March Money Madness

http://www.savingforcollege.com/articles/march_money_madness

For the past 13 years, college basketball fans across the country have been placing bets on their favorite teams during the annual March Madness bracket tournament. Last year the final game attracted 23 million viewers, making it the most popular sports championship next to the Super Bowl. Chances are you’ve even participated in your office pool hoping to win a little extra cash. The tournament itself, however, generates much more than what gets passed around the cubicles.

Ad Men (and Women)

It’s no surprise that advertising is one of the biggest players. According to a study from Kantar Media, March Madness generated $1.15 million in ad revenue in 2013 alone. This included corporate sponsorships worth up to $35 million sold to companies like Coca-Cola and AT&T.

Vegas, Baby!

As the second busiest sports betting event, March Madness also generates millions of dollars of tourism revenue for Las Vegas. The tournament, combined with the onset of spring weather, make this month the city’s busiest time of year. Unlucky gamblers aren’t the only ones feeling a loss. American companies were said to have lost at least $1.2 billion for every hour of during the first week of the games. Some CEOs argue that office pools are worth the cost of lost productivity because they strengthen morale and relationships among employees.

Who Wants to Be a Billionaire?

Many consumer-focused companies take advantage of March Madness’s popularity to run special marketing promotions. This year, one colossal prize for a winning prediction caught the attention of over 15 million Americans – basketball fans or not. In the spirit of competition, Quicken Loans teamed up with prominent billionaire Warren Buffett, offering $1 billion for guessing a perfect bracket.

The contest generated plenty of buzz, but you actually had a better chance of winning the lottery. According to Quicken Loan’s official rulebook, your mathematical odds of becoming a billionaire from the contest were 1 in 9,223,372,036,854,775,808. Currently, the odds of winning the Mega Millions jackpot are only 1 in 258,890,850. Since it was very unlikely that anyone will take home the $1 billion, Quicken Loans promised to award the 20 most accurate brackets with $100,000 to be used toward buying, refinancing or remodeling a home. Although your odds of winning this prize are much greater (20 in 15 million), you’d probably still be better off enjoying the sunny weather in Vegas.

So, will Mr. Buffett have to pay up? Not this year. The contest didn’t even last beyond the first round of games and officially ended after Friday night’s games. Buffet wasn’t expecting a winner, but he would have liked to see the excitement last a little longer. Not once in the history of the tournament has anyone guessed every bracket correctly.

How Would You Spend It?

Those who entered the competition must have been pondering the thought of instant wealth, regardless of how minuscule their chances were. How would most people spend it? Extravagant homes, luxury cars or first-class vacations might come to mind. But with the country’s student loan debt passing the $1 trillion mark, there may be a large number of people who have sizable bills to take care of first.

College!

Those who are fortunate enough to be debt-free will likely want to ensure the same financial freedom for their children or grandchildren. If you are saving for a young child, you can invest in a 529 college savings plan and watch your investment grow tax-free each year until tuition is due. The money withdrawn will also avoid being taxed if it is used for qualified educational purposes. Another advantage of a 529 plan is that although a future student may be named a beneficiary, the account owner retains control of the assets. (This lets you have a say in case your son wants to choose his school based on who wins the March Madness tournament!)

Learn more about the 529 plans offered by your state!

Of course, $1 billion is more than enough to fund a college education, but it looks like we’ll have to wait until next year for another chance. Fortunately, even the modest winnings from an office pool can be enough to start a 529 account. Even if you’re not a basketball fan, it’s hard to escape the excitement of the tournament. With so much attention surrounding colleges, March is a great time to start thinking about how you can help your children get there.

Did you participate in Quicken Loan’s contest? How far did you get? What are some ways you would spend $1 billion?