The economics of Hideki Matsui

How do you put a value on Hideki Matsui? That question has dominated much of the off-season talk about baseball economics.

Early on, a report out of Japan alleged that the Yanks stood to lose $15 million in revenue if Matsui left the Bronx. Many though questioned those numbers. The revenue from Japan doesn’t flow directly to the Yanks. Instead, it lands in the central MLB pot and is redistributed to the 30 teams.

For the Yankees, Matsui’s impact to the bottom line came about through sponsorships and ticket sales. Since 2002, the Yomiuri Shimbun, a Japanese newspaper, paid for one of the outfield billboards, and Benihana, the Japanese hibachi restaurant, sponsored his at-bats. Furthermore, Yankee games became a major destination for Japanese baseball fans. Those are the revenue sources the Yanks may miss.

But will they actually notice a decline in revenues with Matsui on the Angels? Yesterday, we learned that the Shimbun would not have renewed their sponsorship in 2010 regardless of Hideki’s team. But the Yanks have already sold the empty billboard space. As commenter Ed explained, “Sell a sign in the stadium for $1m/year to a Japanese company because Matsui’s here. He leaves, you sell it to the American company that had the next highest bid, and you get $0.9m instead. Depending on what you want the numbers to say, you can claim Matsui lead to $1m in income or to $100k.”

Today in the Japan Times, sports economist Andrew Zimbalist further details the economics of Hideki:

“I believe the main impact will be what he contributes on the playing field,” Andrew Zimbalist, the Robert A. Woods Professor of Economics at Smith College in Northampton, Mass., told The Japan Times in an exclusive interview on Saturday. “The coterie of reporters that follow Matsui add nothing to the team’s revenues.”

Zimbalist, a member of the editorial board of the Journal of Sports Economics and author of several books on baseball economics, thinks Matsui’s signing won’t make a huge impact for the Angels in terms of revenue. “There also may be some additional Japanese fans in greater L.A. and tourists who come to the games, but, I suspect, that these numbers will be very modest. There also may be some Japanese signage at the ballpark.

“In the end, the fact that Matsui is a beloved star in Japan may add a few million dollars to the Angels’ revenues, but, again, the main impact will be on the field.”

It’s safe to conclude now that the $15 million figure we heard a few weeks ago was wildly overinflated.

In the end, the Yanks may find themselves short a few dollars with Hideki out of the picture. The team, coming off of a World Series championship, will not find itself short of fans, and the sales staff has already exceeded 2009’s sponsorship figures. As Hideki’s value to the Angels will be on the field, if the Yankees find themselves yearning for Matsui, it will be his bat and not his marketability that they will miss.