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Former Payroll Manager for San Francisco Giants Suspected of Embezzlement After Taking a Little Too Much Credit for Team’s Success

A lot of work goes into building a championship baseball team. Good pitching, solid defense and, contrary to some people’s opinion, pinstripes seem to help. What many people easily forget is that there is more to it than just talent on the field. There’s the business aspect of baseball that is essential to every successful team. You can’t just throw a bunch of money around and hope for the best, Steinbrenners. There has to be a plan. The San Francisco Giants, the reigning champs, are one of those teams. Unfortunately for the Giants, they are not impervious to bad luck. Case in point – Robin O’Connor, a former payroll manager for the team, has recently been accused of embezzling more than $1.5 million from the organization. The team was not aware that this misappropriation was happening until someone at Bank of America (Yes.) rang them up with news of a letter they received from Ms. O’Connor, who had recently applied for a home loan and had written a letter explaining two very large deposits into her bank account. Apparently, someone at BofA found the following a little bit out of the ordinary:

“Because of her outstanding contributions to our Major League Baseball team and front office during the 2010 season that assisted us in accomplishing our goal of winning the 2010 World Series, she was given two additional payments of compensation in May 2011,” the letter, quoted in the affidavit, states.

Yes, the correct calculation of federal, state, social security, medicare and other miscellaneous deductions were of such magnitude that it warranted not one but TWO bonuses for Ms. O’Connor. Because if no one gets paid, no one is happy. And unhappy players don’t perform.

Ex-employee may have taken $1.5M [ESPN]

That Duke Snider Autograph May Have a Tax Story Behind It

Snider returned to Brooklyn on a sad note on July 20, 1995, when he appeared in federal court, a couple of miles from where Ebbets Field once stood, as a criminal defendant. Snider and another Hall of Famer, the former Giants first baseman Willie McCovey, pleaded guilty to tax fraud for failing to report thousands of dollars earned by signing autographs and participating in sports memorabilia shows. “We have choices to make in our lives,” Snider said. “I made the wrong choice.” [NYT]

Who Leaked the MLB Financial Statements?

This morning we mentioned the Deadspin story that presented leaked financial statements of several Major League Baseball teams. This included the Pittsburgh Pirates who have had 18 straight losing seasons yet remain profitable – making $14.4 million and $15 million in net income for the fiscal year ended October 31, 2008 and 2007 respectively.

The Seattle Mariners financials are also now available and the Texas Rangers numbers will be rolling out tomorrow, so there’s plenty of financial analysis treasure hunting for you to engage in, if that’s your thing.

Fis is unprecedented access to the teams’ financial position and performance, PLUS! all the wonky details of their Summary of Significant Accounting Policies – everything from revenue recognition to prepaid signing bonuses, guaranteed contracts, so on and so forth.

However, it also includes details that give insight into MLB controversial revenue sharing program, such as the Pirates using $44 million in ’07 and ’08 to develop players, as reported by the New York Times. With the lowest payroll in baseball and perpetual loserness, baseball fans in the Steel City might rather see that money spent on some free agents so they have something to discuss between the hockey and football seasons.

But perhaps more importantly, the Times reports that MLB is not taking this breach lightly. Since these teams are privately held, the information is not widely shared and the suspects are few:

Access to the teams’ audited financial statements is usually limited to the commissioner’s office; baseball’s lead bankers, Bank of America and JPMorgan Chase; and two accounting firms, Ernst & Young and PricewaterhouseCoopers. But [Florida Marlins President David] Samson said that “in the course of business, other entities have access.” Teams do not see one another’s financial reports, but receive a general accounting of where they rank compared with the other 29 clubs in profitability.

Of course this is the point in the post where you’d expect us to point the finger at E&Y or PwC but in reality, it seems unlikely that the leak would come from either firm. Likewise, it doesn’t make much sense for it to have come from BofA or JP Morgan. All these firms no doubt boast the services they provide to Major League Baseball and any professional servicing those clients wouldn’t dare risk damaging their firm and their career by exposing sensitive financial data of such a high profile client. Does it really make sense for an E&Y/PwC/BofA/JPM employee to leak the financials to Deadspin on a whim?

The leak has to be from within the commissioner’s office. First of all, someone there has the access to all these records and it is extremely more likely that Deadspin has sources in the commissioner’s office that would be willing to leak the information (especially teams no one gives a shit about). Secondly, we shouldn’t forget that baseball has had its share of squealers. There’s no reason to believe that the whole sport isn’t infested with them.

And as we mentioned – who gives a shit about the Pirates, Mariners or Marlins? These are low payroll teams whose financial information doesn’t cause much of a stir other than the fact that this is first time the data has been available to the public at large. If someone really wanted to bomb the hell out of us, the Yankees, Red Sox and Cubs financial statements would have been leaked and then the disparity (financial and thus, competitiveness) between the teams would really on display.

Baseball Chases Leak of Financial Documents [NYT]
MLB Confidential, Part 2: Seattle Mariners [Deadspin]

You Can Blame the Tax Code for Expensive Baseball Tickets

Since it’s opening day for baseball, there are probably a few of you (non-tax accountants) that are at the ballpark enjoying sun, overpriced beers and, if you’re lucky, some complimentary tickets on behalf of your firm.

If you happen to be shelling out your own hard-earned money however, you’re no doubt aware that price of your tickets continue to go up season after season. Throw in $9 beers and Brother Jimmy’s BBQ and you’ll spend a small grip just to enjoy a day of sport and no work.

What’s the cause of the skyrocketing cost of attending a baseball game, you ask? The tax code of course!

That’s according to an op-ed by two professors, Duke law professor Richard Schmalbeck and Rutgers business professor Jay Soled, in today’s Times.

There are many reasons for the price explosion, but a critical factor has been the ability of businesses to write off tickets as entertainment expenses — essentially a huge, and wholly unnecessary, government subsidy.

These deductions have led to higher ticket prices in two ways. On the demand side, they have fueled competition for scarce seats, with business taxpayers bidding in part with dollars they save through the deductions.

On the supply side, the large number of businesses bidding for expensive seats has driven the expansion of luxury skyboxes and a reduction in overall seats in new ballparks.

The authors note that baseball was, until the 1970s, a “populist sport” and fans of all economic classes could attend games for a reasonable cost. Those days are long gone and the professors blame the ability of corporations to deduct business-entertainment expenses as the culprit. They state that you not need look further than the opening of the new Yankee Stadium that has “3,000 fewer seats than its 1923 predecessor but almost three times as many skybox suites.”

The professors advocate a limit on deductions for on luxury tickets to a low fixed amount (e.g. $50). They cite the outright elimination as “unrealistic” but we can’t recall at time when “realistic” and “Congress” collided in a sentence.

We agree with our esteemed colleague at ATL that if you really want to stick it to the companies who take advantage of tax code’s generous provisions, just make skybox tickets non-deductible altogether.

As the authors note, Corporate America has a love affair with sports-related perks and we’d guess that eliminating the deduction would not stop them from buying luxury tickets. The client relation types in your firms know that there is an intangible value to wooing potential clients in some comfortable confines as opposed to cramped seating in the stands with the commoners.

Throw Out Skybox Tax Subsidies [NYT via ATL]