Week 15: NBA Lockouts and the CPA Exam

Tune in weekly to follow Ohio-based Guest Blogger, Joe Ferri as he conquers FAR using the Roger CPA Review Online Course, and documents his every trial and tribulation!

I’m a big NBA fan, so the NBA lockout that is currently going on has been kind of a bummer for me. I used to really look forward to night time games and would have welcomed the break from my weeknight studying. I’ve been following the labor negotiations pretty closely for some time now and it does kind of present an interesting accounting topic. Probably more relevant for the BEC exam, but here goes…

The players and the owners are trying to agree on a proper split of revenue (just one of the major issues). They call that split their BRI (Basketball Revenue Index). Most likely, it will probably end up somewhere around 50/50. In studying BEC, we go over prime cost which is direct material plus direct labor. In this case, the players sort of represent both the direct labor and the direct material or product. You would think that would give them quite a bit of leverage. In this economy with ticket sales not what they used to be, I’m sure the owners want to reduce costs wherever possible to ensure profitable franchises going forward. Well see how it ends up, not sure they’re too close to a resolution just yet. Well, just an observation and hopefully well be watching basketball soon.

Back to studying for me.

Joe Ferri

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