Baseball superstar Shohei Ohtani’s record $700 million 10-year contract with the Los Angeles Dodgers may also be a boon for his corporate sponsors, whose shares have largely underperformed this year.
The contract is the biggest ever in the history of North American sports, according to MLB.com. It will put Ohtani even more in the spotlight, helping advertise the products and services of his corporate supporters including Mitsubishi UFJ Financial Group Inc., Japan Airlines Co., Kose Corp. and Seiko Group Corp.
Most of those sponsor shares gained on Monday, with Kose rising 2.4% and Seiko advancing 1.8%, outperforming the benchmark Topix Index’s 1.5% increase. MUFG climbed 1.9%, while JAL ended the session little changed after surging last week on bullish industry projections.
Ohtani, 29, who has been likened to the legendary Babe Ruth for his ability to hit home runs and pitch at elite levels, has also helped lift sponsors’ share prices in the past. After he became the first player in nearly 100 years to start a game pitching while leading Major League Baseball in home runs in April 2021, an equal-weighted basket of five of his sponsors outperformed the Bloomberg World Apparel Index and the Topix Index over the next few months.
The news comes as Japanese shares retreat from three-decade highs that were reached earlier this year on signs the nation is escaping from deflation while companies focus more on increasing shareholder value. The Nikkei 225 index had one of its worst weeks so far in 2023 in the period to Dec. 8 as a surge in the yen threatened to cut into exporter profits while growing speculation the Bank of Japan is moving to hike interest rates fueled concern that borrowing costs will increase.
As Ohtani announced his move to a new team, back home in Japan the political scene was growing more troubled, with Prime Minister Fumio Kishida reportedly set to remove officials from his administration amid a slush-fund scandal.
“The Ohtani story in that sense went a long way toward distracting us from the bad news,” said Shoichi Arisawa, an analyst at Iwai Cosmo Securities Co.
Kose, for whom Ohtani promotes skincare products, has underperformed the Topix index this year on weak China demand due to an economic slowdown and following the release of treated radioactive wastewater at Fukushima. Seiko, which has sold watches named after the baseball star, has also lagged the broader market.
While foreign visitors to Ohtani’s home country rebounded to levels before the Covid pandemic, Japan Airlines shares have also trailed amid concern higher fuel prices and a still weak yen will weigh on earnings. Meanwhile, MUFG, which has a web page devoted to the athlete, has outperformed the Topix as the sector surged on expectations that banks’ lending profits will get a boost if the BOJ raises interest rates.
Economic Impact
More broadly, Ohtani’s unprecedented success has driven increases in tourism to see the player and sales of merchandise featuring him, among other benefits, according to Katsuhiro Miyamoto, a professor at Kansai University in western Japan. Ohtani’s move to the Dodgers will have about a 64.3 billlion yen ($437 million) economic impact next year, more than the around 50 billion yen effect if he stayed at the Los Angeles Angels, Miyamoto wrote in a report.
Ohtani, whose unique ability to both pitch and hit well has made him a star since moving to the US in 2018, this year garnered his second American League Most Valuable Player award. As one of the top players ever to hit the MLB free agent market, Ohtani was courted by several teams including the Toronto Blue Jays and Chicago Cubs. Pitchers in modern-era professional US baseball tend to spend little time practicing batting, making Ohtani’s skills stand out.
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