In 2014, Berkshire Hathaway insured a Quicken Loans contest that offered $1 billion for a perfect NCAA March Madness men’s basketball bracket. The contest was open to the public; no one won it. But the promotion with Quicken inspired Berkshire CEO Warren Buffett to start offering a similar chance to his own employees.
Beginning last year, Berkshire offered a contest open only to employees of Berkshire-owned companies (there are more than 40), that promised $1 million every year for life to anyone who could correctly predict all Sweet Sixteen teams. No one could do it last year, but two men who both went perfect through 20 games split a $100,000 prize for lasting the longest.
This year, Berkshire’s employee contest again offers $1 million every year for life for a perfect Sweet Sixteen, and $100,000 to the person who stays perfect the longest, but Buffett also sweetened the pot with an additional $1 million to anyone who can nail the first 32 games (out of 63 in the tournament).
[UPDATE, Mar. 20, 2017: The Berkshire contest has a winner: steelworker Dwayne Johnson, who lasted 29 games with a perfect bracket.]
Yahoo Finance spoke to Buffett by phone about his passion for March Madness and why he loves running the most generous employee contest in America.
What follows is a condensed transcript.
Yahoo Finance: So you just announced last week $1 million for getting the first 32 games right—but last year’s winners only got 20.
Warren Buffett: Oh, I did a little figuring. And there’s no way to figure it precisely, but you know that if you get the 15 [-seed] and 16 [-seed] teams out of there, you can assume they’ll lose, and 95% of the time you make it through that. So you knock out those eight teams, usually.
So I figure if we did this for five years, and our prize was for getting through the first 32, and we had 100,000 people playing from Berkshire, I do think we would get at least one winner. But it would have to be a year with relatively few upsets.
I’m hoping somebody wins, obviously.
You love doing this. You and [top Berkshire insurance exec] Ajit Jain love probabilities and odds – do you put your heads together on this?
We certainly put our heads together when we did the big one with Quicken Loans a few years ago. But this one, we’re not charging anything, so we don’t really have to put our heads together in terms of probability, we’re just trying to make it really interesting for employees.
There are probably a fair number of our 367,000 employees that don’t even know they work for Berkshire. So I like them feeling like they’re part of the Berkshire family, and this is a great way to do it. I love the fact that it looks to me like we could easily get 100,000 entries this year. Last year we ended up with 83,000 and we’re way ahead of that this year.
It would be a lot of fun if we had, say, 8 or 10 people left after the first 27 or 28 games. You’d have all their coworkers watching each game and rooting them on.
As you know, after every game, we can tell exactly how many people are left, and we can tell how many will be left after the next game, based on one team or the other. So it’s a lot of fun as you go through it.
Do you do that personally, do you tally it up and look at anything that shows you all the employee brackets?
I don’t do it personally, the guy that does that is with Ajit’s operation in Connecticut. And he lets us know instantly what’s going on. We all pay attention to it. I mean, outside of Berkshire, a lot of people are following it, that’s for sure.
Right—do you think it’s fair to say Berkshire offers the best employee March Madness contest? I certainly haven’t heard of any other that pays out more.
There’s no way of proving it, but I would say it’s basically certain that that’s the case. I can’t prove it, because you could have some private company… But I don’t think there’s anything like this. I’d bet a lot of money that no one else does this. It’s like we have our Christmas party at a different time of year.
There are other sports events that people can do pools for, like NFL pick ‘em leagues, or many offices do Super Bowl squares… you don’t do anything like that. What is it about March Madness?
This is the best one. I think in the first two days, it’s two days when people are just completely focused on it. I think it has the broadest participatory aspect to it, probably of anything. I mean, maybe more people watch something else, like the Super Bowl, because this gets extended over a period of time, but I don’t think you could come up with any contest that would be as interesting to people as this one. Certainly around our office that is the case. And I think it extends to our subsidiaries.
We’ve got a couple foreign companies, and their participation is very high. We have a company called International Metalworking, based in Israel, and they have 1,933 entries that have come in already.
But I think U.S. Liability [USLI, an insurer in Pennsylvania], where one guy won last year, I think they have the highest number of people [who participate]. His $50,000 really made an impression. And the guy that runs US Liability was a high school basketball player, Tom Nerney. He scored 1,000 points in his career at a Catholic school, and he also has coached lots of girls teams. He’s a heavy favorite in the contest this year.
Do you fill out a bracket of your own?
Creighton [in Nebraska, a 6-seed this year] is my team.
But I don’t fill one out. I want to be able to look at this with impartiality.
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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.