21 Oct 2013Working Paper Summaries

How Major League Baseball Clubs Have Commercialized Their Investment in Japanese Top Stars

by Isao Okada and Stephen A. Greyser

Japanese money flowing from broadcasting rights, sponsorships, and merchandise contributes substantially to the prosperity of Major League Baseball (MLB) in America. This market growth depends on wide exposure of and good performance by Japanese major leaguers. Acquiring and signing these stars can become a passport to get in touch with the Japanese market directly. The authors examine how the MLB clubs have tried to commercialize their investment in Japanese top stars and assesses whether the clubs have succeeded. Seven factors attract revenues from Japanese companies and fans: pitcher or position player, player's popularity, non-stop flights from Japan, distance from Japan, non-sport tourist attractions in a city, size of Japanese community in the city, and player's and team's performance. The most important factor, however, is the player's talent and popularity in terms of performance in both Japan and the US and his media exposure in Japan including endorsement contracts. Key concepts include:

In terms of attracting Japanese spectators and corporate sponsors, signing a position player has a clear advantage for MLB clubs compared to signing a pitcher.
High popularity for each player is a prerequisite condition for success in attracting revenues from Japanese companies and fans.
In terms of attracting spectators from Japan, there is a presumed advantage for cities that have non-stop flights from Japan. However, it is difficult to estimate how big an impact direct flights have.
When Japanese travelers whose prime interest is to see a MLB game plan to visit the US, distance from Japan affects somewhat their willingness to make the trip.
When Japanese tourists choose a destination to see an MLB game in the US, attraction points other than MLB ballparks are influential, unless the tourists are solely fans of a specific player.
The larger the local Japanese community, the larger the opportunity for a team to attract people to the ballpark for a Japanese star.
If a Japanese major leaguer does not perform well in the MLB level, he could lose his luster even if he was a top player and very popular in Japan.

Author Abstract

When a Major League Baseball club signs a Japanese star player, it obviously tries to commercialize its investment in the player. The initial focus is on home attendance (ticket sales) and television audiences, plus merchandise sales. These elements are similar to those considered for any high-performing players. However, for Japanese stars, there is also the potential to attract significant fandom from the local Japanese community. This represents an opportunity for truly incremental local revenue for the team. In addition, teams try to attract revenue from Japan-such as obtaining corporate sponsors, advertising signage at the home field, and visiting Japanese fans traveling to the US to see these stars perform. In addition to treating team efforts at growing local Japanese community support, this paper examines seven factors for success in attracting revenues from Japanese companies and fans: pitcher or position player, player's popularity, non-stop flights from Japan, distance from Japan, non-sport tourist attractions in a city, size of Japanese community in the city, and player's and team's performance. The most important factor, however, is the player's talent and popularity in terms of performance in both Japan and the US and his media exposure in Japan including endorsement contracts. In addition, if a MLB club signs a Japanese position star player and is based in a city that is endowed with a variety of non-baseball tourist attractions, this would have a further advantage for the team. The field-based research reported here is derived largely from analysis of team experiences with five principal Japanese baseball stars-Hideo Nomo, Ichiro Suzuki, Hideki Matsui, Daisuke Matsuzaka, and Kosuke Fukudome. The paper's "2013 Reflections" (pp. 15-17) includes analysis of Yu Darvish of the Texas Rangers.