Kansas City Zephyrs Baseball Club: a Baseball Accounting Dispute
Parties Involved:
Players; Professional Baseball Players Association (PBPA)
Owners; Owner-Player Committee (OPC)
Bill Ahern; Arbitrator
CONFLICT:
Players
feel that they should share in the teams’ profits will be biased towards accounting that yields higher net profits so that they may argue for a stake in the profits feel that the owners are hiding their profits through accounting tricks
Owners contend that the teams are actually losing money each year will be biased towards accounting that yields lower net profits (if any) so that the players will not have a substantial claim for more pay
Major League:
Made up of 26 Teams
14 American League, 12 National League
Many teams do not own their own stadium or minor league teams
Each team has 24 players on the active roster, 16 minor league players “on option”
Each team plays 162 games (81 Home, 81 Away)
There are 150 Minor League teams that are only partially funded by their affiliated Major League Team
Team Owners established the Major League Agreement
Major League Rules including signing, trading and dealing with players
Elects a Commissioner to a seven-year term
Protects the best interests of the game
Administers the Major Leagues Central Fund
Case Study: Kansas City Zephyrs
Selected by both PBPA and OPC
Chosen for representative nature
Clean and simple financial example
-not owned by a corporation (publicly owned)
-does not own its stadium
-private financial data will not be needed
Points of Disagreement:
1. Roster Depreciation
2. Overstated Player Salary Expense
Current roster salary
Amortization of signing bonuses
Nonroster guaranteed contract expense
3. Related-Party Transactions (Stadium Operations)
Key Accounting Concepts:
Recognition of Revenue
Recognition at the point at which goods are delivered to a customer
The Matching Concept: relating revenues and expenses so that owners’ equity is neither overstated nor understated
Players will tend to argue for...
Players; Professional Baseball Players Association (PBPA)
Owners; Owner-Player Committee (OPC)
Bill Ahern; Arbitrator
CONFLICT:
Players
feel that they should share in the teams’ profits will be biased towards accounting that yields higher net profits so that they may argue for a stake in the profits feel that the owners are hiding their profits through accounting tricks
Owners contend that the teams are actually losing money each year will be biased towards accounting that yields lower net profits (if any) so that the players will not have a substantial claim for more pay
Major League:
Made up of 26 Teams
14 American League, 12 National League
Many teams do not own their own stadium or minor league teams
Each team has 24 players on the active roster, 16 minor league players “on option”
Each team plays 162 games (81 Home, 81 Away)
There are 150 Minor League teams that are only partially funded by their affiliated Major League Team
Team Owners established the Major League Agreement
Major League Rules including signing, trading and dealing with players
Elects a Commissioner to a seven-year term
Protects the best interests of the game
Administers the Major Leagues Central Fund
Case Study: Kansas City Zephyrs
Selected by both PBPA and OPC
Chosen for representative nature
Clean and simple financial example
-not owned by a corporation (publicly owned)
-does not own its stadium
-private financial data will not be needed
Points of Disagreement:
1. Roster Depreciation
2. Overstated Player Salary Expense
Current roster salary
Amortization of signing bonuses
Nonroster guaranteed contract expense
3. Related-Party Transactions (Stadium Operations)
Key Accounting Concepts:
Recognition of Revenue
Recognition at the point at which goods are delivered to a customer
The Matching Concept: relating revenues and expenses so that owners’ equity is neither overstated nor understated
Players will tend to argue for...