$42 Million?

That's what the Red Sox reportedly bid for the right to negotiate with Japanese Star Daisuke Matsuzaka. Assuming this isn't a ploy to block him from going to the Yankees (and I think we can be fairly sure it is not), it seems as if the Sox have grossly outbid all other competitors. The Rangers were rumored to have bid $22 Million, and I suppose we'll find out what the Yankees bid soon enough.

Anyway, agent Scott Boras is said to be seeking a 3 year deal so that his client can hit Free Agency when he is 29, which would be right in the prime of his career. Conservatively, let's predict a 3 year contract for $25 Million. This means the Red Sox will be paying $67 M for 3 years of Matsuzaka, or $22.33 M a year. Of course, the Red Sox aren't expecting to recoup all of this, but just for fun, lets give it a look.

Even if the Red Sox were to make the playoffs each of those years, it doesn't seem like he could be worth that much. Roughly using a complicated system for player valuation laid out in the excellent book Baseball Between the Numbers, by Baseball Prospectus, we can estimate how much revenue Matsuzaka might be able to earn for Boston.

First, some assumptions

1. The Red Sox make the playoffs each of the next three years, but Matsuzaka only directly affects this 2 out of the three years. (Optimistic, but we'll go with it)
2. Matsuzaka performs at a level similar to the top pitchers in the league those 2 years, and is slightly less effective the third year

The best VORP for a Pitcher this year was by Johan Santana, with 79.6 - if we use the accepted measure that 10 runs is about equal to one win, that's about an extra 8 wins that Santana added. We won't assume that Matsuzaka will be Santana-like. Let's say he has VORPs of 70 and 65 the two years he helps the Red Sox get into the playoffs, and one of about 45 the other year. Just individually, he is contributing about $11.7 M over those three years (using $650 k per win). And if Boston makes the playoffs two of those years because of him, thats another $50 M generated ($25 M per year, according to Baseball Prospectus).

So, that's a total of about $62 M that we can attribute to Matsuzaka. Falls short by about $5 M of what Boston spent, but I'm sure they would gladly take it. Of course, it could be different, as Matsuzaka is a huge star in Japan, and there might be additional revenue made there. If
anybody knows more about how that works, please feel free to comment.