KANSAS CITY ZEPHYRS BASEBALL CLUB: A BASEBALL ACCOUNTING DISPUTE
This case is used to illustrate some basic accounting issues in a controversial setting. The controversy arose because the baseball team owners and the players association were engaged in collective bargaining negotiations and the outcome of those negotiations depended on the parties’ agreeing on the true profitability of the baseball business.
The case describes 3 areas in which the accounting is being disputed:
1. Roster depreciation;
2. Player compensation;
3. Transfer pricing of related party operations (stadium costs);
1. Roster Depreciation
The owners recognize depreciation of a value placed on the player roster at the time the baseball club was purchased apparently just because tax rules allowed them to do so. Tax rules allow this value to be set arbitrarily at a maximum of 50% of the purchase price (It would be foolish to set it at a lower value for tax purposes). The depreciation is spread......
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Approximate Word Count: 539
Approximate Pages: 3 (260 words per double-spaced page) |