Business of Matsuzaka
So the Red Sox look like they’re going to sign Japanese pitcher Daisuke Matsuzaka. SI.com is reporting it’s a six-year deal worth $52 million. That’s pretty close to where I had it. With the posting fee that they will give the Seibu Lions, Matsuzaka’s Japanese team, that would bring the total investment to $103.1 million. That makes Matsuzaka’s total contract the third richest total contract for a pitcher in Major League Baseball history behind what the Colorado Rockies signed Mike Hampton for in 2001 ($121 million) and what the Los Angeles Dodgers agreed to pay Kevin Brown in 1999 ($105 million). At $103.1 million, that would be the 11th largest contract in Major League history. Obviously it’s a different situation, since Matsuzaka only gets a little more than half that money, but it’s still what the Red Sox are paying for him. By the way, Matsuzaka’s agent, Scott Boras, is the only agent to have negotiated more than two deals in which teams have promised $100 million to baseball players. Boras negotiated both the record-holding 10-year, $252 million Alex Rodriguez deal and the Kevin Brown deal.
Let me say this, despite all the bashing of Boras - see “Scott Boras Demands $35 Million To Rescue Drowning Child” (a concocted story, of course) - he does a very good job for his clients.
I will also say that he didn’t have as much leverage as people thought he did in this negotiation. If the Matsuzaka deal could not be consummated, his client would have to wait until next November, and that could only mean one thing in this brutal business: 365 days for agents to effort to steal Matsuzaka from Boras. And we all know how expensive those tickets to Japan are!
We’re not saying it’s going to happen, but we’re hearing some buzz that Fenway Sports Group - the marketing firm that the Red Sox own - is angling to get in on marketing Matsuzaka. Fenway Sports Group is certainly doing everything these days. Their marketing clients are an impressive roster that includes Dunkin Donuts, Phiten and Who But W.B. Mason - which by the way somehow sponsor both the Yankees and Red Sox. They’re also in full-fledged negotiations with Jack Roush for a piece of his NASCAR team.
Anyway, we’ve heard some rumors that there was at least some initial conversations about Matsuzaka and FSG. Certainly a profitable and logical connection. The best thing about this would be that they could virtually make sure that Matsuzaka wasn’t doing sponsorships that were against what the team was doing. When Hideki Matsui signed with the Yankees, Continental Airlines could have used its connection as an official sponsor of the New York Yankees to promote its flights to Japan. But then, Hideki Matsui promptly signed a deal with Japan Airlines. If the team was marketing Matsuzaka, something like that wouldn’t happen.
There’s a few reasons why we think this might not happen. Marketer Steve Fortunato already handles some of the marketing work for Boras’ clients, including Alex Rodriguez and Johnny Damon.
The second reason?
Major League Baseball and the Major League Baseball Players Association probably won’t allow the team to market Matsuzaka - which has never happened before. Why? Because it could get sketchy if the team offered marketing guarantees and other financial incentives that weren’t being counted as overall salary and therefore weren’t accounted for in luxury tax and revenue sharing calculations.
Calls to Fortunato and a Fenway Sports Group executive were not returned.
Now onto the Red Sox and how they can make money off Matsuzaka. They can’t. Let’s end the conversation now. THERE IS NO WAY THAT MATSUZAKA CAN PAY FOR HIMSELF. Well, there is - if he leads them to six World Series titles.
Let’s just go over the business facts here.
1. The fact that the Red Sox will be one of Japan’s most popular teams with Matsuzaka and reliever Hideki Okajima is nice. The Red Sox, Yankees (Matsui) and Mariners (Ichiro and Kenji Johjima) absolutely own Japan. But they get nothing for it. The fact that more people are watching their games doesn’t mean they benefit more than the Tampa Bay Devil Rays. The television revenue is split equally among all teams. The fact that those teams sell more caps in Japan is also economically irrelevant. That money is also split among all teams. That’s why the Yankees marketing deal with the Yomiuri Giants never really got off the ground.
2. The Red Sox are the team that is most unlikely in the entire league to be able to capitalize. Why? Because they have no seats to sell. They basically sell out the entire year. They also don’t have a big chance to capitalize much on ticket prices either. Last year, they had the highest ticket price in the league ($46 per seat) by a mile.
For all those who are now going to tell me that ratings on NESN - the station that the Red Sox owns -- are going to go up and they can charge more for their advertising, I guarantee you that the audience can’t grow that much more. Red Sox fever is already huge. There’s not going to be that many more people watching games because every fifth day this guy is pitching. So forget about a huge increase in advertising. As for the increase of signage in Fenway Park. I’m sure there’s a couple million dollars a year to be made in new Japanese-based sponsors, it’s just not going to be enough.
By the way, there are five Red Sox jerseys on eBay with “Matsuzaka” on the back with the No. 18. What enabled some savvy merchandisers to do this? Last month, it turns out, Matsuzaka told Japan Today, “I would like the number (18) if it’s vacant when I sign a contract.” Matsuzaka wore that number throughout his eight-year career with the team. There is currently no number 18 on the Red Sox roster.
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