Kansas City Zephyrs Case Study

Chad Dellworth
Case: Kansas City Zephyrs Baseball Club: A Baseball Accounting Dispute
ACCT 6350

1. How Should Bill Ahern resolve each of the accounting conflicts between the owners and the players?

After meeting with both the owners and the players, Bill concludes that the three main accounting areas of concern between both parties are:

* 1) Roster depreciation * 2) Player compensation * 3) Owners’ stadium fees

In all of three of these conflicts, I noticed that the players tend to make more assumptions about the owners’ intentions than they do factual statements regarding sound accounting principles. I only mention this because Paul, the players’ lawyer, felt that the owners were being greedy and “hiding” profit in their accounting books rather than split their extra income with the players.

According to our class reading Accounting for Property, Plant, and Equipment and Other Assets, all assets—in this case being the players—have a depreciation value. Unfortunately, PBPA goes against this statement by claiming that the players shouldn’t be depreciated at all; in fact, they went as far as to say that the players add value if anything. Now I don’t exactly claim to be an expert on baseball myself, but I know enough to safely say that baseball players tend to wear down over time. For example, pitchers are known for having shorter careers by throwing out their arm. Therefore playing baseball has to be taxing, not to mention risky. If anything, baseball players should only be viewed as from a depreciation standpoint.

Another dispute that occurs between the players and the owners is the notion that a good portion of the players’ compensation becomes a deferred expenditure rather than showing the whole amount as a current expense. However, our class reading points out that deferred compensation must be