Reinsdorf, Jerry Michael

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Reinsdorf, Jerry Michael

(1936-)
Chicago White Sox and Chicago Bulls

Overview

Jerry Reinsdorf, owner of the Chicago White Sox baseball team and the Chicago Bulls basketball team, is often called the most powerful figure in professional sports. His strong business sense and financial expertise rewarded him with a net worth estimated between $60 and $90 million. As the prototype of the team owner of the future, he treats his teams as strictly business. "I will not lose money in order to win," is a succinct and often-repeated statement of his priorities.

Personal Life

Reinsdorf was born in Brooklyn, New York, on February 25, 1936. His parents, Max and Marion Reinsdorf, were Jewish immigrants from Poland. His father, who never finished high school, was a sewing machine salesman and mechanic. An avid Brooklyn Dodgers baseball fan, Reinsdorf remembers playing stickball as a kid. In 1956 Reinsdorf married Martyl Rifkin. They have four children, David, Susan, Michael, and Jonathan.

Reinsdorf received his B.A. from George Washington University in 1957, and a law degree from Northwestern University in 1960. Besides being an attorney, Reinsdorf is also a certified public accountant, a specialist in real estate securities, a registered mortgage underwriter, and a certified review appraiser. In 1981 Reinsdorf purchased the Chicago White Sox, which won the American League West Division title in 1983 and 1993. He has served on Major League Baseball's Executive Council, on the Ownership Committee, and on the Player Relations Committee. In 1985 Reinsdorf purchased controlling interest in the Chicago Bulls basketball team, which won the National Basketball Association (NBA) championship repeatedly during the 1990s.

Although he prefers to stay out of the spotlight, Reinsdorf has received numerous awards for his community and charity work, most notably the Chicago Park District's Chicagoan of the Year Award, Ellis Island Medal of Honor (1993), and Order of Lincoln Award (1997). He organized the Chicago White Sox Charities to raise funds for cancer research and for the Direct Instruction reading program in Chicago's public schools. He has been active in numerous organizations, including Interfaith Organizing Project, American Academy of Achievement, Cystic Fibrosis Foundation, Trial Lawyers Club of Chicago, Chicago Jewish Sporting Hall of Fame, and the National Jewish Sporting Hall of Fame.

Reinsdorf is described as unpretentious. He is an avid cigar smoker, does not spend a lot of money on clothes, and has never been an athlete. According to Sports Illustrated, he always carries with him a copy of the Serenity Prayer: "God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference."

Although Reinsdorf has been criticized by both baseball and basketball fans for some of his fiscal-oriented decisions, his employees are very loyal and describe him as fair and generous. Each time the Bulls made it to the NBA finals, Reinsdorf paid to fly the team's full-time employees and their families to the out-of-town games, a perk that cost $1.5 million in 1996. "Even coaches Reinsdorf has fired are treated well," reported Sports Illustrated. "The owner still sends former Bulls coach Doug Collins . . . an engraved watch every time the Bulls win a championship, in gratitude for having taught Chicago's players 'to believe in themselves.'"

Career Details

Reinsdorf's first job was as an attorney for the Internal Revenue Service (IRS) in Chicago. He worked there four years, learning the art of negotiation as well as how to set up tax shelters. After leaving the IRS, he combined his legal and accounting knowledge to help professionals, such as doctors, incorporate and set up tax shelters. In 1973 he cofounded Balcor Co. with Robert Judelson, creating one of the first businesses in the United States to specialize in real-estate partnerships. The firm quickly grew to 1,500 employees and had $5.5 billion in holdings. Less than 10 years after its founding, Balcor was sold to American Express for $53 million. Reinsdorf stayed on as chairman until 1987. The last five years of his association with Balcor netted Reinsdorf $50 million in commissions.

In 1981, with partner and former law school classmate Eddie Einhorn, Reinsdorf bought the White Sox for $19 million. "The first two years we lost $8 million," Reinsdorf told Sports Illustrated. "The ballpark was crumbling, and we sunk $20 million into it. I was scared to death we were going to go broke during that period." One of Reinsdorf's first actions to raise some money was to prohibit the airing of games on television until the networks paid the organization adequately.

In 1985 Reinsdorf paid $16 million to add the Chicago Bulls basketball team to his portfolio; he figured that owning the Bulls would give him more clout when negotiating with sponsors. That same year Michael Jordan was a rookie, and the Bulls were struggling to pull fans into Chicago Stadium. Since 1987, led by superstar Jordan, the team has had a continuous run of home sellouts at the box office. Ten years after his $16 million purchase, Reinsdorf's basketball team was worth $178 million.

Making the White Sox turn a profit was more challenging. In 1988, with the help of Einhorn and Illinois governor James Thompson, also a law school classmate, Reinsdorf was able to secure legislative support for a new stadium replacing the venerable Comiskey Park. Their first year in the new stadium, also called Comiskey Park, the White Sox sold 2.9 million tickets and showed a $22 million profit. Players Association executive director Donald Fehr explained Reinsdorf's deal to Chicago magazine: "I'm not sure it's appropriate to ask the public to pay for this stuff [the new stadium]. But if the question is, were the cards played well, they were played brilliantly."

Reinsdorf generated considerable ill will when he threatened to move the White Sox to St. Petersburg, Florida, if the new stadium was not approved. In 1990 he played a round of hardball with the National Basketball Association (NBA). The league had tried to thwart his negotiations with the Chicago-based television station WGN for a lucrative broadcasting contract for the Bulls. Reinsdorf filed suit because he believed that the Bulls needed to establish a presence on WGN. The NBA ended up paying $10 million in legal fees and facing embarrassment when evidence showed that some owners were under-reporting the revenue that was used to determine the highest salaries players could earn.

Chronology: Jerry Michael Reinsdorf

1936: Born in Brooklyn, New York.

1956: Married Martyl Rifkin.

1957: Received B.A. from George Washington University.

1960: Received law degree from Northwestern University.

1973: Cofounded Balcor Co.

1981: Purchased Chicago White Sox.

1986: Purchased Chicago Bulls.

1988: Won legislative support for a new stadium at Comiskey Park.

1994: Arranged for private financing of a new arena for the Bulls.

1996: Agreed to pay Albert Belle $55 million over a five-year period, a new high in baseball players' salaries.

In 1994 Reinsdorf was able to pull off a second stadium coup, this one built with private money for the Bulls and the Blackhawks, Chicago's professional hockey team. The new arena, named the United Center, seated 23,000 fans. That same year, just when the White Sox were leading the American League, baseball players went on strike and—for the first time in 90 years—the World Series was cancelled. The strike lasted nine months, during which Reinsdorf was portrayed by the fans and the media as a person determined to break the power of the players' union, regardless of the cost. The escalation of players' salaries were only one issue. For Reinsdorf, just as important was revenue sharing among the teams. He felt the sport would suffer if only teams in the largest markets survived. In 1994, 19 out of 28 teams were losing money, according to Chicago magazine. "Reinsdorf took positions over and over again that were in the best interest of the game, even if it meant a sacrifice to the White Sox," Boston Red Sox general partner John Harrington told Sports Illustrated. "I came to admire his integrity because he was so unselfish. He felt that going into labor negotiations, we had to have additional revenue sharing before we could ask the union to do something about controlling salaries. He felt we could not be two-faced about it."

Reinsdorf actively lobbied members of the Ownership Committee to reject the five-year collective bargaining agreement reached by the owners' and players' negotiators because it failed to include any restraint on players' salaries. He was unsuccessful in blocking the agreement, so when the players went back to work, the owners had adopted revenue sharing without salary caps. Game attendance after the strike fell to two-thirds of what it had been in early 1994. Desperate to reignite the Chicago fans, Reinsdorf signed a contract to pay White Sox home-run leader Albert Belle $55 million over a five-year period. Although he had fought for a cap on player's salaries, with a stroke of his pen he set a new record for the highest salary paid. By 1997 the White Sox player payroll was more than $54 million, third highest in the American League. His initial White Sox investment of $16 million was worth $133 million 15 years later.

Aware of his reputation as both a successful and an extremely unpopular sports mogul, Reinsdorf admitted to Sports Illustrated that he probably should clean up his public image, then explained why he doesn't: "I know I could have a better public image if I were less open, if I ducked more issues and didn't speak out. But it's not my nature. I admire honesty more than any other trait." He quoted his mother, saying, "You have to tell the truth, even if the truth is hurtful."

Social and Economic Impact

The baseball players' strike in 1994 ushered in a new era in American sports. Fans were forced to accept the fact that baseball is no longer just a game, America's favorite pastime, but also a business. For almost 20 years, Jerry Reinsdorf epitomized the owner who made decisions based solely on economics. As a representative of the owners of 28 teams, he was a key figure in causing the strike when he proposed a limit to players' salaries and supported revenue-sharing to help subsidize struggling teams in smaller media markets.

Reinsdorf also introduced a new concept in stadium financing. His insistence that the taxpayer finance the new Comiskey Park was unprecedented, but such stadiums were later built in several large American cities. When critics point out that the other ballparks are better designed or more unique architecturally, Reinsdorf always counters the same words, according to Chicago magazine: "Our ballpark will generate more revenues than those ball-parks, which is ultimately the important thing."

Rather than using public money for United Center, Reinsdorf arranged for private leases on the 216 luxury suites called "skyboxes" that ring the stadium; again, a practice that was emulated elsewhere. These leases guaranteed that a fixed amount of money would be collected every month, regardless of how well or how poorly the team performs. All 216 skyboxes were leased before the United Center was completed, at prices ranging from $55,000 to $175,000 per year, which covers the annual loan payments on the stadium. Once again Reinsdorf showed his ability to draw on other people's money while protecting himself financially.

For his focus on the economic bottom line, Reinsdorf has not always been popular with fans. In a reflective moment during an interview with Sports Illustrated, he compared himself to Harry Truman, the man he most admires: "He was the first president to recognize Israel, the one who desegregated the armed forces, the one who gave the go-ahead to drop the atom bomb. . . . He made so many decisions without worrying about the criticism that would follow. He did what he felt was right. You know, Truman left office with a 25 percent approval rating, but history has judged him to be one of the great presidents."