A Professional Sports Team and Related Items (Including a Stadium)were

question 64

Essay

A professional sports team and related items (including a stadium)were bought by an exceedingly wealthy investor and sports fan. The negotiated price was $225,000,000. Details of what was purchased and the agreed fair values are as follows:
$$\begin{array} { | l | r | } \hline \text { Stadium } & \begin{array} { r } \text { Fair value in } \\\$ \text { millions }\end{array} \\\hline \text { Land } & 70 \\\hline \text { Cable TV broadcasting contract } & 20 \\\hline \text { Player contracts } & 91 \\\hline \text { Spectator leases on luxury viewing boxes } & 9 \\\hline \text { Product licensing agreements } & 17 \\\hline \text { Season ticker subscriber list } & 18 \\\hline \text { Contacts and commitments for use of stadium } & 24 \\\hline \text { The "team" imputed or residual value } & 225 \\\hline \text { Total } & 34 \\\hline\end{array}$$ The team has been less than successful in its professional sports league and has been recording losses of $1,000,000 to $8,000,000 per year on its audited financial statements for the past five years. It was these losses that prompted the last owner to sell the team and related assets.
Required:
a. There are several identifiable intangible assets noted on the list. Group these assets into three classes, being those that are
(i)easily measurable and identifiable;
(ii)reasonably measurable and identifiable; and
(iii)very difficult to measure and identify.
For each group, what common quality or feature of these items distinguishes their classification?
b. While all the items can be assigned a value, would you capitalize all these amounts?
Explain your conclusion.

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Definitions:

Erich Fromm

A German-born American psychoanalyst and social psychologist known for his theories on freedom, love, and human nature.

Abraham Maslow

A psychologist best known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, leading to self-actualization.

Unconscious

The part of the mind that contains thoughts, memories, and desires not within the realm of conscious awareness.

Conscious

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, etc.