Partnership with 2 people involved ( 8 week sports league)

[Laxfun]

Funds that came in from teams involved = +11,440 (cost of entering was 520)
Beth took in 3,640 from 7 teams and Don took in 7,800 from 15 teams. Beth got paid +1035 for reffing/working games . Don got paid +1215 (27 games) for reffing games.
Taking these payments out for us reffing games off the top brings total to 9,190 left in league funds. Here is a breakdown of all expenses paid in league . Don paid all expenses except $270 that Beth paid refs. Expenses are as follows : Field rental fee =650 (Don Paid) , Snack shack fee =160 (Don Paid) , Payment for other refs that Don paid = 1215 (27 games) . Beth paid refs 6 games which equal 270 . Miscellaneous expenses were 138 paid by Don. We agreed to pay half of expenses (50/50).
Subtracting all the equals 6,757 which is left for 2 owners. (Don and Beth) .We agreed on Don getting 68% of final funds and Beth getting 32% because Don did majority of work. The 68% and 32% will come out after expenses and ref pay . I take 32% of 6,757 and for Beth that comes down to 2,162 . So Beth gets 2,162 plus ref/working fees of +1035 (see above) and that equals 3,197. Half of expenses that Beth must pay (from above) are 325 field rental fee, 80 snack shack fee , 608 fees from payment to other refs , and 69 misc. expenses. That equals 2,115 for Beth at this point that she would get. Then i need to add +135 for her since she paid refs $270. I have her final amount being $2250. Being that she has $3,640 in her possession that means she would owe Don $1390 . Is this right ? I've been working on this for about 2 months now and i know there are other ways to do this but i feel this is possible way. This isn't even complicated but i feel like something is not right.
Thanks,
Don

 

[JeffM]

Sorry to be so long getting back to you. Your post is difficult to decipher, particularly because, despite a forty-three year career as a banker, I never saw such an unfair partnership agreement. Also your accounting and agreement seem to mix up what pertains to the partners and to the partnership.

First, I admit that I have no idea what relevance the 520 mentioned in your first sentence has. I have ignored it, which may make everything I say wrong.

Second this is what I understand (marked in bold). Please correct me if I am wrong.

Beth collected 3640, but 1035 was due her personally so she was responsible for 3640 - 1035 = 2605 of partnership funds.

You collected 7800, but 1215 was due you personally so you were responsible for 7800 - 1215 = 6585 of partnership funds.

The partnership's revenues were 9190. Beth owed the partnership 2605; you owed the partnership = 6585.
And 2605 + 6585 = 9190. All in balance.

The partnership's gross expenses were
650
160
1215
270
138
2433

As you have explained the partnership agreement, it required both you and Beth each to pay 1216.50 to the partnership. But neither of you paid any attention to the agreement. She paid 270 on behalf of the partnership, and you paid 2163 on behalf of the partnership.

Do I have the facts right?

Third, here comes analysis under what you have told me is the agreement.

If all had gone according to the agreement, net expenses of the partnership would have been zero so the partnership's profit would have equaled
9190 - (2433 - 1216.50 - 1216.50) = 9190 - 0 = 9190.

Your share would have been 6249.20, and Beth's would have been 2940.80.

So here is how it should have netted out according to the agreement

You would have owed to the partnership: 6585 + 1216.50 = 7801.50.
She would have owed the partnership: 2605 + 1216.50 = 3821.50.

Thus, the partnership would have received (gross) =

6585 + 1216.50 + 2605 + 1216.50 = 9190 + 2433 = 11623.

Then 2433 would have been paid out in expenses leaving net

11623 - 2433 = 9190.

Net you would have received 6249.20 - 1216.50 = 5032.70.

Net Beth would have received 2940.80 - 1216.50 = 1724.30.

And that is logical

5032.70 + 1724.30 = 6757 = 9190 - 2433. Everything balances.

But it is totally impractical because it assumes you do not have to pay out expenses until the season is over and the partners have each made their contributions. So you did not follow the agreement because it never could work in the real world.

In fact, where you ended up is

Don has 6585 - 2163 = 4422 and so is short by 5032.70 - 4422 = 610.70

Beth has 2605 - 270 = 2335 and so is over by 2335 - 1724.30 = 610.70.

So if Beth pays you 610.70, you will have achieved what your apparent agreement contemplated.

BUT THAT AGREEMENT IS UNFAIR.

Consider this example. Partnership has revenues of 5000 and gross expenses of 4000. Therefore, under the agreement,
the partnership has revenues of 5000 plus no net expenses. Profits are 5000. 68% or 3400 goes to Don, out of which Don must make a contribution of 2000 for a net benefit of 1400. 32% of the profits go to Beth. Out of that 1600, Beth must contribute 2000, for a net cost to her, of 400. In other words, Beth is paying for the privilege of working without pay. Needless to say, that is not how normal partnership agreements work. Good negotiating Don. You completely bamboozled Beth.

 

[Laxfun]

Funds that came in from schools to both partners totaled 11,440 (22 teams at $520 each)
Beth received 3640 from 7 schools and Don received 7800 from 15 schools .
Beth gets paid +1035 for working event (officiating) based on time .
Don get paid +1215 for working event (officiating) based on time he worked.
Both partners agreed to pay half of expenses at end 50/50.
Don paid these expenses as follows : rental fees $650 , food rental fee $160 , payments for workers at event $1215,
misc. expenses $138 .
Beth paid these expenses : payment for workers $270

The $520 above is each team's entry fee. No one bamboozled anyone yet. That was my original math and i may have been wrong.
Don did most of work in partnership but agreement was that i get 68% and Beth gets 32%. Other partner wasn't even around in the summer when i was setting whole league up . There would not have been a league without me. Former two people who ran it quit. We are both holding onto are
original money that we received from teams although as you can see i'm out a lot more funds from expenses.
Thank you for your response.

 

[JeffM]

Funds that came in from schools to both partners totaled 11,440 (22 teams at $520 each)
Beth received 3640 from 7 schools and Don received 7800 from 15 schools .
Beth gets paid +1035 for working event (officiating) based on time .
Don get paid +1215 for working event (officiating) based on time he worked.
Both partners agreed to pay half of expenses at end 50/50.
Don paid these expenses as follows : rental fees $650 , food rental fee $160 , payments for workers at event $1215,
misc. expenses $138 .
Beth paid these expenses : payment for workers $270

The $520 above is each team's entry fee. No one bamboozled anyone yet. That was my original math and i may have been wrong.
Don did most of work in partnership but agreement was that i get 68% and Beth gets 32%. Other partner wasn't even around in the summer when i was setting whole league up . There would not have been a league without me. Former two people who ran it quit. We are both holding onto are
original money that we received from teams although as you can see i'm out a lot more funds from expenses.
Thank you for your response.

Yes. I told you how to settle up under the agreement. Beth owes you 610.70 to implement the apparent intent of your agreement. I am sorry that the rationale was not clear. It took me a while to figure out such an unfair agreement and work out where each of you would have ended up if the agreement had been implemented as planned.

I now get the 520: twenty-two teams times 520 each gets you to 11440.

I merely pointed out that the agreement as you stated it is not at all standard for a partnership and can end up being extremely punitive for Beth. She should get out now. I understand it works for you, but it could be a disaster for her as my example showed. She is crazy to continue.

 

[Laxfun]

I'm not clear why the 68% and the 32% are not included in any of the equation above? I thank you for everything that you have done.
I'm just still not clear on how final numbers came about.

 

[JeffM]

There was 11,440.00 total that came in between the two of you. She collected 3640.00, and you collected 7800.00

Is that correct?

But not all of that was partnership money. 1035.00 was for time that she officiated. 1215.00 was for time that you officiated.

Is that correct?

The sum of 1215 + 1035 = 2250.00. So the partnership money was

11440.00 - 2250.00 = 9190.00.

Agreed?

She paid out 270 in "partnership" expenses, and you paid out 2163 in "partnership" expenses.

Is that correct?

If so, then the "partnership" expenses were 2433.00 in total.

But your partnership agreement was that each of you would PERSONALLY pay half the expenses. Is that correct?

Therefore, each of you "owed" the partnership 1216.50.

Thus the partnership should have had funds of

9190.00 - 2433.00 + 1216.50 + 1216.50 = 9190.00.

Still with me?

That was to be divided 68/32.

Your share is 9190.00 X 68% = 6249.20.

Her share is 9190.00 X 32% = 2940.80.

I have no clue why you think that the 68/32 split was ignored.

So, ACCORDING TO THE CONTRACT, here is where each of you should end up.

You should get

1215.00 + 6249.20 - 1216.50 = 6247.70.

She should get

1035.00 +2940.80 - 1216.50 = 2759.30.

Now let's check all that.

1215 + 1035 does equal 2250 as agreed above.

6249.20 + 2940.80 does equal 9190.00 as agreed above.

1216.50 + 1216.50 = 2433.00 as agreed above.

That all looks good.

In terms of cash

11440.00 received - 2433.00 expended = 9007.00 left.

6247.70 + 2759.30 = 9007.00.

All in balance.

All good EXCEPT neither of you paid any attention to the contract. Both of you apparently commingled funds, did not settle up as you went along, and did not keep books for the partnership. Plus you had this goofy and probably unwritten contract (I have been in business for 55 years and never heard of a contract so potentially unfair and so ripe for partnership dispute).

Here is where you stand. Your receipts minus your expenditures come to

7800.00 - 2163.00 = 5637.00.

Her receipts minus her expenditures come to

3640.00 - 270.00 = 3370.00.

Notice that 5637.00 + 3370.00 = 9007.00.

Still in balance.

However, you should, ACCORDING TO THE CONTRACT, have received 6247.70.

So, ACCORDING TO THE CONTRACT, you are short by 6247.70 - 5637.00 = 610.70.

She should, ACCORDING TO THE CONTRACT, have received 2759.30.

So, ACCORDING TO THE CONTRACT, she is over by 3370.00 - 2759.30 = 610.70.

So for our final check, we can see that the amount she is over is exactly the amount that you are short. To settle up, she needs to pay you 610.30.

This of course is what I said back in posts 2 and 4.

I recognize that you resent my advice, but people have resented my advice many times. A straightforward partnership agreement would be much fairer to Beth and far easier to account for. If the two of you agree that you carry the burden of the work, then the sensible way to address that issue is to change the split on the profits to maybe 75/25 or 80/20. Having one split on expenses and a different split on expenses is a NIGHTMARE to account for, and as I have tried to explain before, potentially disastrous to the partner responsible for a greater share of expenses than profits.



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