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Wednesday, January 17, 2007

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I find it hard to believe that the only benefit (besides pitching) will be "overall goodwill." I don't believe from what I've read in previous discussions here (and elsewhere) that anybody thought the Red Sox were going to make up $51 million selling key chains, hats and t-shirts.

Your reference to "Hollywood accounting" seems quite appropriate in an age where a team is owned by several parties, including a newspaper, and its interests are intertwined with a TV network. With Tom Werner and all of the media interests and John Henry's "trend following" investments, money's going to get made somewhere.

There is an argument to be made that Matsuzaka was worth the money solely from a pitching perspective. He was considered by many, if not most, GMs as the No. 1 pitcher on the free agent market, and the Red Sox put in less than what ultimately the Giants paid for Zito. Not only that, they tied up far less in payroll dollars per year than was given to any of this winter's above-mediocre pitching free agent class.

That said, I also have difficulty buying the fact that over the life of the contract, they don't make up at least a good portion of the posting fee.

...boy would i love to have the first dunkin donuts franchise in japan...i'd have dm's mug plastered all over the, uh, mugs...

...paul, my recollection was that most if not all sf's on this site argued that the posting fee had 2 major benefits: would not count as salary, therefore exempt from the luxury tax, which you pointed out...secondly, that the bid money would be recovered through advertising and marketing opportunities throughout the far-east, particulary dm's homeland...the notion that he would be worth $15-20m annually "solely from a pitching perspective..." is a new argument to me anyway....i'm not saying i disagree with you, particularly in light of zito's contract....time will tell...this might be an all time bargain for the sox if the guy proves to be what we've heard about, especially in the later years of the contract, if the inflation of pitching value continues to run wild...

It is a new argument, dc. I never mentioned it before -- the height of our debates about the posting fee occurred before Matsuzaka's cheaper-than-dirt contract terms were released and before Zito signed for $120M.

I did believe, and do believe, that the additional marketing value in combination with the working partnerships, the more readily available talent pool, etc. will make up the $51M over time, I don't think I ever said it would immediately make up all $51M immediately. All you really need it to do is make up about $20M to bring the posting fee in line with what the other teams reportedly bid.

...i have to agree with you paul...it's hard to believe that with a little imagination the sox can't find some nugget in their new found relationships that will help offset that bid...

All you really need it to do is make up about $20M to bring the posting fee in line with what the other teams reportedly bid.

Don't you need to bring in $20M above what other teams would bring in to be in line with the other posting fees?

Paul - how much of Zito's 120 M would you factor in from because of the bidding + salary?

I don't buy it, I heard JWH on WEEI a while back say the exact same thing and he also seemed to be "selling it."

Ultimately, I think there could be some very good reasons for them to play their cards close to their chest on this.

1. Talking about all the additional money you make would drive posting figures up in the future.

2. You don't want the Japanese market to feel like you're stealing their best talent just to turn them in to a side show to sell travel packages.

3. It will also drive the actual contract value up when you win the posting and have to deal with the Boras's of the world. He tried it this year by saying Matsui earned the Yanks 20 mill a year. The Red Sox don't want to give the agents any more ammo.

I work pretty close to Fenway and go by there at least once a day. Since the Matsuzaka deal went through I have seen a surge of Asian tour groups around the park, in the Yawkey Way team store, etc, and I mean bus loads.

...but lockland, i think the point was that sox trademarked merchandise like the kind sold in the team store is revenue shared by all mlb teams...

...the sox are probably sandbagging for the reasons mentioned...as i said in my earlier post, it's hard to imagine they don't envision some nugget that will be theirs alone...

Also, the obvious truth, that for some reason people didn't talk about while the posting/signing was going on, was where the additional revenue came from for New York and Seattle. New York and Seattle sold a lot more tickets after they got Matsui and Ichiro, a lot more.

The Red Sox can't sell more tickets.

DC, true, but we all knew that merchandise sales were split at the start of this madness.

I was more pointing out the general uptick in Asian interest and it doesn't take a Harvard MBA to find ways to exploit that interest.

Also, the overall goodwill from the local merchants doesn't hurt, it brings in more dollars for them, allows them to improve, improve the area, etc... Not direct team revenue, but can only help the Red Sox organization in the llong run.

Asian language programs... As silly as that sounds, there isn't a market for them now, but every 5th day there is now.

The Fenway Tour, $12 a pop, every day, as many as they can send out.

Travel packages.

SOME advertising and sponsorship.

Smarter people than I can expand on that list.

Isn't the team retail store on Yawkey Way owned by the Sox? If so, then then it seems to me that while the merchandising revenues are split (in other words, the cost of using the logo), an increase in actual retail sales would benefit the team directly, like any other retailer.

Of course, as I said before, I don't think the Red Sox are going to make up $51 million selling key chains, hats and t-shirts.

First:
You would never ever never say "There really aren't a lot of economic benefits" if you were the Redsox' senior vice president of sales and marketing. If you said that without the full backing of your boss', it would be the equivalent of saying "I can't complete the basics of my job description."
Second:
The whole argument really seems to be that there isn't alot of local business to be had. I'd be interested to see if any of the other Japanese players in MLB have increased local revenue significantly (answer: I doubt it). Using this as part of an argument that the Sox aren't going to get a ton of money is disingenuous.
Every major baseball team has exclusive deals with companies.
None of this has anything to do with mine and others' analysis of Matsuzaka.

I think Lockland brings up good points. Actually, it's hard for me to think of a single reason why the Sox would be forthcoming about making money on the Dice-K signing. To appease fans? I don't think the average fan cares much either way.

...i think we all agree, there's something in it for the sox beyond the obvious...they're sandbagging because it would be stupid to tip their hand...and yep, pastorsteve's right: that's a lot of t-shirts...only the sox accounting staff will ever know for sure...and their Harvard MBA's...

0 divided by 30 is um.... lemme see.

[takes off shoes to count toes]

0 divided by 30 is ... $51 million smackeroos!

i don't know... i remember that despite arguments to the contrary, there was a number of people here saying that jersey and hat sales over in japan would offset the bid.

we were swimming in "new streams of revenue" around here.

i'm sure that the sox will find some way to soften the economic blow, but it will definitely require some creativity.

yfib, "new streams of revenue" was the offset to "buyer's remorse", as i recall...it's an accounting thing, i think

I know initially some said apparel sales would help to offset, but those arguments died out pretty quickly as it became apparent those proceeds are split among all 30 teams.

It’s amazing that there is so much CYA spin coming out of the Red Sox front office regarding this – so much it even has fans here confused.

It was made abundantly clear by many Sox fans that the $51 million ante was no biggie given the amount of revenue that would be pouring in from the Far East. And to a degree, I still buy that argument. The opportunity is there. Is someone in the FA having problems making deals?

I remember back when Matsui signed, there was none of this type of crap. It was clear from the get-go what was going to happen. There was no fear of exploiting a national treasure, no fear of tipping one’s hand. The deal was just as much about commerce as it was about baseball. It was all about the big TV deal, ads popped up on opening day throughout Yankee Stadium, and Hideki’s face was even on the side of an airliner by the All- Star break. And when Hideki returned to Japan for opening day the next year, there was no trace of resentment from the fans.

If Dice-K is the player that “everyone” believes him to be (although a GM saying he the best player available who is not bidding on him is doing so in order to run up the price) then why can’t the Sox freely admit that he will bring in the cash that Matsui brought in?

I'm not a big baseball follower, but maybe they coughed up the posting fee and salary to keep other teams from getting him.

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