about basketball that ups your chances of picking each event correctly. Assuming you do know a good bit about basketball then Bergen says your odds of picking a perfect bracket are much, much better than one in 9.2 quintillion, and in fact, are probably only around 128 billion to one.
As the above lesson in statistics makes clear, it’s not too likely that Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is going to have to cough up that billion dollars this year. By the same token, Quicken Loans probably didn’t have to break the bank to pay the premium to Berkshire Hathaway for the $1 billion insurance policy for the contest, meaning that they are getting a lot of good publicity about a “billion dollar perfect bracket contest” for a relatively small price tag.