Playing Hardball

Jerry Reinsdorf got Michael Jordan back playing basketball, but the federal courts stymied his assault on baseball's economics.
| By Edward Kiersh | From Jack Nicholson, Summer 95

Drinking and dousing each other with cheap American sparkling wine, the Chicago Bulls were a happy bunch that 1991 night in Los Angeles. They were NBA champs for the first time, and amid these frenzied giants, screaming trash about a dynasty in the making, team owner Jerry Reinsdorf seemed strangely out of place navigating through bursts of bubbly. But as usual, Reinsdorf was on a mission. Armed with a box of Davidoffs, and feeling charitable that night, he felt compelled to introduce his superstar Michael Jordan to premium cigar smoking.

"Cigars are symbolic of celebration, and since Michael was new to smoking, I had to offer him the best," recalls Reinsdorf, 59, lighting a Partagas and sitting in a Palm Beach, Florida, hotel, his feet propped on a satin lobby chair. "He never became much of a smoker, but that was a joyous night, and cigars are symbolic of male bonding. They're freedom, a way of saying [screw you] to the world."

In many ways, that championship night in 1991 was a turning point for Reinsdorf, who, as owner of both the Chicago Bulls and baseball's Chicago White Sox, was and may still be the most powerful man in professional sports. At the very least, the Bulls' victory affirmed that he was on the right track. Yes, he already had built the Balcor Co. real-estate group into a $6.5 billion concern. And, yes, the White Sox were already in a new Comiskey Park, built with taxpayers' money under a plan the Illinois State Legislature agreed to. And, yes, he would be building a new stadium for the Bulls with financing largely supplied by foreign banks. But despite a decade of ownership of the Chicago White Sox and seven years at the helm of the Chicago Bulls, a championship had eluded him.

So that championship night belonged to Reinsdorf. Jordan lit up at his urging, but after a quick hug of the Larry O'Brien championship trophy, the court superstar disappeared into the night. Reinsdorf remained, strutting around the locker room, hugging his players. The son of a Jewish sewing machine peddler, he savored the long journey from his childhood haunts in Brooklyn. Calling his mother and hearing praise showered on his Bulls, he had finally stepped into the winner's circle. The future seemed bright.

"It was my first championship, so of course it was memorable," says Reinsdorf, quickly adding a woe-is-me, Woody Allen-style touch between puffs on his Partagas. "Yet it wasn't baseball. If I'm driven at all, challenged, it's to win a World Series. That's the dream."

That dream was harshly interrupted, and maybe permanently sullied, by the nine-month long baseball strike, a player-owner confrontation (largely spearheaded by Reinsdorf himself) that lasted from August 11, 1994, to April 2, 1995. Crowned by the media as the strike's backroom Machiavelli, the genial yet ever-combative Reinsdorf was only doing what he does habitually--taking on the world, and usually winning. Reinsdorf's reasoning was simple: Baseball desperately needed some economic sanity if the owners were to continue making the big money. He badgered the owners into a unified block by championing a team salary cap and a revenue-sharing system whereby the rich, large-market clubs would help subsidize poorer teams--so "the alligator [players' union] doesn't swallow us."

His adamant stance never wavered. Even when President Clinton last winter demanded an end to the national pastime's labor war, Reinsdorf wasn't cowed. He remained defiant, hawkishly urging fellow owners to stay united in their attempt to restructure baseball's economics and to keep fighting the players' union, a group he derides as "humorless ideologues, driven by a psychopathic hatred" of ownership. Even after the March 31 federal court ruling that undermined the owners' position, Reinsdorf expressed disappointment, not relief, to what he termed a "pause" in the strike.

"We don't have a settlement or an agreement," he said a few days after the ruling by U.S. Circuit Court Judge Sonya Sotomayor. "We're just in a pause, a pause, a lull. We still don't have a deal. We still have to negotiate a deal...a contract. The strike has ended, but the parties still have to get together at the bargaining table. I just hope the union will finally negotiate in good faith. Nothing has changed....I still feel there has to be a significant restructuring of baseball's economics.

"I don't know if I am frustrated by the court's getting involved--but yes, I am disappointed. It just wasn't a constructive action on the part of the court, on the judge's getting involved. [The courts] normally stay out of most labor disputes. They should let the parties settle differences by themselves.

"We were very close to the players realizing they were being misled by their union," claims Reinsdorf. As a result, he believes the players would have eventually taken matters into their own hands.

The owners, Reinsdorf insists, also emerged from the long fight as unified as they have ever been, and are perhaps closer than ever as a group to the position espoused by Reinsdorf and other hardline owners. "I don't see any anger rising in the wake of the judge's decision," says Reinsdorf. "The owners are terribly united. The moderates have moved into the camp of those who want substantial change. There will be no shift in our leadership. I don't see an internal battle." He still predicts that revenue sharing will become a reality.

At this point, Reinsdorf isn't ready to back down or seriously compromise with the players either. "The philosophical and financial differences that divided us are still on the table. But patience, patience. Changes still have to be made, and we're just in a pause. A temporary pause.

"I'll fight for what I believe in. I'll always fight for what I believe. I hope we get an agreement, but the owners have the resolve to do whatever is necessary to achieve a just result--that's a restructuring of baseball's economics."

There's no hint of any contrition or regret over what's come down already, and his strident comments even inadvertently lend credence to the media's elevation of Reinsdorf into the role of puppeteer, engineering every move and countermove made by the owners and interim commissioner Bud Selig. The gritty, anything-but-charismatic Reinsdorf likes to downplay his clout, chuckling "I'm not driven or powerful. I'm happiest at home with my cigars and poodles" (Pandora, Diva, and Little Guy). But even the owners' decision not to lock out the players, the only viable option left to them after Sotomayor's ruling, was apparently made based on a Reinsdorf analysis. "There was a significant risk of damages. We felt the risk was too great," says Reinsdorf, brushing aside a suggestion that such a move would have created a public relations nightmare. "Let's leave it at that. There were just too many risks that weren't worth taking." But he remains convinced that a solution acceptable to the owners will be reached. "We'll get there. The battle still goes on. We're not licking our wounds. We're just sorting things out. We might just come up with a new strategy. If we just stay the course, have patience, we will correct the economics. We'll eventually even have revenue sharing."

But a new, reflective Reinsdorf, still tinged with his standard don't-abandon-the-barricades mentality, only surfaced in the wake of the legal setback. Throughout the fall and winter, he was still driven by the dream: to create a World Series winner in a business climate that made sense to him. Throughout those long months, there were other components of the Reinsdorf empire to tend--like the sudden and unexpected return of Michael Jordan to the Bulls. But for Reinsdorf, they appeared to be distractions from the task at hand. In the midst of a mid-March owners' strategy meeting at the usually sedate Breakers Hotel in Palm Beach, rumors of Jordan's return to the NBA shifted attention away from baseball. Michael had been seen at a Bulls' practice, and once Reinsdorf appeared before reporters, the feeding frenzy began.

"Jerry, have you heard that Michael was at the Bulls' practice today?"

"I haven't talked with anybody about it," shoots back Reinsdorf.

"Would you like him back?"

"I just want for Michael what Michael wants."

"Do you have any indication of his future plans?"

"None at all."

In the glare of those TV lights, Reinsdorf looked weary, embattled--eons removed from his celebratory antics during the Bulls' 1991 championship. Already having lost over $10 million due to the strike, and spending 80 percent of his time on baseball labor issues, he seemed barely interested in Jordan's return.

He took the opportunity not to reflect on Jordan, but to go on the offensive. After attacking the baseball players' union chief Don Fehr for "preventing a settlement by not addressing the problems of the industry," he turned warm and fuzzy, praising acting commissioner Selig (nicknamed Bud Light) as "our wonderful, devoted leader."

That's the media's cue. They've heard it before, and as a group, they seem to prefer the picture they've painted of Reinsdorf as the villain, a "cancer" in baseball motivated only by self-interest (according to one players' association official). Reinsdorf admits that he's not comfortable with the press, and is prone to such broadsides as calling The New York Times a "house organ" of the baseball players' union. And, he's candid enough to concede, "I've made mistakes with the press." (Most notably, airing his hard-line demands for a new Comiskey Park.) "I have a lot to learn about PR."

But those lessons, much like his threatening to lose weight and play golf, will come later. Much later. After the impromptu, Jordan-inspired press conference, Reinsdorf was asked by real-estate partner Bob Judelson to "chew out" one of their business associates. Reinsdorf retreated to his hotel room, steeled again to play the heavy.

Countless phone calls later, Reinsdorf reappeared, carrying a mobile phone and an unlit Cuban cigar, and looking refreshed. A Chicago writer intercepted him to ask if he'd spoken to Jordan's agent, David Falk, but Reinsdorf ignored the question and moved through the Venetian-style lobby.

Finally settling into a seat near a dining room, he muttered, "Jordan, Jordan, Jordan," then added, "It was quite a meeting today, everyone rallying around Selig. There was a lot of laughing. I couldn't exist in anything where there isn't a lot of screwing around."

A playground for hard-driving businessmen whose egos have led them into sports and its macho camaraderie, these meetings are also Reinsdorf's secret pipeline straight to Havana.

"I usually sit next to my partner in crime, Toronto Blue Jays' president Paul Beeston, who brings me Cubans," said Reinsdorf with a grin. "They're very enjoyable, and while they can also be very inconsistent, I feel it's my patriotic duty to smoke lots of Cubans. They're contraband, so as a good American I have to light, smoke and destroy them."

Not everyone is amused with Reinsdorf's smoking seven cigars a day. Certainly not his wife, Martyl (married for 38 years with four grown children), who bans him from smoking inside their Phoenix manse. "She tolerates my smoking inside the house if she's in a really good mood, and that happens every decade."

The welcome isn't much better among baseball owners. Baseball is a fractured political landscape that is also a battle for turf, a struggle between diverse personalities with colliding interests. There are shrewd businessmen such as the Marlins' Wayne Huizenga of Blockbuster Video fame and Little Caesars Pizza founder Mike Ilitch, owner of the Detroit Tigers. Freewheeling spenders like Yankee boss George Steinbrenner contrasted sharply to the Angels' tightfisted Jackie Autry.

Except for the bruised feelings of owners left out of the Bud 'n' Jerry power loop, Reinsdorf is generally respected, if not liked, by baseball's lords. (After suing NBA commissioner David Stern over Chicago superstation WGN's rights to televise Bulls games, he admittedly has few friends in basketball.) But he won over most of the baseball owners long before the strike issue surfaced when he led a concerted assault on baseball commissioner Fay Vincent. Praising his grasp of labor issues and his "working tirelessly" throughout the baseball strike, baseball owners indulge Reinsdorf at meetings. No one complains about his smoking. Not to his face.

"Jerry's the one guy I'd have in the trenches with me," exulted Steinbrenner. "He's principled, a man of his word, a quick-minded negotiator. But those stinking cigars. The smoke always burns and waters my eyes."

Bursting into laughter when told of these remarks, Reinsdorf countered, "The owners are a fun bunch. Here we are, months into a strike that's costing us tens of millions of dollars, and yet we're wisecracking all the time at meetings."

Reinsdorf can't say the same for the union. "I don't think the other guys ever laugh. They're ideologues on a mission with a pathological hatred for us. The union doesn't like me because they can't run over me. They have always run over baseball owners."

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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