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Kansas City Zephyrs Baseball Club Case

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KANSAS CITY ZEPHYRS BASEBALL CLUB

This case illustrates some basic accounting issues in a controversial setting. There are two parties in the case, which are Owner-Player Committee (OPC) – owners’ representative of the 26 major baseball league teams in collective bargaining negotiations and Professional Baseball Association (PBPA) – the player’s union. As we know, the baseball team owners and the players association were engaged in collective bargaining negotiations, so Bill met with Keith (Zephyrs' Owner) and Paul (player). In my view, I think Paul (the player) is right, and I want to explain in 5 areas as following:
Roster Depreciation The owners point out depreciation on the player roster at the time the baseball club was purchased. 50 percent of the purchase price is designated as the value of the player roster at that time. This amount was capitalized and is being amortized over six years. He disagrees that the depreciation is real, because he thinks that most of the players actually improve their skills with experience. The value of player rosters appreciates and depreciates over time. I agree that the roster appreciates as the players become more experienced. Good trades and coaching will increase the roster value, but injuries and retirements will decrease it. Overstated Player Salary Expense

1、Amortization of Signing Bonuses

The players think the owners overstate player expense in several ways, so Paul comes up with 3 adjustments. One is that they expense the signing bonuses in the year they're paid. They feel the bonuses are just a part of the compensation package, and that for accounting purposes, the bonuses should be spread over the term of the player's contract. To be economic wise and fair the signing of bonuses needs to be capitalized and amortized over the lives of the contracts since players are expected to provide

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