If the Houston Astros Win 23 More Games, This Texas Business Will Refund $4 Millionby
At the beginning of the Major League Baseball season, Houston furniture store owner Jim McIngvale made a Texas-size bet: The first 500 customers to spend $6,300 at his Gallery Furniture would get a full refund and keep their furniture if the Houston Astros won at least 63 games.
At the time, it seemed like a good publicity stunt and a safe bet. The Astros were the worst team in baseball for three years running, averaging 54 wins a season. But now the team is sitting on 40 wins at the season’s symbolic halfway point and is on target for 67.5 wins. Bloomberg Businessweek data show that the Astros haven’t been particularly lucky or unlucky. The statheads at Baseball Prospectus are pegging the team for 69.7 wins, based on the team’s performance so far and the strength of its remaining schedule, among other factors.
In other words, it’s very possible that McIngvale will shell out $4 million in refunds this fall.
McIngvale, who prefers the sobriquet “Mattress Mack” when he’s marketing his business, insists that would be a good thing. He’s been selling furniture in the Houston area since 1981 and employs about 300 workers at two stores, where he expects revenue to reach $120 million this year. He had experimented with promotions tied to sporting events in years past, but his breakthrough came earlier this year, when Gallery Furniture promised full refunds to customers who spent at least $6,000 based on the outcome of the Super Bowl.
The Seattle Seahawks beat the Denver Broncos, and McIngvale happily paid out $8 million to more than 1,000 customers. “From my standpoint, when the customer wins, it’s the best thing that could happen,” he says. Also, he estimates he got $35 million worth of media exposure from the Super Bowl promotion and that sales increased 25 percent in the ensuing months. “Part of what we sell is trust. People are skeptical that they’re going to get their money back, and when they get paid, they’re thrilled. After the Super Bowl, the trust level in the community went through the roof.”
In that context, the Astros promotion is a more highly evolved version of the Super Bowl deal. The earlier gambit was focused on a discrete event. To some degree, so is a promotion run by Boston-area furniture chain Jordan’s Furniture, which gave away $30 million in refunds tied to the Boston Red Sox winning the 2007 World Series. The baseball season, meanwhile, unfolds over six long months, creating the opportunity for sustained interest in the Gallery Furniture promotion. With a little luck, the Astros will fall off their current pace and McIngvale’s refund will gain traction as a narrative worth clinging to at the tail end of another losing season.
Despite the stakes, McIngvale says he isn’t paying much attention. “The first couple games, I watched,” he says. “Then I said to hell with it, it’s a long season. The money is set aside, and if they win the games the customers will be happy.”