We have a local legend, icon and hero here in Houston, where I live. His name is Mattress Mack and he owns a furniture store.
Okay, his real name is Jim McIngvale and his furniture store is a little more than just that. It’s THE furniture store.
He’s built this amazing empire of furniture sales doing crazy, fun and remarkable things.
This past weekend was no different.
Gambling with Football and Furniture
I got an email on Friday – two days before the AFC and NFC championship football games.
They were running a(nother) bizarre promotion.
Here’s the gist of the rules:
1. Purchase $5,000 or more of furniture from Gallery Furniture (the name of this iconic furniture store).
2. Have it delivered by 2PM CST Sunday, January 19, 2014 (before the first football game starts).
3. Choose you you think will win both football games.
4. Pick the winner of both games right and you get your money back on your purchase (yep – all $5000+ dollars you spent).
Sounds crazy, right?
I read the rules four times. It was fact. They were really doing this.
The Math behind the Madness
I immediately started thinking about the math.
Two games. Two winners. 25% chance of guessing both of them right.
The probability tree looks like this:
So, mathematically, for every $20,000 in sales, Mattress Mack will give back $5000. Assuming his profit margin is more than 25%, he’ll still be in the black.
I did some quick research and found that the furniture retail industry has around a 40% profit margin.
I breathed more easily knowing that – at least statistically – Mattress Mack was going to come out fine.
People Picked – People Won
I read today that 85% of the players won in this crazy game of football vs. furniture.
Which blows the 25% I originally figured out of the water.
It cost Mattress Mack $600,000.
Who would play this game?
Doing a little arithmetic, we can see how many people joined in on the game:
$600,000 was the payout, which means about 600,000/5,000 = 120 people won.
85% of the people who played won, so we can use this equation to model the number of players:
120/x = 85/100, where x is the number of players
Solving for x, we see that about 140 people played.
Good Idea or Just an Idea?
If he was only playing the numbers, he’d have been okay.
Alas, he forgot to consider what the parimutuel betting folks factor into their games (as well as actuaries). There are favorites in football games. And there are long shots.
Mattress Mack set up the game as if there were equal chances of each team winning. Thus giving him the clear advantage.
But there were not equal chances.
Unfortunately for Mack (and fortunately for 120 people), it wasn’t a “fair” game.
He’s still our hero!
Mattress Mack is as crazy as he once was. And we still love him.
Especially since his reaction was, “I realized it was a great success because it made a lot of customers happy.”
Can’t deny that!
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Football vs. Furniture - A Tale of Probabilities
Check out the math in this strange and exciting furniture promotion based on the football championships!