Kansas City Zephyrs

Topics: Major League Baseball, Minor league baseball, Baseball Pages: 8 (2904 words) Published: August 23, 2013
Refer to the Kansas City Zephyrs reading from earlier in the week.

For each of the 5 areas in dispute, answer the following:
Who is right?
Submit your answers in your own Word document by the end of Week 1.

Bill Ahem was asked to be an arbitrator in a major dispute regarding profitability between the Owner-Player Committee (OPC, the representatives of the owners of the 26 major League baseball teams in collective bargaining negotiations) and the Professional Baseball Players Association (PBPA, the players' union).

Baseball Accounting Dispute
The players felt they should share in the teams' profits while the owners maintained that most of the teams were actually losing money each year so there would be no profits to be shared with the players. The OPC were asked to produce financial statements to support their position that most of the Baseball teams were actually losing and not making profits but the PBPA, who had examined the owners' statements, claimed that the owners were hiding profits through a number of accounting tricks and that the statements did not accurately reflect the economic reality. Ahern would need to review both parties’ information and make a decision on the profitability issue. His decision was important because it would affect the ongoing contract negotiations, particularly in the areas of minimum salaries and team contributions to the players' pension fund.

After meeting with the OPC and the PBPA, Ahern's task was to review the Zephyrs' financial statements, hear the owners' and players' arguments, and then reach a decision as to the profitability to focus on the finances of the Kansas City Zephyrs Baseball Club, Inc. Both sides agreed this team’s operations were representative, relatively clean, a simple example to study, not owned by another corporation, and it did not own the stadium the team played in so private financial data would have to be revealed because the corporation was publicly owned.

Who is right? At this point it is very premature to say who is correct. The PBPA does have a right to ask for an investigation into the OPC’s financial statements if they believe that the owners are in fact making a profit and believe they should get a part of it. Why? The players are the reason the fans attend the games and spend their money on tickets and concessions, if the owners are making more of a profit than what they are claiming on their financial statements the players should have a right to also get a cut of the profits.

Major League Baseball
Major league baseball in the United States is comprised of a number of components bound together by sets of agreements and contractual relationships. At the heart of major league baseball are 26 major league teams and each team operates as an independent economic unit, responsible for contracting their own players, promoting games, selling tickets, arranging for the use of a stadium and other needed facilities and services, and negotiating local broadcasting of games. The teams would then join together to establish common rules and playing schedules, and to stage championship games making the business of most teams limited exclusively to their major league activities.

Most teams are organized as partnerships or privately held corporations; very few are subunits of larger corporations making the individual teams relatively small with annual revenues between $20 million and $30 million. Each team maintained an active roster of 24 players during the playing season, plus 16minor league players "on option," who might see major league action during the season bringing the total to 40 players on major league contracts for each team at any one time. Each team played a schedule of 162 games during the season, 81 at home and 81 away. Collectively, the team owners established most of the regulations that governed the industry. The covenant that bound them was the Major League Agreement (MLA), to which was attached the Major League...
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