Results tagged ‘ Automakers ’

The Interns Channel Their Inner Cassandra

four_horsemen_apocalypse.jpgEvery time I sit down to read the news these days, it seems that one of the four horsemen of the apocalypse is leering out from behind the story. Wildfires in Australia, cholera in Zimbabwe, war in the Middle East and famine here, there and everywhere. Even in the United States we are far from immune to these problems. Unemployment is out of control, no one knows where the financial crisis will ultimately leave us and despite the situation, Congress still can’t seem to figure out how to work together.

But I think the problem can be traced back deeper. No, Mr. Huckabee, it’s not the “anti-religious” forces within the country. And thank you for your input Bristol but it’s not because of teenage pregnancy and the unrealistic idea of abstinence. No, my very exact calculations based on the careful use of a divining rod and an ancient gypsy monkey paw have placed the sewing of the seeds of this crisis on September 9, 1992.

Oddly, another event took place that same day. Could the two be related? It seems too perfect to just be a coincidence. And since there was only one way to find out, I flew the RSBS interns in from Chicago and set them to work. And by the end of the day, in typical RSBS fashion, they came up with several interesting conclusions.

In much the same way that lax regulation allowed the housing market to become overheated, Bud Selig’s single-minded focus on increasing owner revenue allowed a bubble to develop in the baseball market. This enveloped the entire spectrum of baseball related services, too, from the price of seats at a game to the inflated salaries earned by players. But, as fans start tightening their belts, the teams are going to have to figure out some alternate way to keep the money coming in. Perhaps they’ll do it by offering better deals on ticket prices or attempting some new way to keep the concessions moving. It’s a pretty safe assumption that the owners won’t be seeing the same kind of money they did in the past, though. Soon, they might even have to start applying Verizon math to make ends meet.

Additionally, the confluence of decreasing revenue streams and the steroid situation will hit the free agent market pretty hard. The current log-jam in the credit markets came about as a result of toxic assets floating around the banking sector with no one knowing who would take the hit at the final reckoning. It’s like Barry Bonds floating around the periphery of MLB, trying to convince someone to take a chance on him. In the halcyon days of 2005, someone would have been willing to take the risk on both the fancy financial instrument and Mr. Bonds but the market is too tight right now to justify adding such huge liabilities to the books. Free agents will be signed to short-term contracts with PED stipulations, the union will call foul and soon we’ll have a breakdown, just like what we’ve seen in the credit market.

On the bright side, baseball still does provide a quality product so it won’t turn into a situation like that facing the automakers:

calvin_and_hobbes.jpgAt the same time, though, the tendency of owners to rely on municipal largess to rejuvenate the flagging fortunes of their franchises has backfired, a similar situation to what we’re now seeing at GM and Chrysler. Just look at the two new ballparks in the Bronx and Queens, payed for in large part by taxpayer money. As a result of the current economic situation, both teams are struggling to find the sponsorship and financing they need to finish off their end of the bargain. And once again the burden will fall on the shoulder of the taxpayer and the consumer because all the effected parties are “too big to fail.”

The question is, what do we do with these conclusions? Do we continue to chant the Selig mantra, sticking our heads in the sand and claiming that we did all we could do and no one would listen to us? Do we follow the new administration’s path and throw lots of money at the problem in hopes that it will break up the jam? Me, I think there’s a simpler answer. It’s time that the leader who got us into this mess admitted his culpability and fell on his own sword. Healing cannot take place until the tumor has been removed. For that reason, Bud Selig must go.

-A (with special thanks to DK) 

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