Here’s Why Yankees Fans Aren’t the Only Ones Rooting Against the Red Sox

Earlier this year, Massachusetts furniture chain Jordan’s Furniture announced a marketing gimmick that would delight any diehard Red Sox fan: if the Sox went on to win the 2007 World Series, all furniture sales made between March 7 and April 16 of this year would be refunded.

The chain, which is owned by Berkshire Hathaway Inc., sensibly bought an insurance policy to cover the possibility of a Sox victory. While Jordan’s declined recently to comment to Freakonomics.com on any details, the chain’s CEO earlier told TheRedSoxTimes.com that he had “bought insurance that is going to cover the whole thing. I would never have done it if I was going to be rooting against the Red Sox, let’s put it that way.”

The full cost of the promotion reportedly amounted to the “license fee paid to the Red Sox to use their name, advertising spots, and a little bit of insurance.” Meanwhile Jordan’s executives reportedly estimated that the promotion’s total sales might top $20 million.

In Chicago, meanwhile, Cubs fans got a similar chance when Park Avenue Home Furnishings in Libertyville, Ill. announced it was offering a full refund for all goods bought between March 30 and April 29 if the Cubs went all the way.

Andy Alexson, the store’s owner, told Freakonomics.com that he purchased a Lloyds of London policy for 2 percent of the promotion’s total sales. “It was nothing,” he said, “it was like [buying] an ad in the paper.” The policy stated that “if the Cubs win, we rebate everything including tax, delivery, everything.” It also stipulated that Alexson had to regularly report sales figures, which he hoped would total between $500,000 and $700,000 during the promotion.

“But the sale didn’t go anywhere near as well as I’d hoped because the Cubs sucked in April,” he said, “and then a competitor complained to the state attorney general that my offer was a gambling offer, so I had to debate it. We fought the attorney general over it, and argued you’re getting value for your purchase.” A month later, Alexson looked into doing another promotion, this time for the White Sox, and was told that Lloyds now wanted 18 percent of total sales, since the team had played so well two years earlier.

The Boston promotion caused a stir with Massachusetts authorities after locals raised charges of illegal gambling, according to the Boston Globe. Because of the high ticket items available for rebate, along with the substantial risk involved, debate arose over whether the sales were lotteries, classified as illegal gambling in both states.

Ultimately, the Massachusetts Attorney General ruled that the sale showed “no evidence of consumer harm,” and let Jordan’s alone.

Still, there’s at least one party outside of New York and Cleveland rooting firmly against the Sox this year: whoever holds the Jordan’s insurance policy.

Update: The Sox have indeed won the series, sweeping the Cleveland Indians, and claims are pouring in at Jordan’s Headquarters. Eliot Tatelman, president and CEO of Jordans, is reportedly refusing to release the total value of qualifying rebates, as well as the total cost of the insurance policy that will cover them. For an official description of the promotion, see here.


Bill

I have to laugh about New York's preoccupation with Boston, New England etc.

Where is Spike Lee's 1918 shirt now?

Let's go Red Sox!

Alex Bozzi

I am rooting against the Red Sox because I always root against the AL team since the DH is an abomination against the Baseball Gods, for which they will eventually extract their due punishment against all AL team fans. May the heathen infidel AL'ers go down in flames!

J.Torre

Or as Nathan Arizona said (in Raising Arizona): "All right, boy, I guess you got a reward coming. Twenty-five thousand dollars. Or, if you need home furnishings, I can give you a line of credit at any of my stores. In fact, that's the way I'd rather handle it."

Notanotheryankee

I dislike the red soxs. And i'm not a yankees fan either

BostonPaul

Actually, it was very clever by Jordan's. NPR had a story this morning, one way they made it pay was that the policy only covers dining room tables, sofas and mattresses. So of course you would buy chairs with your table, those are NOT refunded. Or you buy a bed and dresser with your mattress, those are NOT covered. Believe me, they are going to get 1000 times more value in publicity that whatever this policy cost them. Look at all of the people reading about this in the NY Times (and hearing about it on NPR) for free!

Nate

I would guess the insurance policy holder just hedged it off by buying red sox to win at Vegas (or many other places). I'm surprised that the Cubs went for only 2% - I would guess that they traded higher than that at Tradesports in April...

andy

Berkshire Hathaway has extensive insurance operations, I'd be surprised if the writer of the policy wasn't also a subsidiary.

Fred

Wait a second! We're talking about an insurance company. Surely they'll have a million reasons lined up for why the claim will be denied, no? In that case, Jordan's Furniture SHOULD be rooting against the BoSox.

If insurance companies can deny claims made by those affected by Hurricane Katrina, denying this claim should be a walk in the (ball)park.

Jordan Golson

Andy is right. The policy was underwritten by a Berkshire Hathaway insurance outfit for cost.

Andrew

Go Sox!

Nicholas Weaver

Also, Amit Jain (sp?) at Berkshire Hathaway specializes in pricing and writing such policies. EG, the Pepsi "Billion Dollar" giveaway a few years back was underwritten by Berkshire/Hathaway's insurance division.

Given Berkshire/Hathaway's normal policies, I'd bet that the policy was the same as it would be to anybody else, minus some fraction of the expected profit, so being a Berkshire/Hathaway subsidiary doesn't help all that much when writing the policy.

lexa

I remember a local car dealer has/had a promotion where you get $X back on your car if it snows on Christmas. However, this is Baltimore, and we rarely get a white Christmas, so their money is pretty safe.

Pete

This is another great post by Melisa Lafsky.

Red Sox probability of winning World Series was somewhere around 10% - 15% I think at beginning of season. So it's like the store was creatively giving a discount of that magnitude.

Joy

From an April 15 Boston Globe story on this subject:

"I'll let you in on a little secret," [Eliot] Tatelman told her . "The game plan is, when we win the World Series, to have the players come in and hand out the refund checks. What do you think you'll do when we hand it to you?"

"Buy everything else we need," she replied.

"Exactly," said Tatelman, looking like a man who had just sold a ham to a pig.

Peter

Or Warren Buffet could just pay the whole cost of a winning promotion out of pocket. He can afford it.

Eugene

Red Sox will lose to the Cleveland Indians. Next story?

Devin

Looks like Lloyds should have bought a 20 dollar baseball prospectus subscription before issuing those policies, it's laughable that they considered the Cubs to have a 2% chance at winning the WS and the White Sox to have an 18% chance. Flipping those around would have been more accurate.

Ryan

Devin - you need to realize these odds were at the beginning of the season. I'm a pretty close follower of baseball, and there is no chance I would've flipped those odds. The White Sox were a much better bet at the beginning of the year to win the World Series than the Cubs. Oh, and there's also that whole 1908 curse thing going on.

-Cardinals Fan

SKates

Devin is right...most prognositcators had the Cubs as a MUCH better bet at the beginning of the season if only because they played in the weak NL and the even weaker NL Central...I know it hurts as a Cardinals fan, but it's true. The White Sox were supposed to be an average team in the deepest division and the stronger league, so 18% is approximately 18 times too high a percentage. The Cubs were given odds at around 30-1 to begin the season, so something around 2-3% would have been correct.

Theresa

You start from a false premise, that people would *think* that Yankee fans would be the only ones rooting against the Red Sox. I despise both of them! Their fans are basically the same arrogant yahoos, just with different accents, rooting for different teams. Go Tribe!