Major League Baseball: Industry Overview, Key Issues and Forecast

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The MLB:
Major League Baseball is the highest level of baseball play in the United States. It is comprised of two leagues, the National League and the American League, and 30 separate teams who each play a 162 game season. The commissioner of the league is Bud Selig, as commissioner he oversees the logistics of organizing the umpiring employees, and all contracts dealing with labor, marketing and TV broadcasting. Mostly funded by private enterprises, with partial funding from public taxes; the MLB as a whole brought in $132 million in 2005 of operating income, which jumped to $360 million of in 2006 (Orzanian). The overlapping schedules make the National Football League the most competition the MLB has for viewers.

Key Issues:
In 1994, the league tried to impose a salary cap on the professional players, this action resulted in a player strike. This strike lasted into the 1995 season, before the teams decided to impose a “luxury tax”, which taxes the teams who have an aggregate payroll in excess to an annually revised figure. The lack of salary cap has affected the level of competition within the MLB, and has resulted in overspending by the wealthy teams. The implementation of a salary cap has only been proposed by a small number who work for the league and by fans, neither have done much in breaking ground toward a positive decision on the matter. There has been recent debate on whether the MLB should use instant replay cameras to alter or challenge decisions during games. As it stands, the MLB has considered the shift to use of the cameras as decid ing factors, but it becomes tricky as to where to draw the limitations of using it for decisions in a game that has been historically governed by the unbiased and educated decisions of the umps. The debate has been going on all during the 2007 season, and a vote is scheduled to take place sometime before next season to decide officially on whether or not the use is permitted, and the stipulations surrounding the use. The use of steroids within the MLB was brought to officials attention in a 2003 anonymous test of players, which should 5-7% of their professional players were using steroids to enhance their performances (Snow). In light of this outcome, Baseball's drug policy, laws revised for the 2004 season and then again after the 2005 season. As it stands, the MLB mandates a suspension of 50 games for a player testing positive for the first time and 60 to 80 games for "possession or use of any prohibited substance (Shalkin). The stronger stance on the use of drugs within the league has been a move in a positive direction for the MLB as a whole.

Forecast for the Future:
As it looks now, the short-term forecast for the organization of Major League Baseball as a whole is looking both promising in terms of revenue and rocky in terms of the decisions they are being faced with. Within the next year, we are projected to see the climbing viewer interest expand, as it was saw its fan base attendance jump 4.5% in 2006 to 79.5 million attending fans (Rogers). Also, within the next year the general managers of the 30 teams within the MLB will sit down to vote on the issue of using instant replay for game play decisions. The vote is going to be a close one, and the decision to use it will only be approved with restrictions when a decision is challengeable, such a sliding into a base, opposed to every pitch thrown during the game. Within the next year, we will see a change in the policy, even it is a very restrained one. Expanding the short-term forecast to a time period of the next five years, we will see talks begin to make progress between the player’s union and the MLB towards creating a salary cap that will foster an environment for fair competition within the professional sport. This process is going to be a very long, very grueling string of negotiations, and the public may not see any definitive results for another five years or so.

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