With Emma Peters

Sheldon Adelson, the casino magnate, is a self-made billionaire whose knack for business has helped him amass an enormous $28 billion fortune, according to Forbes. His winning percentage in politics, however, is far below his success rate in business.

Adelson and his wife Miriam have become political megadonors, giving roughly $100 million to federal candidates and groups supporting them during the last two election cycles, including failed presidential candidate Newt Gingrich in 2012. Only 56% of the candidates backed by Adelson won during those two cycles. That’s slightly better than the odds of winning a coin toss, yet it’s far below the reelection rate for incumbents, which exceeds 90%. And the winning percentage of candidates backed by political-action committees Adelson gave money to was just 42%, the worst performance among the 10 biggest megadonors in politics today.

Money has been flooding into politics during the last five years, an era in which corporate money seems to be dominating political activity and rendering ordinary voters irrelevant. The 2016 elections are likely to be the most expensive yet, with the Democratic and Republican parties each poised to spend billions, much of that ponied up by rich donors hoping to put their favorite pols in office. Billionaire industrialists Charles and David Koch provoked alarm among some democracy watchers earlier this year when they pledged to raise $900 million from their network of America's richest families to help elect conservative candidates in 2016.

With so much concern about democracy for sale, Yahoo Finance set out to ask a basic question: Are rich donors buying election results? We scrutinized thousands of federal records on campaign donations in presidential and congressional campaigns in 2012 and 2014, and came up with this simple answer: no. Among our findings:

* Wealthy donors of both parties often back losing candidates, partly because they align themselves with strident left- or right-wingers who have a hard time winning over mainstream voters.

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* In many races, there’s a huge amount of money on both sides, with big donors essentially canceling each other out.

* Contrary to conventional wisdom, liberal spending groups have backed a higher percentage of winning candidates during the last two election cycles than conservative groups, perhaps because Democratic President Barack Obama won the White House in 2012, contributing to other Democratic victories.

* Much of the money flooding into politics is spent on political ads that aren’t that effective and sometimes have no discernible effect.

* External factors such as the economy or national political trends are still far more decisive in federal elections than campaign donations.

Two recent Supreme Court decisions—Citizens United in 2010 and McCutcheon in 2014—make runaway spending possible, by allowing donors to give unlimited amounts to so-called super PACs and by eliminating limits on how many candidates donors can give to. “Outside spending by a tiny number of mega-rich donors has played an increasingly important role in each federal election since Citizens United,” the Brennan Center for Justice Analysis wrote in a report earlier this year. Academics Martin Gilens and Benjamin Page warned recently that the increasing influence of “economic elites” in politics threatens to undermine democracy itself. Even politicians complain about incessant fundraising that can take up half of every workday in Washington.

Nobody disputes that record amounts of money are pouring into political races. But the return on investment to big donors appears to be less than the fretting over the health of democracy suggests. “The money going into super PACs is not determinative in most elections,” says political scientist Adam Bonica of Stanford University. “Whether these donors give as shrewdly to politicians as they run their businesses is probably a resounding ‘no.’”

Yahoo Finance conducted its analysis by determining the “winning percentage” for the 10 biggest political donors—the percentage of candidates they gave money to who actually got elected. We also calculated the winning percentage for about 100 political-action groups—including super PACs—that received money from big donors during the last two cycles. (Full details on our methodology are at the end of this story). Here’s how each of the 10 biggest donors fared:

One top donor appears to have a high success rate -- former New York City mayor Mike Bloomberg, who has an 85% winning percentage. That could be because Bloomberg’s a political independent who tends to donate to electable centrist candidates rather than more controversial ones on the fringes.

Many other top donors gravitate toward candidates who share their ideology on pet issues, even if they have a lower probability of getting elected. Adelson, for instance, is a hawkish supporter of Israel who often puts his money behind politicians who share his views, regardless of their electability. For 2016, the Adelsons appear to be backing Republican presidential candidate Marco Rubio, having donated at least $41,000 to his campaign and to PACs supporting the Florida senator. That could be a small down payment on much larger donations in coming months. Rubio has toughened his stance lately toward Israel’s enemies—especially Iran—which some analysts see as a bald effort to appease the Adelsons and nab some of their money. Still, Rubio has middling poll numbers and is far from being the Republican front-runner.

In 2012, Adelson’s candidate of choice was former House Speaker Newt Gingrich, who lost in the Republican primaries to Mitt Romney. But along the way, a Gingrich super PAC called Winning Our Future that received $15 million from the Adelsons produced a film that trashed Mitt Romney and contained charges against the former private-equity baron that surfaced later in Democratic attacks on him. Once Gingrich was out, the Adelsons contributed at least $30 million to the Romney effort, part of their pledge to spend as much as $100 million to defeat the incumbent, President Obama. To no avail. Since Obama walloped Romney, Adelson lost twice in the 2012 presidential race—and his early support for Gingrich may have helped damage Romney’s image, contributing to his eventual defeat.

The big donor with the worst record picking candidates is Joe Ricketts, the founder of brokerage firm TD Ameritrade, who donated modest amounts to at least 6 GOP presidential candidates in 2012—including Ron Paul, Rick Perry and Rick Santorum—and much larger amounts to a handful of conservative super PACs. The most conservative top 10 donor is hedge-fund billionaire Robert Mercer, according to Crowdpac, which ranks the ideology of candidates and donors on a 10-point scale. (Mercer ranks a fraction more conservative than businessman Richard Uihlein, though both round to a score of 8 on our list above. ) Mercer gave at least $15 million to candidates and PACs in 2012 and 2014, and he’s shaping up as a big player for 2016 as well. His biggest donation so far has been an $11 million gift to a super PAC backing the presidential campaign of Republican Texas Sen. Ted Cruz, a divisive figure most handicappers think has little chance of landing the nomination. Mercer may be putting his money where his conviction is, but it’s unlikely to notch him a W.

The most liberal top 10 donor is hedge-fund manager Tom Steyer, an environmentalist who puts most of his money behind candidates who favor tough measures to combat pollution and climate change. Steyer is backing Democrat Hillary Clinton in the presidential race, who has frontrunner status and could turn out to be a winning bet. And his winning percentage during the last two cycles has been 64%, which beats the average of 59% for all of the top 10 donors.

In fact, the average winning percentage of the four liberal donors on the top 10 list (including Bloomberg) is 70%, which handily beats the 52% winning percentage the 6 conservatives averaged. Liberal super PACs that got funding from top donors did better, too, with a 58% winning percentage, compared with 42% for conservative super PACs. Democrats may have a stronger record during the last 4 years because of all the Republican candidates who tried to defeat Obama in 2012, and failed, dragging down the winning percentage of Republican donors who gave to those campaigns.

Rich donors give a lot more money to super PACs than to candidates or traditional PACs, since there are no donation limits. (The limit on donations each cycle is $5,400 for candidates and $10,000 for traditional political-action committees.) Super PACs materialized after the 2010 Supreme Court case abolished donation limits, allowing well-funded super PACs to spend multiples of what a candidate might spend. They can support one candidate or many. Jeb Bush, for instance, raised just $11 million in traditional funding during the first half of 2015, but a super PAC supporting him raised $104 million, or nearly 10 times as much. Most of the super PAC money will probably be spent running ads for Bush or against his opponents, but some of it could be doled out to other candidates, too.

But super PACs—even the best-funded ones—don’t automatically buy success. Of 53 super PACS the top 10 donors gave money to in 2012 and 2014, the average winning percentage was just 47%. Here’s the winning percentage for the 10 biggest super PACs of the last two election cycles that are still operating:

Note: Some super PACs on this list weren't operating in 2012; their scores for that year are given as none. Sources: Center for Responsive Politics, Federal Election Commission

Diminishing returns



Money is certainly important in political campaigns, but there also seems to be a point of diminishing returns beyond which it is less and less successful at buying votes. In addition to the basic cash needed to meet payroll, travel and other routine expenses, campaigns need money mainly to run ads (including negative ads attacking opponents) and encourage supporters to show up and vote. But research by political scientists John Sides, Lynn Vavreck and others has found that the payback on ads, in terms of votes, is surprisingly small and sometimes negligible. For one thing, research shows that ads rarely convince voters to change their minds once they've settled on a candidate, so by definition ads only affect voters who haven’t picked a candidate yet. And there aren’t too many undecided swing voters left in blue-red America. In some races, airwaves become so saturated with political messaging in the days before an election that it dilutes the impact of every ad, for every candidate. (Money may provide more of an edge in state and local elections, which were beyond the scope of our analysis.)





Money can be decisive when there’s a funding mismatch. In the 2008 presidential election, for example, Obama heavily outspent Republican nominee John McCain in Indiana and North Carolina—two states that lean Republican—and won both. “Obama had overwhelming force on the ground and in the air, and it paid off,” says Kyle Kondik, a political analyst at the University of Virginia’s Center for Politics. In 2012, Republican Mitt Romney spent more money in those two states, erasing the Obama advantage and winning both -- suggesting that equal funding is sometimes necessary to hold the line and allow natural partisan inclinations to carry the day.

Instead of putting the U.S. electoral system up for auction to the highest bidder, the flood of big money into political campaigns seems to be creating a kind of arms race in which the money piles up but neither side gains a real advantage. Sides and Vavreck liken campaign spending to a tug-of-war in which two candidates, more or less equally funded, pull just as hard on their end of the rope, with the flag in the middle barely moving. It’s also possible that the millions in new spending by super PACs is funding a growing army of political consultants, data crunchers and other campaign specialists, without changing election outcomes very much.



National political landscape has greater impact





Well-funded super PACs may appear to be a decisive factor in elections when, in fact, national political trends are far more important. The GOP super PAC American Crossroads had a lousy year in 2012, for instance, when only 5 of the 19 candidates it placed bets on produced the desired outcome -- a winning percentage of just 26%. An analysis by the nonprofit Sunlight Foundation found that the group spent much of its money to defeat Obama, which obviously didn’t work. It also spent heavily on Republican Senate candidates who lost in states Obama carried.

But in 2014, when there were no Obama coattails for Democrats to ride on, Republicans had a much better outcome and American Crossroads’ winning percentage soared to 73%. On the left, two union-backed super PACs—one affiliated with the AFL-CIO and another with the National Education Association—had high winning percentages in 2012 but were the first- and second-lowest in 2014. Research by Alan Abramowitz of Emory University concluded that heavy spending in 10 hotly contested Senate races in 2014 had almost no effect on the outcome—but incumbency and each state’s partisan leanings did.

Political money might yield more of an advantage if big donors banded together on one side to overwhelm big donors on the other side. Amassing that kind of firepower would be easier in primary elections, when money is spread thinner among multiple candidates, than in a general election where all available money goes to one of two campaigns. “If the Kochs are really willing to spend $900 million, they could buy the Republican primary if they could get their donors to unify behind a single candidate,” says Kondik.

Neither the Kochs nor anybody else seems able to unify the big Republican donors, however. At least 7 Republican candidates—Bush, Scott Walker, Rubio, Cruz, Chris Christie, Rick Santorum and Donald Trump (who’s funding his own campaign)—have wealthy backers intent on funding their own man rather than hewing to party unity. That means most of those big GOP donors are going to lose. On the Democratic side, Hillary Clinton may have more of a lock on her party’s big donors, but they’ve given her less; Clinton’s main super PAC raised just $16 million during the period when Bush’s super PAC raised $103 million. Clinton supporters insist she’s likely to catch up and point out that Bush, with 16 opponents in the primaries, needs to spend more than Clinton, who’s only battling 4 others (or 5, if Vice President Joe Biden decides to run).

American democracy is by no means free of influence seekers with plenty or money to spend. Corporations, for instance, spend 10 times as much money lobbying incumbents for favorable legislation than they spend trying to place favored pols into office. There will still be a ton of cash flowing into the 2016 races, but the smart money will be keeping some powder dry for the big battles that come after Election Day.

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Methodology: We started with the 10 biggest individual donors in 2014, as reported by the Center for Responsive Politics. We then added together the total amount of reported donations for each donor in 2012 and 2014, to capture one presidential election year and one midterm election year. Then we downloaded data from the Federal Election Commission on every political contribution those donors made between Jan. 1, 2011 and Dec. 31, 2014. Where they gave to candidates, we determined whether that candidate won or lost, then determined a “winning percentage” for each donor based on the percentage of candidates they backed who actually won in the general election. Since donors often make multiple contributions to a single candidate in a given race, we eliminated duplicate entries so that we were measuring the number of candidates supported, not the number of donations.

We also determined the winning percentage for each political-action committee and “super PAC” these donors contributed to by determining which of the candidates that received money from the PAC won. Super PACs can spend money either supporting or opposing a candidate (by, for instance, running negative ads), which they are required to report to the FEC. So for each candidate listed, we first determined if the candidate won, then determined if the super PAC “won.” If the SPAC opposed a candidate who lost, we counted that as a win for the super PAC. If it opposed a candidate who won, that was a loss for the super PAC. And if the SPAC supported a candidate who won, that was a win, and vice versa. By computing the percentage of instances in which the super PAC “won,” we determined the winning percentage for the super PAC.

We excluded from our analysis donations candidates made to state-level groups, such as the New Hampshire Republican State Committee or the Colorado Democratic Party. We also did not include donations to any state or local races or causes. And we did not determine the winning percentage when PACs gave money to other PACs. Our analysis includes all donations made by the top 10 donors in presidential or congressional races in 2012 and 2014, and to national political-action committees, including super PACs, during those two cycles.

For the list of top 10 super PACs, we started with a list of the biggest super PACs in 2014, as reported by the Center for Responsive Politics. As we did with candidates, we then added total fundraising for the 2012 and 2014 election cycles. Then we downloaded lists of all candidates who received money from those super PACs in each election cycle, determining in each case whether the super PAC won or lost. We computed the winning percentage in each cycle separately, then combined all the data to determine a total winning percentage for the four years we examined. Some super PACs were not yet operating in 2012; in such cases, the winning percentage during that cycle was “none.”

We did not weight our findings based on the amount of money donated or the number of donations to any given candidate or PAC. Our goal was simply to gauge big donors’ ability to pick winning candidates and to influence outcomes. That’s why we provided two measures for each donor. The winning percentage for candidates indicates the donor’s ability to select winners. The average winning percentage for PACs indicates the effectiveness of donations that were usually far larger than those that went directly to candidates.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.