Kansas City Zephrys Baseball Club, Inc. Case Study
Issue: The PBPA believes the OPC should share with the baseball players the profits of the major league baseball teams
Who is right? & Why? Roster depreciation
Regarding roster depreciation, I would agree with the PBPA lawyer, Mr. Hanrahan, that depreciation expense should not be included in the income statement of the team since there are no plans on selling the equipment, only plans of sharing profits with the team players. Besides, experience can definitely add value to the team and increase revenue for the team. The better the players become, the better the games, the better the games, the greater the audience.
Who is right? ...view middle of the document...
If there are players that left the roster and later were picked up by other teams, that large gain should to be taken in consideration and distributed evenly in the years of the players contract, because it is misleading and affects the salaries paid considerably.
Who is right? & Why? Related-party transactions
Mr. Hanrahan’s speculation seems valid to me. Related-party transactions can definitely overthrow and diminish the real earnings to benefit the only the owners secretly. If it was such a bad business then why are they in it? For just the love of baseball! I doubt it.
This should definitely be investigated more profoundly by an auditing authority. It does seems hard to believe that the other team owners who are not stadium owners would dock and let the team revenue be diminished so that the other two owners can charge a premium for the rents. Unless that never happened and they are just making up those amounts to show that they are in fact losing money.
In one hand, I would not be surprised if in fact the owners of the teams were using sophisticated accounting methods to hide profits from the baseball players, such as roster depreciation, overstating salaries expense, recording future transactions in the preset, and...