103 million dollars! 103 million dollars for a pitcher who has never pitched in the Major Leagues! The Red Sox have gone off the deep end with their signing of Japanese pitcher Daisuke Matsuzaka. I could justify the $51.1 million bid to negotiate with Matsuzaka, if only as a way of blocking the Yankees from acquiring him. Plus, the bid would be refunded if a contract was not reached. But the subsequent six-year, $52 million contract? For two million dollars more than the $103 million they paid for the bid and the contract, the Red Sox could have re-signed Johnny Damon and Pedro Martinez, and maybe won another World Series in 2005 or 2006. This is terrible, my Red Sox are now even topping the Yankees in terms of reckless spending. In my mind I could easily visualize Red Sox general manager Theo Epstein and Yankees owner George Steinbrenner playing “Never have I ever” this winter. With old Steinbrenner mocking, “never have I have ever…spent 100 million dollars on a pitcher…” and then adding, “who has never won a major league game,” as Epstein proceeded to get so drunk he signed J.D. Drew.

On further examination though, I love the Dice-K signing. And this isn’t just because Matsuzaka’s first start was a tour de force of his tremendous variety and poise on the mound. Even if he gets shelled in his next start, the signing of Dice-K strikes me as similar to the kind of innovative economic thinking that smaller market teams such as the Oakland A’s and Seattle Mariners built their success on.

The presence of a Japanese sports icon such as Matsuzaka will add millions of dollars in additional revenue for the Red Sox and makes the signing a terrific value. The Mariners revenue jumped $27 million the first year after they acquired Ichiro Suzuki. The Yankees also experienced a substantial revenue increase when they brought in Hideki Matsui. Industry experts have projected that the Red Sox will gain $11 million in revenue per year from having Matsuzaka on their team. Little of the $66 million of revenue the Red Sox will bring in during Matsuzaka’s tenure could have been had if they signed an American or Latino star. If you subtract this projected revenue gain from the total paid for Matsuzaka, then the Red Sox are only spending about $37 million over six years. To put the quality of the value of the Matsuzaka contract in perspective, Jason Marquis, a pitcher who is three years older than Matsuzaka and who had an ERA over 6.00 last year, signed this off-season for $7 million per year. Matsuzaka is the best pitcher from Japan and recently was the MVP of the World Baseball Classic that featured many star Major Leaguers. In other words, it is realistic to expect that Matsuzaka will be at least an above average starting pitcher in the major leagues.

The Matsuzaka signing represents a rare savvy economic move by a franchise that achieved its finest moment in part because of the great value they realized with the signings of players such as David Ortiz and Bill Mueller, but has recently been plagued by egregiously bad acquisitions. If you need examples, see the post-World Series victory signings of Edgar Renteria or Matt Clement, who will make a combined $18.5 million this year. As a fan, one more thing I liked about the signing was the feeling that my team – which happens to have the highest average ticket price in baseball by a whopping $13 – was starting to spend money just as prudently as the proverbial little guys; at least until they decided to pay the daunting offensive combination of Drew and Julio Lugo about the same amount to play in 2007 as the entire Tampa Bay Devil Rays team. I guess ticket prices probably won’t be dropping anytime soon.