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Perusing the Cubs' bankruptcy filings....


Frobby

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I just killed 30 minutes looking at the papers the Cubs filed with the Bankruptcy Court. Here are a few gleanings from their listing of assets:

- Total assets claimed to be $1.418 billion, compared to $1.269 billion in liabilities

- The assets include:

--Intercompany accounts receivable $1.277 billion

--Third party accounts receivable $36.3 mm

--Investment in player contracts $58 million, less $40 million amortization of contracts.

I don't really understand the line for investments in player contracts, since the Cubs have far more than that invested in ongoing contracts with players. Maybe one of the accountants on the board can enlighten us.

The Cubs say they had operating revenue of $217.4 mm in 2007, $241.1 mm in 2008, and $231.5 mm in 2009 (through Sept. 27). What is interesting here is that Forbes had reported $214 mm for 2007 and $239 mm for 2008, so this shows that Forbes has pretty good information, at least as far as operating revenue goes.

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I just killed 30 minutes looking at the papers the Cubs filed with the Bankruptcy Court. Here are a few gleanings from their listing of assets:

- Total assets claimed to be $1.418 billion, compared to $1.269 billion in liabilities

- The assets include:

--Intercompany accounts receivable $1.277 billion

--Third party accounts receivable $36.3 mm

--Investment in player contracts $58 million, less $40 million amortization of contracts.

I don't really understand the line for investments in player contracts, since the Cubs have far more than that invested in ongoing contracts with players. Maybe one of the accountants on the board can enlighten us.

The Cubs say they had operating revenue of $217.4 mm in 2007, $241.1 mm in 2008, and $231.5 mm in 2009 (through Sept. 27). What is interesting here is that Forbes had reported $214 mm for 2007 and $239 mm for 2008, so this shows that Forbes has pretty good information, at least as far as operating revenue goes.

Not sure about the player contracts line item, but I think it's more a function of tax accounting than a reflection of the amount they're paying their current players (hence why it's a balance sheet, not an income statement, item).

My guess: I think when the owners buy a team, they can capitalize the contracts to their existing players, and then use them as a depreciating asset to shield taxes on other income for a period of time (that's why you have the amortization line item). In other words, the existing players lose value over time, so every year the owners can claim an expense as this asset deteriorates. This expense can be used to offset other income and decreases the taxes the owners owe. Not sure, but that's my guess based on the available info. So, it's basically just an accounting gimmick/nuance, and not reflective of the current team.

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In other words, the existing players lose value over time, so every year the owners can claim an expense as this asset deteriorates. This expense can be used to offset other income and decreases the taxes the owners owe. Not sure, but that's my guess based on the available info. So, it's basically just an accounting gimmick/nuance, and not reflective of the current team.

The salary paid to a player is considered an expense, just like the salary paid to a front office worker or the wages of a custodian. However, as I understand it, a player contract is also considered a depleting asset, not unlike an oil well -- an interpretation with huge tax advantages.

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