August 19, 2017


There has been one constant throughout the history of baseball: owners desire to make a profit.

In order to keep a competitive balance (and profit sharing), MLB has a luxury tax on payrolls currently pegged at $195 million. The penalty for going over the ceiling is 50 percent to 92 percent. This is a soft salary cap where big market teams like the Dodgers and Yankees can easily absorb.

But the future is rapidly changing that overspend model. The Yankees sold most of their interest in the YES Network, which was the cash cow that fueled those free agent filled teams. The Dodgers got a billion dollar team network deal with TW, which turned into a bust when cable operators balked at paying high subscription fees.

The cable industry, the tinder for the rapid rise in profits and player salaries, is losing three million subscribers a quarter. The biggest reason was the surcharge of sports network fees on monthly bills.  The second reason was the internet and other means of consuming sports than television sets. The third, and possibly most glaring reason, is that the younger generation is less interested in traditional sports franchises. Young kids are more involved in their technology of video games and e-sports than play baseball in the park. In addition, teams have made it almost cost prohibitive for a family to go attend a major league game.

The outside profit center for many teams, the publicly financed sweetheart ball park deal, like the cable money is going to go extinct. Not one publicly financed sports stadium has created an "economic boom" for the municipality. In fact, the associated debt with those deals can be crippling taxpayers. With more and more cities, counties and states in massive fiscal holes and bankruptcy, the community revolt against such capitalism welfare projects will end.

But on the other side, star players are looking for massive contracts. Bryce Harper nears free agency with agent speculation that he will demand anywhere from $30 million to $50 million per season. ESPN opined that Harper could easily become the first $500 million player in sports history. When baseball franchises are worth at the high tide level of $1.5 billion, a superstar player's demand for a third of the team value makes the business model absurd.

Teams are no longer owned or controlled by millionaires looking to massage their country club egos with sports championships. Most teams are corporations who have to answer to shareholders. Investors demand return on their capital in the form of dividends, earnings and appreciation. The easy cost control item on a team is payroll.

In the near future, baseball as a game will fundamentally change. There are growing calls to eliminate much of the subjective, human element of game by turning ball and strike calls over to computer grid technology. In essence, the game will be played without umpires - - - merely sensors and real time play reviews at the league office. But even the elimination of umpires will not drastically alter the erosion of the economics of the game.

If the next generation of fans accept virtual reality for reality, then baseball will probably forge ahead to create a digital platform to replace the timeless past time. Whether it be 3D or holographic representation of past, present or computer generated players, baseball could morph into super computer super charged video game.

Fans like their fantasy leagues. They like their smart phone apps. If baseball was compressed into a graphic rich, high octane video game, many would watch. The elimination of players, ball parks, infrastructure costs, team travel, etc. is like a dream to a team accountant.  If the owners can keep a fan base happy without incurring normal costs, then it is virtual game on.

Since most states have privacy and image rights laws, the new virtual baseball game would probably be run by superstar programmers than old player profiles. Instead of expensive Bryce Harper batting third for the Nationals, it could be RobotOF127. The league could set input parameters for team programmers in setting up algorithms for player stats/performance guides. The league would then run on its own servers simulated games using those team rosters. Whether there would be an real time manager making decisions or strategy calls would be possible. It would also be possible that teams would employ a few gamers to act as pitcher, hitters and fielders to add a "human" element to the simulated game.

Simulated games could be played quicker than real ones. Simulated seasons could be finished rather quickly. Playoff games could be subscription or theater events across the country (or across the globe).

One could argue that this is merely a technological fantasy. That there will always be enough players wanting to play professional sports to field teams. That may be true, but in some sports there is a major shift on whether the health risks outweigh the playing time. More parents are taking their children out of contact football at earlier ages. Even professional players are retiring early because of the current research on the ramifications of concussions. Football could be the first major sport to have a serious personnel shortage. In addition, marketing executives note that in order to capture fans early, those kids need to appreciate the sport, i.e. have played it at some level. That is the fantasy connection between seeing your favorite player juke through the line for a touchdown then going outside to play football with friends.

The same could hold true for baseball. It is a time consuming and expensive spectator sport. The lure of going to the ball park for a game is that it was a social event. There was enough time between pitches to converse with friends. But in this internet age, people are less social. They don't see the need to spend three hours talking to other people at an event. They can poke, text or email them.

All consumption of all forms of entertainment are under fire. Baseball is just one option in this ever changing landscape.