A cool $1 million was on the line last Saturday when Charles
Thomas, winner of a drawing sponsored by Philips Electronics,
stepped up to attempt a half-court shot at halftime of the NBA
rookie All-Star game. But the folks at Philips weren't sweating
the outcome. The company had already paid out as much as it was
going to for the promotion. In fact, the person with the $1
million on the line was Bob Hamman, the man behind many of the
offbeat promotions at sporting events.
Hamman is founder and president of SCA Promotions, which devises
such stunts, analyzes the risk and determines how much to charge
a sponsor based on the potential payout. SCA won't divulge how
much the All-Star contest cost Philips but says its fees range
from 2% to 20% of the prize, based on risk. Philips was happy to
pay its money up front. "We get more out of the event if someone
makes the half-court shot," says Philips vice president of
merchandising Jim Murphy, "and we don't have to root against
them. We want a winner--especially since our costs are fixed."
This time Hamman bet right; Thomas's wounded duck fell well
short. "If it had gone in, well, maybe we wouldn't do that promo
again," says Hamman. "But that's what we do. We sell dollars for
pennies. Potential dollars, that is."
Since 1986, SCA has underwritten more than $10 billion in
promotional jackpots--ranging from $25,000 cow-chip tosses in
south Texas to $1 billion Internet lotteries--while paying out
nearly $100 million in prize money. About one third of the 4,000
events the Dallas company contracted for last year were sports
February 17, 2003
Hamman conceived of SCA while working in insurance, when he was
asked to cover the value of the prize--a $30,000 boat--in a
tournament to catch a South Carolina state-record marlin. "I
thought if I could quantify the odds, I could handicap it," says
Hamman, who weighed factors including how long the record had
stood, the number of participants and the duration of the
tournament. He decided on a fee, the sponsor agreed, and no one
reeled in a record fish. SCA was born.
"When it comes to odds and statistics, Bob is a machine," says
SCA senior account manager Adam Walker. That affinity for numbers
pays off for Hamman in another field. The Los Angeles native is a
10-time world champ in bridge and has been the world's top-ranked
player for 18 straight years. He's cut from the same mold as
Peter Lynch and Warren Buffett, tournament bridge players whose
card skills reflect their business acumen. "He's not risk averse,
yet his decisions are extremely calculated," says Bruce Keidan,
director of media for the American Contract Bridge League. "He's
all about prudent risk-taking."
It's a strategy based on mathematical models, economic reasoning
and physics, tweaked through years of experience. When companies
come calling--SCA fields some 500 inquiries a week--sales
representatives draw on that knowledge to spit out a price in a
matter of seconds.
Still, some deals have made Hamman wince. Last summer SCA paid
sponsor Anheuser-Busch's $3 million bonus to Steve Fossett, when
he completed the first circumnavigation of the globe by hot-air
balloon. "There wasn't much analysis we could do because it had
never been done before," says Hamman. "We got that one wrong."
Most times, however, Hamman shrugs off his losses, like the
million-dollar payout last November to a fan who sank a
half-court shot during a New York Knicks game at Madison Square
Garden, and the million SCA was on the hook for in 1999 when an
Arizona Diamondbacks fan correctly picked the player (Jay Bell)
and the inning (the sixth) in which a grand slam would be hit.
"We need winners to keep this business going," Hamman says. "Just
not too many of them."
Here are the chances, as calculated by SCA, of an average
competitor succeeding in one of the company's
Football: 35-yard field goal 7-14 to 1
Basketball: Half-court shot 30-60 to 1
Hockey: Goal from center ice 300-500 to 1
(through 3 1/4" opening)
Baseball: Strike from pitcher's mound 300-500 to 1
(through 4" diameter opening)
Golf: Hole in one (150 yards) 10,000-15,000 to 1