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Case Analysis 10-3 Kansas City Zephyrs Baseball Club, Inc.

In: Business and Management

Submitted By gulces
Words 1721
Pages 7
I.Issues
Why does net income not equal cash flows?
Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements)
Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened?
What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract?
Of what importance are the periodic net income numbers if the clubs can always be sold for huge profits?
How should Bill Ahern resolve the accounting conflict between the owners and players?
How much did the Kansas City Zephyrs Baseball Club earn in 1983 and 1984?
Facts
This case shows that how different accounting methods can lead a company to different positions. That is what Bill Ahern was selected on April 9 to focus on reviewing the finances of the Kansas City Zephyrs Baseball Club, Inc., which was bought on November 1, 1982 by five shareholders for $24 million, because both the representatives of the owner of the 26 major league baseball teams and the professional players association agreed that Kansas City Zephyrs Baseball Club’s operations were representative, and the baseball club entity was not owned by another corporation, and it did not own the stadium where they play. So Bill Ahern was reviewing their finances on April 17, 1985. He had to make a difficult judgement in next two days. He spent Tuesday reviewing the history of major league baseball and the relationship between the various entities. On following day, Wednesday, he met with the twi Zephyrs owners’ representatives, and On the following Monday, Bill Ahern met with the representatives from Professional Baseball Players Association and their lawyer. The problem that was needed to be resolved was weather...

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