Kansas City Zephyrs Case Study
Maria Alvarez
1369152
The Kansas City Zephyrs
The five areas under dispute between baseball owners and players are: 1. Roster depreciation 2. Current roster salary 3. Amortization of signing bonuses 4. Non roster guaranteed contract expense 5. Stadium operations
Who is right? 1. Roster depreciation: The owners
The owners capitalized and amortized 50% of the purchase price over six years because that is the maximum percentage allowed by the Internal Revenue Code. I would argue that the value of the player roster is somewhat subjective. The players argument, however, is that with experience comes greater value. That is an argument that can be debated.
2. Current Roster Salary: The Players
For
the highest paid players payment is deferred, therefore, the team should not show a loss until the salary is paid out. Furthermore, with regards to the Zephry’s team , money was not set aside to cover the future obligation.
3. Amortization of signing bonuses: Owners
The signing bonuses may be a part of a compensation package. However, if there is a monetary bonus that is paid the first year the player signs the contract, that is when those monies should
Be expensed.
4. Non roster guaranteed contract expense: Players
Salary for those players no longer on an active roster should be deducted when the salary is paid out. The deduction should not occur when the player is taken off the roster. There are further repercussions if the player is picked up by another team, as well.
5. Stadium operations: Players
In regards to the Zephyr’s the issue is the stadium pricing agreement. However, when the owners of the teams are related to another business entity with which the team does business there is a conflict of interest. This may be an area that would be more difficult to prove as the possible business relations with a baseball team are numerous.
1369152
The Kansas City Zephyrs
The five areas under dispute between baseball owners and players are: 1. Roster depreciation 2. Current roster salary 3. Amortization of signing bonuses 4. Non roster guaranteed contract expense 5. Stadium operations
Who is right? 1. Roster depreciation: The owners
The owners capitalized and amortized 50% of the purchase price over six years because that is the maximum percentage allowed by the Internal Revenue Code. I would argue that the value of the player roster is somewhat subjective. The players argument, however, is that with experience comes greater value. That is an argument that can be debated.
2. Current Roster Salary: The Players
For
the highest paid players payment is deferred, therefore, the team should not show a loss until the salary is paid out. Furthermore, with regards to the Zephry’s team , money was not set aside to cover the future obligation.
3. Amortization of signing bonuses: Owners
The signing bonuses may be a part of a compensation package. However, if there is a monetary bonus that is paid the first year the player signs the contract, that is when those monies should
Be expensed.
4. Non roster guaranteed contract expense: Players
Salary for those players no longer on an active roster should be deducted when the salary is paid out. The deduction should not occur when the player is taken off the roster. There are further repercussions if the player is picked up by another team, as well.
5. Stadium operations: Players
In regards to the Zephyr’s the issue is the stadium pricing agreement. However, when the owners of the teams are related to another business entity with which the team does business there is a conflict of interest. This may be an area that would be more difficult to prove as the possible business relations with a baseball team are numerous.