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Playing Hardball

Jerry Reinsdorf got Michael Jordan back playing basketball, but the federal courts stymied his assault on baseball's economics.

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Dismissing the popular conception that he was out to "bust" the union, Reinsdorf said a players' association is necessary to represent people who had been "treated like slaves." But, unlike old-line owners who were long terrified of strikes and quickly caved in to player demands for salary arbitration and free agency, Reinsdorf welcomes the challenge of squeezing rollbacks from the union.
"Don Fehr has no interest in doing good for his members and is driven by a psychopathic hatred of baseball owners," insisted Reinsdorf, his voice rising. "He's not a baseball fan, he just wants to beat us. I respect Marvin Miller (the former union head) for getting players mobility and good wages. But Fehr is a dangerous ideologue, and there comes a point when the union has to be stopped, or else we'd be put out of business." (Despite repeated requests, the players' association refused to respond.)
Groomed for this fight on the mean streets surrounding Ebbets Field, home of his beloved (and lamented) Brooklyn Dodgers, Reinsdorf is well-suited for the pit bull role. Bluntly speaking his mind with little use for suave corporatese, he's in the rough mold of baseball's union bashers, men like the Kansas City Royals' David Glass (of Wal-Mart) and the San Francisco Giants' Peter Magowan (of Safeway). These hardballers had wrung huge concessions from unions at their companies, and they are now increasingly influential in baseball's power circles. They aren't accustomed to losing.
Many of the hawks have also invested over $100 million to acquire franchises, only to see the strike talks go nowhere for months. The owners were an angry lot at the Breakers, flirting with the idea of "blowing things up"--meaning calling their bullpen for a negotiator throwing heavy heat. It was either a fast settlement, or Reinsdorf would do management's talking.
"While I really respect these new, sharp-thinking guys--as opposed to the orgiastic spenders of the past--it won't happen, I won't be negotiating," demurred Reinsdorf. But the doomsday scenario still makes sense. Forget Trump. Jerry is the man when it comes to leveraging, cementing a deal. All you have to do is look at how he engineered the Bulls' three-peat (they followed the 1991 championship with two more in '92 and '93). After the first championship, Bulls Jordan, Scottie Pippen and Horace Grant were all under contract, advancing Reinsdorf's reputation for lowballing--signing players to long-term deals at bargain prices. "This is good business," he declared. "I won't lose money to win games."
His fast-talking routine began in law school at Northwestern University in 1957. While enrolled there, he was offered a full scholarship by the University of Chicago Law School. Playing them off against each other, he told a Northwestern dean he couldn't turn the Chicago offer down. A few days later, Reinsdorf had a Northwestern scholarship.
Ironically, after Reinsdorf graduated and went to work for the Internal Revenue Service in 1960, his first case was a tax delinquency by Bill Veeck, the colorful owner of the White Sox. The IRS experience proved invaluable. Learning how to establish tax shelters, he and cigar-toting buddy Bob Judelson ("the guy who introduced me to smoking," said Reinsdorf) founded Balcor in 1973, a company specializing in the sale of real-estate limited partnerships.
Structuring these syndications by dint of his lawyering savvy and hard-boiled charm, Reinsdorf quickly raised $650 million to throw into construction projects; he got rich in those go-go real-estate days. When asked what his business was, he roguishly replied, "OPM: Other People's Money." The sale of Balcor to Shearson Lehman Brothers for $104 million made him wealthy enough to join law school classmate Eddie Einhorn in buying the Chicago White Sox for $19 million in 1981. (While Reinsdorf wasn't named as a defendant, Balcor became embroiled in the early 1990s in a $3 billion class-action suit. The suit has never come to trial.)
The Sox's finances were in a shambles. In the shadows of the popular Cubs and perennial losers for over 20 years, the Pale Hose had been poorly run by Veeck. But unlike the business dilettantes who operated most clubs, Reinsdorf and Einhorn, once dubbed the "Katzenjammer Kids" by Steinbrenner, began paring fat. The Sox soon became so competitive, on and off the field, that they have an estimated worth of $130 to $150 million today, and Reinsdorf's reputation as a brutally smart, money-making sharpie has taken on epic proportions.
"We hooked up together and did a limited partnership; Jerry is clearly a moving force, he knows it all--taxes, real estate," said Judd Malkin of JMB Realty, one of the world's largest real-estate firms, who invested in the Sox. "The guy has the highest integrity and he performs. I didn't know anything about the Sox. I clearly invested in Jerry, and if he showed me another deal I'd go in with the expectation it made sense."
Admitting "I love to negotiate, to create leverage, and when I'm in a competitive situation I have to win," Reinsdorf comes across as the prototypical 1980s businessman: cocksure and relentless. As Wall Street Journal reporter John Helyar writes in his book Lords of the Realm (Ballantine Books/Random House, New York, 1994), "Reinsdorf looks at baseball with a pretty cold, calculating eye. I think it offends his sensibilities to run a franchise in an unbusinesslike way."
Reinsdorf also has a caring, sentimental side. Despite taking numerous potshots in the media depicting him as an unfeeling villain, he's especially loyal to favored employees. Other basketball owners would quickly fire their GMs if they became enmeshed in a public pissing contest with not just one but two star players. Not Jerry. He stood behind the Bulls' Jerry Krause throughout his battles with Horace Grant and Scottie Pippen. And after his beloved assistant Sheri Berto died in 1991, along with naming the Bulls' practice facility in her honor, Reinsdorf supported her family financially.
But Reinsdorf's sentimentality extends only so far. Business is still business. So in 1983, claiming the old Comiskey Park was "disintegrating," and "if we didn't get a new ballpark we'd go broke," Reinsdorf again played hardball. Threatening to move the Sox to St. Petersburg, Florida, if Illinois legislators didn't fund a new stadium, he now explained, "a savvy negotiator creates leverage. People had to think we were going to leave Chicago." Those machinations angered St. Petersburg city administrator Rick Dodge. Realizing Reinsdorf was simultaneously negotiating with him and Illinois officials, he told his attorneys, "He was playing us off against each other. I'm not going to sit here and get chewed up like this."
Chicagoans were equally annoyed with Reinsdorf's Florida flirtation. Eddie Einhorn remembers going to a Cubs game with Reinsdorf and a fan yelling, "I wouldn't get into that car after the game." Reinsdorf received so many death threats, with anti-Semitic slurs, that he was forced to hire bodyguards and 24-hour security agents to protect his Chicago home.
Known as a negotiator who "lets things linger until he gets what he wants," Reinsdorf did have one friend during the three-year imbroglio, Illinois Governor Jim Thompson. By June 1988, when it seemed certain that St. Pete would lure the Sox to its new Suncoast Dome, Big Jim twisted arms on the floor of the Illinois Senate, and the deal was done. Illinois funded a new stadium. As John Helyar writes, "Reinsdorf got the gold mine, and [St. Petersburg] got the shaft."
Illinois taxpayers also got the short end of the deal. While Reinsdorf innocently insists, "I didn't get into baseball to make money. Baseball is my religion. I'm happy to break even," the Comiskey deal gave him free rent for up to 1.2 million in attendance each year. The Sox pay the state $2.50 for every ticket from 1.2 to 2 million, yet the team also gets back $5 million a year for stadium repairs and maintenance. In addition, the state buys 300,000 tickets if attendance drops below 1.5 after the year 2001, so in actuality, Reinsdorf got public funds to build his stadium and subsidies to guarantee its profitability.
That deal, which is now a model for other so-called "public-private" sports ventures, spotlights Reinsdorf's talent for drawing on other people's money and his near-absolute insistence on protecting himself financially. It's a formula he employed again in the building of the United Center in Chicago (the new Bulls stadium that opened in 1994) as he schmoozed Japanese bankers into joining a $140 million consortium comprised mainly of foreign bankers. "The Japanese bankers came in not knowing the first thing about hockey or basketball," recalls a Chicago investment banker, referring to Reinsdorf's turning on the charm when it really counts. "But after an evening with Jerry they got a very fast, higher level of comfort."
Comiskey is still Reinsdorf's monument, his pushing all the right buttons in personal, mano-a-mano meetings with legislators. Surviving this bruising fight--plus others like his leading the charge against baseball's Fay Vincent (for "interfering" in labor matters) and the NBA's David Stern--he's one uncompromising hombre, truculent and resilient, with a knack for surrounding himself with the best management people he can get. For unlike the very hands-on Steinbrenner and baseball's other good old boys who are in the game because of their egos, Reinsdorf is quick to delegate authority to subordinates. He treats his teams purely as a business, and that makes him the prototype for sports owners of the future.
Just a few days after sitting for the interview in Palm Beach, everything looks much, much brighter. Jordan is back, and is getting ready for his first NBA game since June 1993. After 17 months of self-imposed soul searching, struggling to find "challenges," Michael "Superman" Jordan generates an excitement worthy of the Second Coming by announcing simply, "I'm back."
Suddenly, the baseball strike generates some good news for America. Jordan abandons his dream of appearing in the White Sox outfield, blaming the strike for his slow "development" as a baseball player. A collective shudder of fear runs through the NBA--the Bulls again champs--while the ever-provocative Reinsdorf goes for his own slam dunk.
"What Donald Fehr did was make it impossible for Michael to play in exhibition games," says Reinsdorf, "which retarded his progress to the point where Michael felt it wasn't worth it."
Jordan as pawn in a labor dispute. Leave it to J.R. Reinsdorf to exploit a new role for his superstar. Now Jordan could be pictured as a victim of the strike, forced to prove himself all over again--and with all of America watching, this promises big dividends for Reinsdorf (an increased demand for Bulls tickets, paraphernalia, etc.). In the very cyclical world of pro sports, his life is sweet again.
"I'm thrilled to have him back," says Reinsdorf at home in Phoenix. "We exchanged lots of phone calls, yet there was no negotiating, no demands for new money. I just talked to him about [personal] things he should think about. I didn't want him to make the decision on the rebound, from disappointment with the baseball strike.
"Yeah, he feels bad about baseball, but now he's comfortable with playing basketball," says Reinsdorf. (Within a few days of his return, Jordan showed just how comfortable he was to be back--he scored 55 points in a 113-111 victory over the New York Knicks.) "He'll be getting $4 million a year, exactly what I paid him before. I'm excited, but I won't go to his first game. I have to be here to deal with the baseball strike."
There it is, the whole Reinsdorf package: excited sports fan; friend to players; concerned owner; shrewd negotiator; steadfast foe of unions; troubleshooter, ever loyal to The Cause. How neat and tidy! But there are the inevitable questions about Jordan's contract, that Reinsdorf could have kept him in basketball if he had renegotiated with Jordan in 1993. But that's not his way.
"Renegotiating by owners is very foolish....You've got to be a mensch and stand by your word," he says, underscoring his life's credo. "I just believe in the sanctity of contracts. Sometimes you make a bad deal, other times you make a good deal."
That's Reinsdorf. Always the dealmaker. Always willing to put it all at risk. Maybe Reinsdorf the man is a bit more complex than being reduced to a caricature of a man on the make for a deal. Yet everyone around him, from Michael Jordan to White Sox slugger Frank Thomas to union boss Donald Fehr, knows that the crafty Reinsdorf will always be looking for leverage. Some way to make the best deal possible. No matter who is on the other side of the table.
Edward Kiersh is an avid baseball fan.
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