There are 3 points which are in dispute between owners and players. These are 1) Roster depreciation 2) Overstated players salary expense 3) Related-party transactions
1. Roster depreciation
Owners say that they bought the Zephyr’s in 1982 for 24 million dollars, and insist that it is applicable to the amortization of 50% of that price over a period of six years. On the other hand, players say that the depreciation expense arises only when a team is sold, and moreover, the depreciation is not real because many players actually improve their skills with experience and, at the same time, there should be an increase in roster value over time. The important point is whether the “team” could be thought as the asset that is applicable to the depreciation.
As the principle of GAAP, the asset which is applicable to depreciation decreases the value as the time goes on. In this case, “Team” is not classified as asset but as impairment test which is not allowed to apply depreciation. Therefore, players are right.

2. Overstated players salary expense
(1) Owners say that the signing bonuses should be counted as an expense in the period that they are paid out. On the other hand, the players mention that bonuses should be spread over the term of the player’s contract. The important point is when the signing bonuses should be counted as expense.
In GAAP, there is principle of conservatism, which means that if a situation arises where there are two acceptable alternatives for reporting an item, conservatism directs the accountant to choose the alternative that will result in less net income and/or less asset amount. I think, in this case, the signing bonus should be counted as an expense in 1984 because of this principle of conservatism. Therefore, owners are right.

(2) Owners say that portions of the highest paid players’ salaries are expensed in 1984 but not paid