...Kansas City Zephyrs Baseball Club, Inc. Answer and submit these two questions for each item in dispute: Who's correct and why? for the Kansas City Zephyrs (6 points). In this baseball accounting dispute case I would rule towards the side of the players. First and foremost, their case on roster depreciation is a good point, because one, this is not done in any other industry when referring to staff or labor, and from a performance standpoint the way you may be able to determine if depreciation is present it could be determined by how much a player is playing in comparison to the previous year(s). And in most cases if a player is actually “depreciating”, they will be put on waivers or released. Next, deferred salaries should be accounted for in the fashion as pointed out by the PBPA, because if the owner’s actually do not pay this money in this fiscal year then that money would be assumed to be earning interest or invested. The third point, referring to stadium operations would definitely need to be analyzed extremely close, because any situation where monies shifting from the right pocket to the left pocket, the rates can not vary from the going rate for these services or properties, because otherwise those transactions might as well be laundering. Ultimately, the accounting policies and procedures practiced by the owners would lend one to question all of their financial reports because their acts up until this point would cause you to think antitrust issues could...
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...PROJ | MODEL | TYPE | STRUCTURAL | ELECTRICAL | EXT. PAINTING | INT. PAINTING | GLASS WINDOW | CARPENTRY & TILE WORKS | Concrete Moulding | Steel Railings | Private Pole | | | | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | OLD | ADJUSTED | kansas | JANUARY | | - | 100,000.00 | - | 15,000.00 | - | 13,000.00 | - | 6,974.00 | - | 90,094.00 | - | 60,508.25 | - | 11,444.75 | 23,000.00 | 24,800.00 | - | 1,200.00 | | FEBRUARY | | - | 100,000.00 | - | 15,000.00 | - | 13,000.00 | - | 6,818.80 | - | 51,150.00 | - | 55,000.00 | - | 10,500.00 | 17,000.00 | 18,300.00 | - | 1,200.00 | | MARCH | | - | 100,000.00 | - | 15,000.00 | - | 13,000.00 | - | 4,527.50 | - | 42,315.00 | - | 40,000.00 | - | 620.00 | 15,000.00 | 16,200.00 | - | 1,200.00 | | APRIL | | - | 100,000.00 | - | 15,000.00 | - | 13,000.00 | - | 3,847.83 | - | 42,315.00 | - | 40,000.00 | - | 526.93 | 15,000.00 | 16,200.00 | - | 1,200.00 | | MAY | | | 100,000.00 | | 15,000.00 | - | 13,000.00 | | 3,065.12 | | 42,315.00 | | 40,000.00 | | 419.74 | 15,000.00 | 16,200.00 | | 1,200.00 | | JUNE | | - | 100,000.00 | - | 15,000.00 | - | 13,000.00 | - | 4,644.60 | - | 34,100.00 | - | 30,000.00 | - | 820.00 | 7,900.00 | 8,500.00 | - | 1,200.00 | | JULY | | - | 100,000.00 | - | 15,000.00 | - | 13,000.00 | - | 3,076.65 | - | 34,100.00 | - | 30,000.00 | - | 660.08 | 7,900.00 | 8,500.00 | - | 1,200.00 | |...
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...For the Kansas City Zephyrs, answer and submit these two questions for each item in dispute: Who's correct and why? Roster Depreciation The owners. From 1977 to 2004, sports team owners were allowed to treat 50 percent of the team purchase price as an asset depreciable over no more than 5 years. Deferred portion (20%) of compensation The owners. It is an accrued expense, The Company may owe its own players’ salaries and wages for work performed, but not yet paid. Even though they are to be paid at some future date, they are indicated on the firm's balance sheet from when the firm can reasonably expect their payment, until the time they are paid. Singing bonus The players. Signing bonuses have to be capitalized and amortized over the lives of the contracts. This is because players are signed to play for the team to provide benefits over the lives of their contracts. Non-roster guaranteed payment The players. Payments to the non-roster guaranteed contracts should be expensed when they are paid. A provision has to be set up. A reliable estimate has to be made of the amount of the obligation based on the past history on probability of players getting injured and not being picked by another team. Stadium rent The owners. The stadium pricing agreement would have to go through a market valuation to see if it provided transparency and accuracy. As related party transactions cannot be presumed to be carried out on an arm's-length basis unless such representations can be...
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...KANSAS CITY ZEPHYRS BASEBALL CLUB This case has three fundamental issues 1. Roster depreciation; 2. Player compensation; 3. Transfer pricing of related party operations (stadium costs); 1. Roster Depreciation (I side with the Owners) The owners recognize depreciation as of a value placed on the player roster at the time the baseball club was purchased. They do this for two reasons. 1. It lowers the value of the team and second for tax purposes. This is very legal and is normally used unless the company wants to show a higher profit. However, the team’s roster is usually its biggest assets and the only reason the owners are doing this is to show lower profits and pay less taxes 2. Player Compensation (I side with the Owners) Players compensation is a significant part of the teams expenses. The team uses accrual accounting which recognizes revenues to expenses at the time in which the transaction occurs rather than when payment is made. Although players’ compensations are not paid immediately in cash it is very likely the team will pay them. If the team does what the players suggest and deffers compensation expenses it would not show accurate expenses and therefore over value itself. 3. Transferg pricing of related party operations: (I side with the players) This is a common accounting practice. Our company actually does this with payroll. We have a staffing agency that operates our nursing homes. We charge for LPN and RN double what we pay them. This way...
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...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...
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...Arguably the biggest game of Sunday’s action is between the Atlanta Falcons and Kansas City Chiefs. Both teams have a playoff berth within their grasp, but with their divisions being as tough as they are, nothing is given – not even a chair at the postseason table. These two squads aren’t complete polar opposites, but there are far more differences than similarities. The Falcons have the best offense in the league, throwing it up and down the field with the greatest of ease. The Chiefs, on the other hand, make their living by playing physical defense, limiting what teams can do on offense. It just so happens that this is the perfect formula for beating the high-octane Falcons – and it’s exactly why the Chiefs will win Sunday’s game. The Falcons’ best weapon is Julio Jones. He leads the league in receiving yards with 1,140 to go with five touchdowns. He has the most 20-yard receptions (21) and averages an absurd 17.5 yards per catch. Not to mention, Jones is the most versatile receiver in the NFL. He can go deep on the outside, run crossing routes and obliterate man coverage in the slot or take a screen pass 40 yards for a touchdown....
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...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...
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...The worst parts in the Kansas City area is the highways. The highways get so irritating because how much rush hour we get each day. We get so many car reacts due to rush hour, and not enough exits on the highway ether, so that make it even slower than it supposed it be. Rush hour is making people be late to work, interview, and other thing people has to get on time, but they can’t because how slow the traffic is. The rush hour in traffic also waste everyone's time and effort. And if we don’t do something about it know the area would be would be nothing but traffic jams, and rush hour. I think that we need more roads to clear up most of the rush hour. If I was in a traffic jam or rush hour I would be mad and frustrated about being stuck...
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...John’s company currently has a 40% share of a 1 million unit market. The current price for his product is $100, but in a direct attempt to gain market share from a competitor, he is considering lowering the price of his company’s product by 10% in an attempt to increase market share to 50%. Marketing expenses and cost per unit will remain at the level of 15% of sales and $70, respectively. 1. Assuming no competitive response and that the price cut resulted in a market share increase to 50%, what would the impact be on net marketing contribution as a result of this action? Show your work. a) an increase of 12.5% b) a decrease of 20% c) a decrease of 17% d) no net change in net marketing contribution e) not enough information to determine the impact on net marketing contribution C D E F G CASE 1-1 Given Calculation Formula 18 Total Demand $1,000,000.00 19 Market Share 0.4 20 Average Selling Price/case $100.00 21 Variable Selling Price/case $70.00 22 Marketing&Sales Expense $60,000.00 $60,000.00 =(D18*D19)*0.15 23 24 Sales Revenue $40,000,000.00 D18*D19*D20 25 Cost of Goods Sold $28,000,000.00 =D18*D19*D21 26 Percent Margin 0.30 =(E24-E25)/E24 27 Net Marketing Contribution (NMC) $11,940,000.00 =D18*D19*D20*E26-D22 C D E F G Given Calculation Formula 34 Total Demand $1,000,000.00 35 Market Share 0.5 36 Average Selling Price/case $90.00 $90.00...
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...1.0 Introduction Armco Inc. is a steel manufacturer that used to be the sixth largest in its industry in US (in 1990). The Kansas City Works within its Midwestern Steel Division was hit by the decline in the business in the US steel industry despite its good performance in the past. Consequently, it downsized and incurred significant losses in most of the 1980s. This entity produces two primary products including grinding media and carbon wire rod, one being recognized in the industry for its durability while the later being non profitable and only covering some of its fixed costs through volume. 2.0 What’s wrong with the old system? (a) Inconsistency with organization’s strategy The Objective of Armco Inc. is maximizing profits and sustaining its position among the leaders in the US manufacturing steel industry. To achieve this objective, Armco has adopted a cost leadership strategy with a broad appeal and has managed to grow bigger through joint ventures and expansion of its product lines in implementing its strategy. However, the strategy adopted by the Kansas City Works is based on differentiation due to its cost disadvantages such as union labor costs and inefficient plant infrastructure.Union labor costs in Kansas City were higher than those of some of its nonunion competitors, particularly those located in the Southeastern U.S. and non-U.S. locations. The Works had an inefficient plant infrastructure because the plant was designed to accommodate five times as many employees...
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...Katelynn Tax 1/18/16 Kansas City Zephyrs Baseball Club, Inc. 2006 There are five main points of difference between the accounting methods of players and owners. The five main differences appear in roster depreciation, current roster salary, amortization of signing bonuses, non-roster guaranteed contract expense, and stadium operations. The following paragraphs analysis the main points above. Owners take 50% of purchase price of $228 million and depreciate it for 6 years this amounts to $19,000 a year in depreciation. While players on the other hand believe there should be no depreciation until the team is sold. They also believe that depreciation isn’t valid because players tend to improve their skills through time and therefore would increase roster value not decrease it. In my opinion I would have to side with the owners on this because generally many firms use straight line depreciation and its fairly common for depreciation to be done that way. Depreciation expenses are typically calculated at (total acquisition cost – salvage value)/useful life. It is possible that there could be no useful life or salvage value if other owners do not buy it and therefore depreciation should still remain as the owners have calculated. I also would like to note that not all players get better over time because of age, or recurring injuries so I believe that the teams do not increase roster value. In fact, I believe in the long run teams stay fairly the same with regards to performance...
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...KANSAS CITY ZEPHYRS BASEBALL CLUB Amortization of signing bonuses: Owners: They have considered “signing bonus” as an expense in the year they are paid (=$12540) Players: Think that signing bonuses are part of the compensation package and for accounting purpose the bonuses should be spread over the term of the player’s contract (=$7818) Our opinion: Agree with the player’s view that signing bonuses have to be capitalized and amortized over the lives of the contracts. This is because players are signed to play for the team to provide benefits over the lives of their contracts. Since we don’t have exact contract periods of all the players. We have used the value proposed by the player’s income statement (=$7818). Non-roster guaranteed contract expenses (payment made to injured players) Owners: They have considered cash paid in 2005 + amount owed to the players over their contract period (=$11875). This is because they are not serving to bring in revenue. They think that it is conservative to recognize those losses now. Players: Think that payment to non-roster players should be recognized when the cash is paid out, not when the players leave the roster (=$4750). Further they think that it is possible that these players’ contracts may be picked up by another team, they Zephyrs have to recognize gains because the liability it has set-up would no longer be payable. Our opinion: Agree with the player’s view that payments to the non-roster guaranteed contracts should be...
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...when you know that part of your tax money is going towards the building of a new ballpark in your area. Within ten minutes of my house in Kansas City, Kansas we have had two stadiums built within the last 12 years, Sporting KC Park (MLS) and Community America Ballpark (minor league baseball). Sporting KC park was built using STAR bonds (only available in Kansas and Nevada) and according to the Kansas Department of Commerce, sales tax revenue (STAR) bonds provide Kansas municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment and tourism areas, and use the sales tax revenue generated by the development to pay off the bonds (Rishe, 2015). Sporting KC had a season ticket base of just under 14,000 for a facility that seats approximately 18,500. That’s roughly 75% of capacity, which is pretty damn good for Major League Soccer. Sporting KC drew an average of 105% of their capacity in 2012 for a 9% increase over their inaugural year at Sporting KC Park (Rishe, 2015). Community America Ballpark was built with the use of private funds. In 2013 the Unified Government of Wyandotte County purchased the Stadium from Ehlert Development. In doing so they will also use STAR bonds for an $8 million renovation (Babbitt, 2015). More than 265,000 fans attended games at the park in 2013, and the Kansas City T-Bones are said to generate over $5.5 million a year to economically benefit Wyandotte County. More than $650,000 has also been given by The...
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...Focus of the Class: Accounting reports are often used in contracting. In this situation, baseball team owners and the players differ on the financial results of operations. An arbitrator has to decide which income number best represents a team's financial performance for the purpose of arbitration. Questions: 1. Who do you think is correct about the true profitability of Kansas City Zephyrs – the owners or the players? a. both are correct on different issues and there is one issue that is undecided because the facts are not there 2. What is your recommendation regarding the particular accounting disagreements between the owners and the players? b. see below 3. Looking ahead to the sale of the luxury boxes, how should the Kansas City Zephyrs Baseball Club account for the up front $250,000 cash payment? c. side with OPC Situation * problem is how to define 'good accounting methods' * protagonist is Bill Ahern - arbitrator in dispute between OPC and PBPA * difficult issues involving the accounting unit, depreciation, amortization of intangibles and related-party transactions Content Inventory * why is the roster (players as assets?) being depreciated by owners? * why is there a significant difference between the current roster salary? * why are the signing bonuses being amortized by the players? Hypothesis * non-roster guaranteed contract expense * OPC - expense the whole amount in 2005 because they are...
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...Kansas City Zephyrs There are 5 items of dispute between the owners and the players. These items are : 1. Roster depreciation 2. Current roster salary 3. Amortization of signing bonuses 4. Non-roster guaranteed contract expense 5. Stadium operations The owners claim that they are making losses in the financial years 2004- 2005 whereas players are calming that owners are using accounting tools to hide profits thereby depriving players of their rightful amount in compensation and other benefits. Each item of the dispute has been analyzed below to find out who is correct and why. 1. Roster Depreciation: I believe that the owner’s way of roster depreciation is apt and has no accounting flaw. Straight line depreciation is widely used across many types of business around the world. At the end of the useful life of the players, their accounting value will be zero. If there is no depreciation fund, the owners will have to spend additional amount to replace them by signing contracts with new players. 2. Current roster salary: I think players are correct here because only that part of the expense should be considered in the current year which has been actually paid out in current year only and should not include the future expenses. This is because no one knows whether both parties will be able to perform the contract next year or in future years. Some reasons of non-performance include: • Owners/ Club go bankrupt. • Players are bought by other clubs with amended...
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