# Billion Dollar March Madness Bracket

January 22, 2014 · 3 minute read · CommentsQuicken Loans and Warren Buffet annouced a billion dollar prize for a perfect NCAA college bracket prediction. As Quicken Loans puts it:

You read that right: one billion. Not one million. Not one hundred million. Not five hundred million. One billion U.S. dollars.

### Why Give Away a Billion Dollars?

My first reaction when I heard this is “where is the value?”. Companies award prizes all time and we know the reason this occurs is basic economics - which teaches us that the “cost” of the prize is less than the “value” the company derives from offering the prize. So what amount marketing, exposure or publicity is worth **one billion dollars?**

The details of the prize are actually $25 million dollars for 40 years. So we can reframe the question as “What amount of addional loan volume must Quicken Loans generate to produce more than $25 million of additional profit annually?” To get there we need to know the average revenue per loan and Quicken’s profit margin. For example if we assume $1,500 revenue per loan and a $10% profit margin this means Quicken Loans would earn a profit of $150 per loan. So $25,000,000 / $150 = 166,667 loans (rounding up).

### This All May be Moot

It’s virtually impossible to predict a perfect bracket. The math is simple: there are sixty-three games so it’s 2 to the sixty-third power. The odds of you filling out a perfect bracket are a staggering 1 in 9.2 quintillion.

#### How big is that?

- That’s one billion, 9.2 billion times.
- It’s 500,000 times more than our $17 trillion national debt.

#### But I’m a Brackets Wizard!

If you are really smart and know that No. 1 seeds always advance in the first round, or tournament champions usually have a top-four seed, or about Duke’s dual advantage of having a legend like Coach K and never getting called for a blocking foul you may be able to cut the odds down to something more like 1 in 128 billion.

Get schooled by DePaul math professor Jay Bergen:

Using 1 in 128 billion odds, if everyone in the United States filled out a bracket, we’d see a perfect one **every 400 years**! ESPN which has run a tournament challenge for the past 16 years has **never had a perfect bracket in over 30 million entries** according to the network. I assume that many of the people filling those out are pretty smart.

### True Genius!

So the true genius of this is the prize will almost certainly not be awarded thus the marketing, exposure and publicity is free! I initially puzzled over why Warren Buffet was involved but as a long time insurance executive he must have some sense of the actuarial odds on this. Brilliant!

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