The worst political investment

By Forbes.com

There are some things that money still can't buy.

For all their glamour and brimming war chests, millionaire candidates who fund their own campaigns have a dismal record of winning elections. And this year's bumper crop of super-rich political hopefuls looks set to do no better than previous ones.

Blue-blood businessman Ned Lamont has dropped nearly $13 million on his Connecticut Senate race. He may have pulled off a rare upset for a political newcomer when he trounced three-term incumbent Joe Lieberman in the Democratic primary, but now polls show him trailing Lieberman, who is running as an independent in the general election.

Meanwhile, Pete Ricketts, a former TD Ameritrade (AMTD, news, msgs) director and the son of the company's founder, may rue the day he entered politics. Despite having sunk more than $10 million of his fortune into what is shaping up to be Nebraska's most expensive race ever, his chances of beating Democratic Sen. Ben Nelson remain dim.

A terrible investment

Rep. Katherine Harris, R-Fla., has plowed more than $3 million of her own cash into a quixotic bid to topple popular Democratic Sen. Bill Nelson. He has a double-digit lead in the polls.

"Election after election, those who put a lot of their own money into their campaigns tend to lose," says Massie Ritsch of the Center for Responsive Politics, a group that tracks candidates' financing. "It's a terrible investment, as investments go."

At first blush, the record of candidates who have poured $5 million or more of their own money into a race might be seen as "pathetic," argues Jennifer Steen, an expert on self-funding candidates at Boston College.

Their election rate is only 37.5%, compared with 63.9% for candidates who raised at least $5 million for their campaigns, according to Steen's analysis of elections from 1984 to 2004.

But incumbency was a potent advantage for the latter group, points out Steen, who wrote the book "Self-Financed Candidates in Congressional Elections."

When you compare non-incumbents to non-incumbents, the wealthy types win 36.4% of the time versus an election rate of 49.2% for the candidates who raise outside funds for their campaign -- not as bad, but still not impressive.

History hasn't deterred scores of wealthy candidates from dropping a lot of cash on races this year. So far, 36 candidates have sunk more than $500,000 into their own races. That's up from 30 in 2004 and 29 in 2002, according to the Center for Responsive Politics.

Already, many big spenders have felt the sting of their investment.

Why they fare poorly

Real estate tycoon Josh Rales threw away a whopping $5 million on a losing bid to become Maryland's Democratic nominee for the Senate. All told, rich candidates who either lost a primary or dropped out of the race have squandered $35 million this cycle, Ritsch says.

Wealthy candidates fare so poorly not because voters are turned off by their big spending but because they often lack a resume that appeals to voters, and they tend to run clumsy campaigns, argues Steen.

Aside from incumbency and experience, regular pols may have an edge over their millionaire opponents because they connect with voters as they hold out their paws for money.

"The task of going out and raising money is one of the ways of working to build political support," says Anthony Corrado, a professor of government at Colby College.

Choosing wisely

Those self-funded candidates who do win elections are often successful because they picked the right race.

New Jersey Governor Jon Corzine, the former chief executive of Goldman Sachs (GS, news, msgs), spent an eye-popping $60 million of his Wall Street fortune on his winning New Jersey Senate race in 2000.

The appeal of a self-funded candidate in a state where corruption is rampant helped ensure that the huge sum -- the most spent by any self-funding federal candidate -- did not go to waste.

This year, the taint of the Foley scandal has turned self-made businessman Jack Davis' rematch against Rep. Tom Reynolds, R-N.Y., the chairman of the Republican congressional campaign committee, into a nail-biter. Davis has vowed to spend $2 million on the race.

In another closely-watched race, multimillionaire physician Steve Kagen is locked in a tough fight for the open seat in Wisconsin's 8th district. His opponent, Republican John Gard, is the Republican leader of the Wisconsin Legislature.

But Kagen has poured $1.7 million into the race, closing his opponent's funding edge. And he has the national anti-Republican winds blowing at his back.

"Generally, it's the case that self-financed candidates do well when they have a good opportunity to do well," says Corrado.

By Jessica Holzer