Kansas City Zephyrs Baseball Club, Inc

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