Yahoo’s reported willingness to pay $11M for ‘insurance’ was the real March Madness

032015blog billion dollar bracket challenge

You may recall that last year around this time Yahoo, Warren Buffett and Quicken Loans teamed up to offer this challenge: If anyone could pick the winner of every single game in the NCAA’s 64-team, six-round March Madness basketball tournament, he or she would win a billion dollars.

No one met the challenge, or came close. In fact, the tournament wasn’t even half over before the final perfect bracket sheet was no longer perfect. This came as no surprise to anyone, in large part because the odds against completing the challenge successfully were one in 9 quintillion or one in 128 billion, depending on who’s doing the math, according to this explanation in Slate.

This year there is no such challenge, but there is a lawsuit pending against Yahoo by SCA Promotions, a company that contends Yahoo had agreed to but didn’t pay it $11 million to insure against the infinitesimally small – bordering on non-existent – possibility that someone would beat those – let’s be conservative, 128 billion to one odds -- by correctly picking the winner of 63 straight games. (The plan all along was to cap the number of entrants.)

Why bother? If this occurred, why would Yahoo even contemplate paying $11 million to insure against an outcome so improbable that it shares a property line with Mr. Literally Impossible.

Why not just -- roll the dice might be the wrong expression here -- and apply that $11 million to a bottom line, which, let’s face it, could use another $11 million.

I know the answer: Lawyers, fiduciary responsibility, that’s not how big corporations roll, and, the ever-popular, “You never know.” (There could even be a law.)

I get that.

But in this case – at those odds – I’m keeping the $11 million in my pocket and letting math kick the crap out of the 15 million prognosticators who would never even have a chance, at least not one worth talking about or insuring against.

Could the actual contest promoters have done the same, I mean absent the lawyers and all?

Yesterday saw the first 16 games of this year’s tournament play out and of the 11.6 million brackets filed at ESPN only 273 remain perfect. It’ll be a handful by the end of today, maybe. It’ll be zero by the end of the weekend for sure.

You can bet your last billion on it.

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