Why Won't Jerry Reinsdorf Sell the Team(s)?

Jerry Reinsdorf's tenure as owner of the Chicago Bulls and White Sox has come with the highs of championship success.

The Bulls won six NBA titles in the 1990s and the White Sox captured a World Series title in 2005.

But Reinsdorf's time at the helm of those organizations has also produced more lows than an EDM bassline.

The latest knock notes include a laughably futile White Sox team that's recorded 109 losses and is on track to be the worst in modern MLB history.

The Bulls are aimlessly destined for more mediocrity despite a 2024 offseason that nominally set the franchise on a path to prioritize younger players. Executives Arturas Karnisovas and Marc Eversley are non-committal to pursuing a proper rebuild that would prioritize acquiring superstar talent through the NBA Draft, trades, or free agency.

If Reinsdorf's teams aren't yielding much in-game success, shouldn't he cash in on his lucrative sports franchises and disappear with his burlap sacks of money? Well, for people who don't have a net worth of over $1 billion, the answer would be a resounding yes. Bulls and White Sox fans will easily give Reinsdorf unsolicited advice: " SELL THE TEAM ."

However, Reinsdorf is a person who has a net worth above $1 billion. With that affluence comes a likelihood that he may never sell his controlling interest in the Bulls or White Sox for wonky and familiar reasons (for Bulls fans): tax avoidance.

CNBC's Robert Frank recently detailed the challenges owners like Reinsdorf are experiencing as the valuations of their professional sports franchises appreciate. In Reinsdorf's case, his ownership group's 1981 purchase price of $20 million for the White Sox is estimated to have grown to a valuation of $2.05 billion, according to Forbes.

Additionally, Forbes estimates Reinsdorf holds a 19% ownership stake in the White Sox, which likely calculates to approximately $390 million for that venture. Likewise, the Bulls' valuation has significantly appreciated from the $16.2 million purchase price paid by Reinsdorf's ownership group in 1985 to an October 2023 valuation of $4.6 billion.

The big takeaway here? The massive capital gains tax implications of Reinsdorf selling his controlling interest in either the Bulls or White Sox are why calls to "sell the team" may never become a reality for the current owner or his successor who likely receives Jerry's ownership stakes in a manner that mitigates estate taxes.

Inside Jerry Reinsdorf's Motivational Wiring

Jerry Reinsdorf is often labeled by fans of his sports franchises with pejoratives that revolve around the word "cheap." White Sox and Bulls fans are encouraged to revisit Ben Joravsky's Chicago Reader column from 1996 that profiles Reinsdorf and his longtime lieutenant, Howard Pizer (also Senior Executive Vice President of the White Sox).

Joravsky attaches more nuanced attributes to Reinsdorf that "cheap" can't fully explain. Fundamentally, Reinsdorf is a tax professional who became wealthy by applying his background as a CPA and lawyer to real estate transactions. His business was and still is real estate, and he only does business when there's an advantage for him to exploit.

Chronicling Reinsdorf's real estate firm that he eventually sold to initially create his wealth, Joravsky wrote:

"It was at Balcor that Reinsdorf earned his reputation as a shrewd operator. His timing was perfect: he anticipated the real estate boom and unloaded the company before the bust. He also got out of the business before changes in the tax code made such investments a harder sell."

As the owner of the White Sox, Reinsdorf enjoys a real-estate advantage of a publicly subsidized stadium that's provided his ownership group 33 years of asset appreciation without the capital costs of owning Guaranteed Rate Field. It's reported that Reinsdorf will seek to continue reaping the benefits of public real estate funding to facilitate the construction of the next White Sox ballpark.

As the owner of the Bulls, Reinsdorf enjoys the real-estate advantage of owning the United Center in a 50/50 joint venture with the Wirtz family (owners of the Chicago Blackhawks), which allows his ownership group to realize profitable operating income and asset appreciation while splitting ownership costs with a United Center roommate. Such an advantage allows Reinsdorf to expand his real estate portfolio on the West Side of Chicago .

Friends, Jerry Reinsdorf isn't selling the team(s) because it never was about the team(s). It was always about organizing assets, taxes, and advantages to make money in perpetuity.

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