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 of related party operations (stadium costs) Roster Depreciation 1. Who is Right? The Players 2. Why? The owners capitalized and amortized 50 percent of the purchase price ($12 million) simply because the tax rules allowed it; therefore the …show more content…
Player Compensation – Amortization of Signing Bonuses 1. Who is Right? The Players 2. Why? Owners suggest that signing bonuses should be expensed as incurred. However, because the duration of the employment contract can be estimated with reasonable accuracy signing bonuses can be capitalized and amortized over that same period. Therefore the players are correct in their argument that bonuses are just a part of the overall compensation package, and for accounting purposes, should be spread over the term of the player's contract. Player Compensation – Non-Roster Guaranteed Roster Expense 1. Who is Right? The Owners 2. Why? Owners suggest that the total future value of these payments should be expensed when the players are removed from the roster. Players suggest that the payments should be expensed as they are made. However per the rules of conservatism, the combined non-roster salaries should be expensed in 1984 and the salaries to be paid out in ‘85 and ‘86 should be listed as a liabilities on the Balance Sheet. Related party operations (stadium costs) 1. Who is Right? The Players 2. Why? Players suggest that the stadium rents are set to understate the profits of the baseball club and to move some profits to the stadium corporation that is owned by two of the baseball club’s owners. A Related-party transactions (RTP) is defined
Moneyball, the story of a dynamic change agent who rallied a small group of undervalued professional baseball players and executives to overturn convention and rethink how Major League Baseball (“MLB”) was managed and played. Its really a book about hustlers. Moneyball consecrated the notion that its noble to win inexpensively, but believe its good to stay a cheap baseball club, because of their fat annual revenue-sharing check they get at the end of the year. Michael Lewis wrote an un-organizational confusion, his misunderstanding of baseball, to his constant interruption of financial and statistical talk, that turned interest in the book away from many.
''And this idea of players making large amounts of money also says something uncomfortable about our society, where a ballplayer can make so much more than, say, a teacher. But it's not the fault of the players. The money is obviously there. It seems like the owners have a death wish about the
The National College Athletic Association, better known as the NCAA has been involved in constant turmoil for quite some time now. In the college sports world, there are two variant sides by which neither can come to a final decision. Those side are for and against paying college athletes for participation. While some agree that “coaches are paid too much for players to be struggling to buy food” (Connolly), some actually seem to disagree. Agree or disagree, the athletes deserve a resolution because the longer the issue, the longer the struggle. The two side fail to realize that their arguments and discord does
Teams with large payrolls routinely win at a higher rate than teams who cannot afford to spend the massive amounts of money other teams do. For example, in the last fifteen years the New York Yankees and Los Angeles Dodgers, two teams which regularly are among the highest spending teams in baseball, won on average 94.7 and 86.8 games respectively. By comparison, the San Diego Padres and the Kansas City Royals, two teams who are not able to compete financially with teams with deeper pockets, won an average of 77.1 and 71.6 games respectively in that same time span (Major League Baseball). This disparity in season wins is a direct cause of Major League Baseball’s lack of a salary cap. Over the course of a 162 game season, teams with higher payrolls, and therefore better talent on their roster, will prevail more often than
There is a dearth of empirical literature regarding the topic of NBA player salary determinants. Whereas there have been some articles written on NBA player salary discrimination, the lack of empirical evidence as it relates to player performance and its impact on player salary have been virtually non-existent. This investigation serves to contribute to the paucity of empirical literature regarding NBA player salaries. Wage fund theory was chosen to guide this study. According to this theory, wages are determined by the amount of capital available to pay workers. As capital increases so do worker raises. This theory has a direct correlation to the NBA salary cap. The salary cap is comprised of Basketball Related Income (BRI) which consists of revenue generated from ticket sales, national and local broadcast deals, in
Anyone who has been involved in an organized sport, whether it is backyard football or a high school sports team, knows that these sports all have organizations that are responsible for setting rules, determining conditions of play, and penalizing individuals who infringe the rules. Some of the organizations like the National Football league and the MLB are familiar to most people, the rules they follow are not generally understood by anyone who is not closely associated with the sport. Most fans and sport critics assume that what is happening inside these organizations are of little concern to them. However, this is not the case. In the MLB, the New York Yankees spend an excessive amount of money every year to obtain big name players. A
Collective bargaining and unions have had a considerable effect on fans through professional sports. Because of these contract negotiations, athletes in recent years have benefited from an increasing share of ticket and television profits. Collective bargaining has resulted in strikes and lockouts and has disrupted several seasons through cancellation of games or even ending a season. The televising of sporting events has become the largest source of revenue
Free agents demand for very high compensation and this takes away major chunk of available salary. Every team has to come up with good balance of rookies and veterans to meet salary cap.
After an eye opening come across after the Los Angeles Dodgers spent nearly two billion dollars just on sales at the ballpark, the Bloomberg News spent nine months gathering and evaluating the numbers and statistics behind the business to in fact to see how much goes on behind the diamond. To put it into perspective, most fans of baseball would believe that whoever would win the World Series on any given year, that they would in fact be the most valuable team in baseball. In point, that is the total opposite. You
The differences between the owners, players, exist because they are both calculate the in various ways at a time under the rules by GAAP. The owner’s financials are also accounted because it is a corporation as well. Depreciation, amortization of players might be an issue if the players are in the non-roster list or call off injury. However, whatever ever happens, has to be followed the GAAP rules.
A third debate arises from the fact that some players no longer on the current roster are being paid amounts that were previously guaranteed in multi-year contracts because of they are retired or injured. The issue is whether the payments should be expensed as they are paid out or whether the total future value of these payments should be expensed when the players are removed from the roster. Owners asseverate that the total future value of these payments should be expensed when the players are removed from the roster because they are no more active players, hence they do not affect company’s current revenues. However, players want to persuade them the payments should be expensed as they are made. If it is not, income numbers would be heavily subject to high volatility depending on when they are released and on the duration of the contracts. Additionally, players say, these contracts could be picked up by another team as well, and then the company would not have to pay any liability. Reasonably,
This baseball team did have analytical method of deciding what player would always where on the field when they were on defense and when they were on the field the team took risks to try some things new. When the team was at bat also they took many risks. For instance, one of the players was afraid of making it to second base, but when he hit the ball, he did not realized that he had made a homerun. The smaller the team like the “Oakland A’s” the less money they need to have because there are not a lot of people on the team and they have simple analytics by putting team players with their strengths. Any baseball team or company should have a copyright because if a company comes up with a new strategy to earn more profit, they do not want any other company to know their strategy. For example, the Oakland A’s should have a copyright because their strategy is genius. He changed the recruitment system to fit his needs and dreams to win the unfair game of baseball. He changed up the scouting system by not going to all of the baseball players in the state but he went to the players that he saw that had passion for baseball. For instance, Stephen Bishop who was in his 40s still had passion of playing baseball
Environmental factor is another factor that Nor'easters must consider-Every business must take the environment factor into account for price policy establishment. They are in the category of constrictions that are carried out by the overall supervising office. Here, the commissioner for baseball has the regulatory powers and he can overrule some certain internal policies of any minor team that is in conflict with the core business objectives of the Major Baseball League (MLB). I strongly urge Springfield Nor’easters to consider this factor in the pricing policy and establishment of their organization.
In order to effectively propose a policy change or implementation, it is quintessential that the definition of the current problem be outlined. Kraft and Furlong definition of “problem” refers to the existence of an unsatisfactory set of conditions for which relief is sought, either through private means or from the government. In the example of Salt Lake City, Utah the municipality faces the immediate financial burden of funding the golf course. Due to the lack of revenue generated from patronage of the golf course the city has assumed financial responsibility in effort to serve a very small demographic of niche users.
The financial bonuses should be tied to how much the team saves this year. Often companies tend to cut individuals who do not have top priority tasks. Keeping the ones who are important understand and will help you save a lot of money.