Kansas City Zephyrs Baseball Club: a Baseball Accounting Dispute

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KANSAS CITY ZEPHYRS BASEBALL CLUB: A BASEBALL ACCOUNTING DISPUTE The controversy between the owners and players concerning how to account the expenses is crucial to understand if the company could be profitable and then able to meet players’ requirements. In this case three problems are under the scrutiny of the arbiter: roster depreciation, player compensation and the transfer pricing of related party operation, thus issues regarding the stadium cost. Players and owners are struggling against each other in order to win the bargain trying to force and emphasize their own reasons. Since they have not reached an agreement yet, a super-partes moderator has been asked to figure out the outcome of the bargain, relying on good and rational…show more content…
Indeed, the economic discipline affirm for signing bonuses to be capitalized and amortized over the lives of the contracts as players are signed in the first place because they are expected to provide benefits over the lives of their contracts. Again, players were in force with their reasons. 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,

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