From: The-word-detective.com
Dear Word Detective: I'm a librarian in Edmonds WA, and can't seem to locate the origin of the phrase "on the bubble." It seems to be a sports and business phrase that relates to salary caps or staff cuts. -- Ginny Rollett, Edmonds Library. Edmonds WA.
Since I have not been much of a sports fan since the Dodgers deserted Brooklyn (I was, of course, a wee tot at the time, but the perfidy still stings), your question left me temporarily flummoxed. I checked Paul Dickson's "New Dickson's Baseball Dictionary" (1999), where I learned that "on the bubble" is applied to a player who is on the verge of being sent down to the minor leagues, called up to the majors, or traded. But the only clue given about the logic of the term was that the player's "bubble" is about to burst, and there was no explanation of the term's source.
Fortunately, I then thought to check the online archives of ADS-L, the e-mail discussion group of the American Dialect Society (available at
www.americandialect.org/adslarchive.shtml). Lo and behold, there had been a spirited discussion of "on the bubble" back in January 1999, and, as is often the case on ADS-L, somebody actually knew the probable origin of the term.
It seems that "on the bubble" almost certainly comes from the qualifying runs preceding the annual Indianapolis 500 auto race, in which cars compete for the limited number of starting places in the race. Since there are several qualifying runs, the slowest, barely-qualifying car in any given run is said to be "on the bubble" because just one other car making better time in a subsequent run would burst that driver's bubble and dash his or her dream of competing in the big race. The final day of qualifying runs is known, in fact, as "Bubble Day."
Just exactly when "on the bubble" made its first appearance at the Indy 500 is uncertain, although one ADS-L correspondent remembers it being in use back in the 1950s, but over the last twenty years or so it has migrated into the vocabularies of football and basketball commentators, and now into the realm business-speak as well.
on the bubble 
