DALLAS (CN) – Yahoo owes $4.4 million after backing out of a deal to offer $1 billion to anyone who can call all 63 winners in this year’s NCAA Men’s Basketball Tournament, a Dallas insurer claims in a lawsuit that does not involve Warren Buffet’s similar $1 billion offer.
SCA Promotions sued Yahoo in Dallas County Court. SCA claims the parties entered into a contingent prize contract on Dec. 27 for Yahoo’s “Tourney Pick ‘Em” promotion.
“If any contestant correctly predicted in advance of the tournament the winner of each of the 63 games, and both Yahoo! and the contestant complied with the applicable material terms of the contract and the sponsor’s official promotion rules, then SCA was obligated to pay the contestant a $1 billion prize as specified in the promotion (i.e. paid out with a 40-year annuity of $5 million annual payments and a balloon payment at the end of that 40-year term),” the complaint states.” (Parentheses in complaint.)
In return for SCA’s backing, Yahoo allegedly agreed to pay $11 million in policy premiums.
SCA claims that Yahoo paid the $1.1 million due on Dec. 31 and that the rest is due on Feb. 15.
Yahoo abruptly canceled the contract on Jan. 27, SCA says, which is allowed under the contract, so long as notice is given at least 15 minutes before tipoff of the tournament’s first game.
But SCA says Yahoo is still on the hook for half of the premium, as a cancellation fee under the contract.
“Despite cancelling the contract, Yahoo! has refused to pay the required cancellation fee,” the complaint states. “Instead, Yahoo! claims that it owes no such fee and has even demanded return of the initial $1.1 million payment.”
One week before Yahoo’s alleged cancellation, Warren Buffet’s Berkshire Hathaway announced its backing of mortgage lender Quicken Loans’ own $1 billion prize for anyone who correctly predicts every winner in the tournament.
Buffet’s contest will be free to enter and the 20 most accurate entrants who do not win the prize will be awarded $100,000 toward the purchase or refinancing of a residential home, according to Quicken Loans.
Under the Quicken Loans Billion Dollar Bracket contest, the Detroit-based lender will also donate $1 million to inner city Detroit and Cleveland nonprofit organizations. Quicken Loans sponsors the home arena of the Cleveland Cavaliers basketball team. Sean Hamel, public relations manager for Yahoo Sports, declined to comment on the lawsuit.
SCA seeks actual damages for breach of contract. It is represented by Jeffrey Tillotson with Lynn Tillotson in Dallas.
This is not the only high-profile suit SCA is embroiled in.
It sued Lance Armstrong, his management company Tailwind Sports and agent Bill Stapleton in February 2013 in Dallas County Court, demanding the return of $12 million in race bonuses Armstrong was paid under policies covering his victories in several Tours de France.
Armstrong and Tailwind sued SCA in 2004 after it refused to pay the bonuses, under suspicion that he was doping-an accusation he admitted years later.
But an arbitrator in 2006 awarded Armstrong $12 million.
Six years later, Armstrong was stripped of his seven Tour de France titles by cycling’s world governing body after the U.S. Anti-Doping Agency released a “reasoned decision” that accused him of running the “most sophisticated doping program” in sports history. Armstrong admitted to many of the allegations in a January 2013 interview with Oprah Winfrey, resulting in SCA’s lawsuit suit.
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