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
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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
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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
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Refer to the Kansas City Zephyrs reading from earlier in the week. For each of the 5 areas in dispute, answer the following: Who is right? Why? 1. Roster Depreciation The players are right. All players believe that depreciation is not required because the players improve their skills through their years of experience. Also, they believe the roster appreciates through the years. The appreciation and depreciation of the player rosters are based on the player’s talent, scouting, and coaching
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In the case study of the Kansas City Zephyrs Baseball Club, Inc. Bill Ahern the arbitrator was assigned to resolve the issue on the parties’ agreeing on the true profitability of the major league baseball teams. Both Zephyr’s owners and players disagree on three different areas: a) Roster depreciation, b) Overstated Player Salary Expense which entails current signing bonuses, roster salary, amortization of and non-roster guaranteed contract expense; and c) Related-Party Transactions (Stadium Operations)
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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
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Kansas City Zephyrs Case This case is a good example of the “earnings game”. A dispute arose between the baseball team owners and the players association on the true profitability of the baseball business. The case describes 3 main areas for which the accounting is being disputed: * Roster depreciation * Player compensation * Current Roster Salary - Deferred Compensation * Amortization of Signing Bonuses * Non-Roster Guaranteed Roster Expense * Transfer pricing
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Kansas City Zephyrs Baseball Club Bill Ahern had to resolve the profitability issues between the owners of the major baseball leagues and the players. The main differences were the following: - Roster depreciation: Per IRS code, 50% of the purchase price ($6M) was designated as the value of the player roaster at that time, and the owners decided to spread it over six years (they did it because they could). Players argue that no depreciation should take place because, they believe that with
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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
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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
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