Jerry Reinsdorf
Jerry Michael Reinsdorf is an American billionaire businessman, and the owner of the NBA's Chicago Bulls and the MLB's Chicago White Sox. He started his professional life as a tax attorney with the Internal Revenue Service. He has been the head of the White Sox and Bulls for over 35 years.
He made his initial fortune in real estate, taking advantage of the Frank Lyon Co. v. United States decision by the United States Supreme Court which allowed economic owners of realty to sell property and lease it back, while transferring the tax deduction for depreciation to the title owner.
As the owner and chairman of the Chicago Bulls since 1985, he oversaw the franchise turning into a lucrative business that won six NBA Championships in the 1990s. He is controversial for his involvement in breaking up the championship team by not hiring back Phil Jackson. He hired Michael Jordan as a baseball player during his sabbatical from basketball. He also moved the Bulls from Chicago Stadium to the United Center.
Since purchasing the White Sox in 1981, the franchise made the playoffs in 1983 for the first time since 1959, and won the World Series in 2005 for the first time since 1917. Reinsdorf moved the White Sox from Comiskey Park to New Comiskey Park in 1991, which was renamed U.S. Cellular Field in 2003, and once again to Guaranteed Rate Field in 2016. In both sporting endeavors, he has developed a reputation as an anti-labor union hardliner. Since the early 1990s, he has been considered one of the most, if not the most, influential basketball owners. He has been influential in instituting the salary cap and revenue sharing.
On April 4, 2016, Reinsdorf was elected to the Naismith Memorial Basketball Hall of Fame as a contributor.
Background
Reinsdorf was born to a Jewish family in Brooklyn, New York. He attended Erasmus Hall High School in Brooklyn, and he was the son of a sewing machine salesman. A lifelong baseball fan who grew up in the shadows of Ebbets Field, Reinsdorf was in the stands the day Jackie Robinson debuted for the Brooklyn Dodgers, breaking the color barrier which prevented black players from serving on Major League teams.Reinsdorf earned a bachelor's degree from George Washington University in Washington, D.C. where he became a member of Alpha Epsilon Pi. He subsequently moved to Chicago in 1957. Reinsdorf became a CPA and lawyer as well as a registered mortgage underwriter and a certified review appraiser. He leveraged a full scholarship offer from the University of Chicago Law School into a scholarship from the Northwestern University School of Law. His first job after graduating from Northwestern in 1960 was a tax delinquency case of Bill Veeck who at the time owned the White Sox. In 1964, Reinsdorf went into private practice. He developed a specialty in real estate partnership tax shelters. He sold his business interests in the real estate partnership in 1973 and formed Balcor, which raised US$650 million to invest in buildings under construction. He sold Balcor in 1982 for $102 million to Shearson Lehman Brothers, the investment banking and brokerage arm of American Express. However, he continued to be President of the company for several years thereafter.
Sports ownership
New purchases
In 1981 he was wealthy enough to purchase the White Sox for $19 million. The purchase was brokered by American National Bank who arranged for a limited partnership. He followed previous eccentric White Sox owners Charles Comiskey, who was known as a miser, and Veeck, who was known as a prankster who gutted the team by trading away promising prospects. Soon after buying the White Sox, he signed Greg Luzinski and Carlton Fisk. He also tripled the team promotional budget and increased the number of team scouts from 12 to 20. By the 1983 Major League Baseball season the White Sox made the playoffs with the best record in the Major Leagues. The team initially signed a television deal with the newly founded Sportsvision under the new leadership of Chairman Reinsdorf and Vice Chairman Eddie Einhorn, but that arrangement quickly fizzled. Einhorn continued as Vice Chairman of the White Sox until his death in 2016.In 1985, following in the footsteps of Einhorn who had purchased the United States Football League's Chicago Blitz franchise in 1984, he purchased the Chicago Bulls as part of a syndicate for US$16 million and quickly turned the team from one that averaged 6,365 fans per game at the 17,339-seat Chicago Stadium in 1985 into one with an 8,000-person season ticket waiting list. He did so by drafting Horace Grant and Scottie Pippen, and trading for Bill Cartwright to join John Paxson and Michael Jordan under the tutelage of head coach Doug Collins. In 1989, the team signed Phil Jackson as the final piece of the championship puzzle. From November 20, 1987 through Jordan's 1999 retirement, the Bulls sold out every game.
In the months prior to the purchase, Milwaukee businessman Marvin Fishman had been awarded a $16.2 million judgment against the Bulls. Fishman had been illegally blocked from purchasing the team in 1972. Reinsdorf purchased the team from an ownership group that included Lamar Hunt, George Steinbrenner, Walter Shorenstein, Jonathan Kovler, Lester Crown, Philip Klutznick, and the estate of Arthur Wirtz, and he held a $9.2 million controlling interest in the team. Reinsdorf's share of 56.8% of the team was purchased from Klutznick, Steinbrenner, Shorenstein and the estate of Wirtz. His purchase ended an era in which the Bulls were managed by committee with decisions by conference call, verdicts by vote. Reinsdorf acquired his majority interests on March 11, 1985 and Kovler sold his 7% stake in the team on January 29, 1986, bringing Reinsdorf's interest to 63%. The following week Reinsdorf ousted Rod Thorn as general manager and replaced him with Jerry Krause.
Ownership history
The White Sox have won American League regular season Division Championships in 1983, 1993, 2000, 2005 and 2008 under Reinsdorf and they won the 2005 World Series. In addition, they were in first place of the central division at the conclusion of the strike-shortened 1994 Major League Baseball season. The World Series victory made him only the third owner in the history of North American sports to win a championship in two different sports. The baseball championship boosted the value of the franchise to over $300 million. When Reinsdorf signed Jordan after Jordan's announcement that he wanted to play baseball, many thought Jordan's drawing power provided an ulterior motive. Reinsdorf, however, had tried to convince Jordan not to give up basketball, but he did not attempt to make Jordan the highest paid player in the game like some feel he should have.As a basketball owner, he has been described by Time as a "cheapskate", a reference they also use for his baseball persona. As of 1995, the time when Scottie Pippen was eager to either be traded or be rid of Krause, he had never renegotiated a contract. As a baseball owner, he has had a reputation as one of the most militant, anti-union, hard-line owners. Newsweek described him as "one of the hardest heads in the 1994 baseball strike". In the baseball offseason between the 1992 and 1993 seasons, he completely abstained from the free agent market. Reinsdorf was one of the last holdouts to the 1996 labor agreement that instituted the salary cap while retaining arbitration rights for the players. His 1996 signing of Albert Belle made news because of his widely publicized general opposition to spiraling player salaries. The $55 million signing was a turning point in the decision by the baseball owners to agree to revenue sharing. The signing also made Reinsdorf the employer of the highest paid Major League Baseball player and highest paid professional basketball player at the same time. Reinsdorf had just re-signed Jordan after the 1995–96 NBA season. However, Jordan had been underpaid most of his career, and Reinsdorf, who did not feel he could justify the $30 million salary from a business standpoint, immediately realized he was going to soon feel buyer's remorse. Even his most successful baseball team was not highly paid: when the White Sox won the 2005 World Series, Reinsdorf had the 13th highest payroll of the 30 Major League Baseball teams.
After Reinsdorf purchased the team in 1981, the White Sox experienced erosion of fan and media support. He complained about old Comiskey Park with its foibles such as numerous obstructed view seats and threatened to move the White Sox. Among his threats was moving the team to Itasca or Addison, Illinois in DuPage County. Reinsdorf, through his real estate business, purchased in Addison. Chicago Mayor Harold Washington lobbied the Illinois legislature, and subsequently then-Illinois Governor James R. Thompson promoted a package of incentives to retain the team in Chicago. The state floated bonds to build New Comiskey Park and let Reinsdorf keep all parking and concession revenues, as well as the $5 million per year from 89 skyboxes. Reinsdorf and Chicago Blackhawks owner, William Wirtz contributed $175 million to fund the construction of the largest arena in the United States. When the United Center opened in 1994 all of the skyboxes were leased for up to eight years. As per the collective bargaining agreement, Reinsdorf was allowed to exclude 60% of luxury suite revenue from "basketball-related income" and thus it is not part of the revenue sharing income.
Reinsdorf is a powerful baseball owner who in 1988 stopped the sale of the Texas Rangers and later influenced the sale of the Seattle Mariners. Edward Gaylord and Gaylord Entertainment Company had first attempted to buy the Rangers in 1985. Reinsdorf was also said to be largely responsible for the ousting of Fay Vincent as the Commissioner of Baseball in 1992. He had previously undermined Vincent by employing Richard Ravitch as the league's labor negotiator at a salary higher than Vincent's. By the early 1990s, Reinsdorf and acting Baseball commissioner Bud Selig had assumed baseball's mantle of power from Atlanta Braves owner, Ted Turner, and New York Yankees owner, George Steinbrenner, who had in turn taken over the sport from Brooklyn/Los Angeles Dodgers owner, Walter O'Malley, St. Louis Cardinals owner, Gussie Busch, and Oakland Athletics owner, Charlie O. Finley.
In the 1980s, Reinsdorf, Bud Selig and the American League President colluded to dissuade the Philadelphia Phillies from signing Lance Parrish who was a Detroit Tigers free agent. During the strike, Reinsdorf, who was an anti-union hard-liner, was so pessimistic that he did not expect baseball to resume until the 1996 Major League Baseball season. In the early 1990s he was able to get new stadiums for his teams.
Some fans and columnists have accused Reinsdorf of breaking up the championship Bulls team after their third straight title and sixth in eight years, claiming the Bulls could have competed for more titles with Michael Jordan, Scottie Pippen and good support from the rest of the team that in the eight-year span included Dennis Rodman, Horace Grant, Toni Kukoč, Ron Harper, BJ Armstrong, and coach Phil Jackson. Some accounts claim that because Jackson feuded with both Reinsdorf and Krause and because both Jordan and Pippen were linked to Jackson, the team was broken up. Forbes describes the scenario as an example of owner greed. Many note that Phil Jackson's decision not to return as coach and Jordan's retirement during the 1998–99 NBA season lockout impacted the decisions of several players on whether to return to Chicago. While Reinsdorf had held out hope that he could convince Jackson and Jordan to return and thus had introduced Tim Floyd as President of Chicago Bulls Basketball Operations instead of head coach, according to film footage from documentary series "The Last Dance," Krause had made it clear to Jackson that he was not wanted back.
Reinsdorf was one of two bidders for the Phoenix Coyotes that would commit to not relocating the team. On July 29, 2009 Reinsdorf and his group were approved for ownership of the Coyotes for $148 million. In August 2009, it was reported that Jerry Reinsdorf & Ice Edge LLC had dropped its bid for the Coyotes, leaving only Balsillie and the NHL as bidders for the team. The NHL bid ultimately prevailed, however the league stated it wished to re-sell the franchise as soon as possible. On March 24, 2010, it was reported that Reinsdorf was once again a possible buyer for the Phoenix Coyotes. Reinsdorf had been working out an arrangement to make the deal more feasible with the municipality of Glendale, Arizona. As late as August 2011, negotiations between Reinsdorf and the City of Glendale were still in process for the purchase of the Coyotes. However, in 2013, the Coyotes were sold to IceArizona, a group of investors that did not include Reinsdorf.
Legacy
Reinsdorf is largely responsible for the revenue sharing of the internet rights of Major League Baseball in which all teams have shared equally since Major League Baseball Advanced Media was established in 2000. Reinsdorf also endeavored to sell the naming rights to the New Comiskey Park to U.S. Cellular in a $68 million 20-year deal that funded a 7-year $85 million overhaul of the stadium that ended prior to the 2008 Major League Baseball season. The overhaul included the removal of top rows of the upper deck, replacement of the baby blue seats with traditionally-colored green ones and dozens of other upgrades. Prior to the seven-year overhaul, the 2001 White Sox barely broke even financially with a $700,000 operating profit on revenues of $101.33 million.Reinsdorf won a major revenue sharing legal battle with other NBA owners over the Chicago Bulls broadcasts on WGN-TV. The 55 game schedule on the superstation for an audience of 35 million competed with the NBA broadcasts, but Reinsdorf was permitted to maintain the contract. As recently as 2004, the Bulls continued to be the NBAs most profitable team, earning $49 million in operating income and having an estimated valuation of $356 million.
Reinsdorf feels that if Major League Baseball Players Association chief Donald Fehr had not opposed steroid testing, baseball would have taken a stand against steroid use much sooner. He feels that in the end this delayed action will cost some players election into the National Baseball Hall of Fame.
Accolades and service
Reinsdorf has been involved in Chicago Mayor Richard M. Daley's initiative to improve standardized test scores in the 559 Chicago Public Schools. He has been involved in other extensive charitable work including those of CharitaBulls and White Sox Charities. His philanthropy and community development have been notable in the Near West Side community area near the United Center. Twice the White Sox Charities has donated $1 million to the Chicago Park District with particular attention to funding baseball and softball fields.Reinsdorf was inducted into the Appleton, Wisconsin Baseball Hall of Fame on August 5, 2006 in a ceremony at Fox Cities Stadium prior to that evening's game between the Midwest League Wisconsin Timber Rattlers and Beloit Snappers. He was so recognized because a former Minor League club, the Appleton Foxes, was a Chicago White Sox affiliate and won three consecutive Midwest League Championships in the early years of Reinsdorf's ownership.
In 2011, Reinsdorf received a Jefferson Award for Public Service. He was recognized for "Greatest Public Service Benefiting the Disadvantaged" based on philanthropic efforts through the Chicago White Sox Charities and CharitaBulls.
He has been a member of the board of directors of Shearson Lehman Brothers, Inc., the Northwestern University Law School Alumni Association, LaSalle Bank, EQ Office and numerous other corporations and charities. He currently serves as a Life Trustee of Northwestern University. Reinsdorf and his wife, Martyl, have four children and eight grandchildren.
Throughout the years Reinsdorf has been active in the affairs of baseball, serving on the Executive Council and Ownership, Long Range Planning, Restructuring, Expansion, Equal Opportunity, Strategic Planning, Legislative and Labor Policy Committees of Major League Baseball, he also serves on the Boards of MLB Advanced Media and MLB Enterprises.