Warren Buffett’s Ping-Pong playing (this year with Bill Gates) and his trips to the Omaha hamburger chain, which is owned by his Berkshire Hathaway always attract photographers at the company’s annual meeting. His candid shareholder letter with its homespun proverbs and the oops-we-got-this-wrong, and here’s-what-we’ll-do-better is quoted in many substantial publications.
Yes, Buffett is good at publicity, and he enjoys it.
Two weeks ago, Buffett was in the headlines. He had challenged college basketball fans to pick every winner in the annual 64-team playoffs that lead to a national champion. The competition is known as March Madness, which, beginning today, features play for the final 16 teams. Buffett’s prize for correct guesses in all of the 32, 16, 8, 4, 2 and final contests? $1 billion. Not million, but billion.
That is the kind of wager that generates chatter in the sports world, and it did.
Those handy with a calculator, however, were quick to point out that the odds of picking every winner in the 63 contests is something like a quadzillion to one. Then, after the many upsets in the first two rounds of play as lesser teams defeated teams expected to do better, others said that now it is impossible – impossible – to complete a fully correct list of winners. So, no $1 billion will change hands.
Even without the upsets, we can expect Buffett knew his money would be safe. A large part of Berkshire Hathaway is insurance companies, and re-insurance companies, the companies that insure the insurance companies. The insurance business is all about odds, and that means Buffett had access to plenty of actuaries to let him know just how unlikely it would be to pay the $1 billion.
Thus, without spending a cent, Buffett received his publicity.
But, what if Buffett had offered the $1 billion wager, or several wagers a hundredth of that amount in size, in a contest or contests that involved academics instead of sports?
College football and basketball are entertainment engines and branding machines that are large and growing larger. Major colleges and universities earn tens and hundreds of millions of dollars by playing those sports well. Television contracts, sponsorships and sports-related accessory sales add up. Some of that money does support other less visible sports played by men and women, but it also pays coaching salaries that exceed presidents’ salaries. Nor do players share in the revenues beyond scholarships.
Warren Buffet has imagination to accompany his resources. Next time, let’s see if he can give a bump to the academic side of higher education. This country must improve its high school-to-college percentage and its college graduation rate. Creating some excitement around those measures might help, even a little. Major college sports are doing just fine without a billion-dollar wager.