ANALYSIS AND RESEARCH CASE: ACCOUNTING INFORMATION AND SALARYNEGOTIATIONS
Hamilton Hawks Playersâ Association and Mr. Sideline, the CEOand majority owner of Hamilton Hawks Soccer, Inc, ask your help inresolving a salary dispute. Mr. Sideline presents the followingincome statement to the playersâ representatives.
HAMILTON HAWKS SOCCER, INC.
Income Statement
Ticket revenues
$ 3,500,000
Stadium rent expense
$2,500,000
Ticket expense
30,000
Promotion expense
80,000
Player salaries
700,000
Staff salaries and miscellaneous
â265,000
3,575,000
âNet income (loss)
$ (75,000)
The players contend that their salaries are below market and araise is warranted. Mr. Sideline argues that the Hamilton Hawksreally lose money and, until ticket revenues increase, a salaryhike is out of the question.
As a result of your inquiry, you discover that Hamilton HawksSoccer Company owns 85 percent of the voting stock in HawksStadium, Inc. This venue is specifically designed for soccer and iswhere the Hawks play their entire home game schedule. However, Mr.Sideline does not wish to consider the profits of Hawks Stadium inthe negotiations with the players. He claims that âthe stadium isreally a separate business entity that was purchased separatelyfrom the team and therefore does not concern the players. On top ofthat, we allocate all the ticket revenues to the teamâs incomestatement."
The Hawks Stadium income statement appears as follows:
HAWKS STADIUM, INC.
Income Statement
Stadium rent revenue
$2,500,000
Concession revenue
875,000
Parking revenue
95,000
$3,470,000
Cost of goods sold
270,000
Depreciation expense
90,000
Grounds maintenance expense
410,000
Staff salaries and miscellaneous
200,000
â
970,000
âNet income (loss)
$2,500,000
Required
What advice would youprovide the negotiating parties regarding the issue of consideringthe Hawks Stadium income statement in their discussions? Whatauthoritative literature could you cite in supporting youradvice?
What other pertinentinformation would you need to provide a specific recommendationregarding playersâ salaries?
ANALYSIS AND RESEARCH CASE: ACCOUNTING INFORMATION AND SALARYNEGOTIATIONS
Hamilton Hawks Playersâ Association and Mr. Sideline, the CEOand majority owner of Hamilton Hawks Soccer, Inc, ask your help inresolving a salary dispute. Mr. Sideline presents the followingincome statement to the playersâ representatives.
HAMILTON HAWKS SOCCER, INC. | ||
Ticket revenues | $ 3,500,000 | |
Stadium rent expense | $2,500,000 | |
Ticket expense | 30,000 | |
Promotion expense | 80,000 | |
Player salaries | 700,000 | |
Staff salaries and miscellaneous | â265,000 | 3,575,000 |
âNet income (loss) | $ (75,000) | |
The players contend that their salaries are below market and araise is warranted. Mr. Sideline argues that the Hamilton Hawksreally lose money and, until ticket revenues increase, a salaryhike is out of the question.
As a result of your inquiry, you discover that Hamilton HawksSoccer Company owns 85 percent of the voting stock in HawksStadium, Inc. This venue is specifically designed for soccer and iswhere the Hawks play their entire home game schedule. However, Mr.Sideline does not wish to consider the profits of Hawks Stadium inthe negotiations with the players. He claims that âthe stadium isreally a separate business entity that was purchased separatelyfrom the team and therefore does not concern the players. On top ofthat, we allocate all the ticket revenues to the teamâs incomestatement."
The Hawks Stadium income statement appears as follows:
HAWKS STADIUM, INC. | ||
Stadium rent revenue | $2,500,000 | |
Concession revenue | 875,000 | |
Parking revenue | 95,000 | $3,470,000 |
Cost of goods sold | 270,000 | |
Depreciation expense | 90,000 | |
Grounds maintenance expense | 410,000 | |
Staff salaries and miscellaneous | 200,000 | â 970,000 |
âNet income (loss) | $2,500,000 | |
Required
What advice would youprovide the negotiating parties regarding the issue of consideringthe Hawks Stadium income statement in their discussions? Whatauthoritative literature could you cite in supporting youradvice?
What other pertinentinformation would you need to provide a specific recommendationregarding playersâ salaries?
