Warren Buffett bought a prominent Massachusetts furniture company -- Jordan's Furniture -- in 1999 for between $200 million and $300 million. At the beginning of the season, Jordan's announced it would reimburse the furniture purchases of anyone who bought sofas, dining tables, beds, and mattresses there between March 7 and April 16 if the Red Sox won the World Series this year.
According to the Boston Globe, Jordan's took almost 30,000 orders during the contest. One customer stands to get back $40,000. Jordan's covered this bet through an insurance policy. It would not disclose which company issued the policy, but it would not shock me if it was issued by Berkshire Hathaway (NYSE: BRK.A).
As a lifelong Boston Red Sox fan, I am absolutely thrilled that they are in the World Series for the second time in a few years. And last night's blowout victory against Colorado was a great way to start. Unfortunately, my years of being disappointed by the Red Sox are making me wary about whether they can keep pulling off wins.
But if the Red Sox do win the World Series, I will be beside myself with joy, as will millions of Red Sox fans -- not to mention the people who bought their furniture at Jordan's during the contest.
But Warren Buffett could be millions poorer if he has to pay out claims on that insurance policy. If Berkshire is not the insurer, then Buffett will benefit from all the free publicity for Jordan's and will enjoy collecting the policy proceeds from a competitor.
But no worries. If he loses the bet, I am sure Buffett can afford the tuition payment on an important lesson -- don't bet against the Red Sox! And if he wins his bet, Buffett will be just a wee bit richer than he would have otherwise been. But Red Sox fans will be enormously disappointed.
Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Berkshire Hathaway securities.
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Reader Comments (Page 1 of 1)
10-25-2007 @ 3:21PM
beanspants said...
that's kind of a neat way to backwards gamble - not sure if it would actually drive traffic to the store, but still quite clever.