His father-in-law, Milton Rifkin, told him to stay in Chicago. "He used to say, 'If you can't make a living in Chicago, you can't make a living anywhere.' They don't care here where you've come from, as long as you're honest and work hard." So Reinsdorf stayed, working at the IRS regional council's office from 1960 through '64. While at the IRS, he says, he learned "how to settle and how to negotiate" and that "you didn't have to squeeze every last nickel out of a deal." He also learned "that if you try to be loved and respected, you'll wind up neither. You have to make a choice. To me, it wasn't a choice."
That's the nut of it: Reinsdorf would rather be respected than loved. It's important to him. Nothing in his manner says, Hey, I'm one of you. He does not solicit affection. He solicits something much colder—respect—and it has cost him the common touch.
After he left the IRS, Reinsdorf made a name for himself around Chicago in the late '60s by taking professional people, such as doctors, and incorporating them—a new concept at the time—setting up tax shelters and tax-free retirement plans. In '73 he started Balcor, a real estate investment firm selling limited partnerships to the general public. Four years later he reported gross income of only $112,000; by '82, he had built Balcor to the point where he sold it to American Express for $53 million.
Reinsdorf agreed to stay on for another five years as CEO of Balcor for a percentage of the profits, and by the time his contract expired, he had overseen $6 billion in real estate deals and had reaped $50 million in commissions. Reinsdorf left Balcor in '87—just before a real estate collapse occasioned partly by the federal tax reform act of 1986. That debacle cost investors millions and forced American Express to take a $200 million write-off on Balcor in a single quarter. But Reinsdorf didn't lose a dime.
In January 1981 Reinsdorf and Einhorn, who first met in law school, put together the partnership that bought the White Sox from previous owner Bill Veeck for $19 million. Reinsdorf was the general partner, with control over baseball operations; Einhorn, a former television executive at CBS, was in charge of marketing. "We were hit by a strike that first year," Reinsdorf says, "and I remember thinking that what the two sides were fighting over was crazy. Either side could have given up and not lost anything."
Sound familiar? It's funny how the last guy into the owners' ranks is always the smartest. But over the years Reinsdorf has become disillusioned with the collective bargaining process in baseball. "The baseball business was worse than I ever imagined," he says. "The first two years we lost $8 million. 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."
Reinsdorf's response? He doubled up. In '85 he put together another partnership, which bought the Bulls for $16 million. Two years ago the team paid a dividend to shareholders equal to approximately twice that original investment. "I thought the Bulls were a sleeping giant," says Reinsdorf, who'd grown up a Knicks fan. "I felt owning the Bulls would help with the White Sox, since it would give me more leverage when dealing with sponsors. And if the White Sox failed, I would still be in sports."
The White Sox, however, didn't fail, thanks to a new, publicly funded stadium, which Reinsdorf, Einhorn and Illinois governor James Thompson, a law school classmate at Northwestern, rammed through the state legislature in '88—but only after Reinsdorf, who had mourned the Dodgers' flight from Brooklyn, threatened to move the team to St. Petersburg, Fla. Reinsdorf negotiated a sweetheart 20-year lease according to which, after the first 10 years, the state promised to purchase up to 300,000 tickets in any year that attendance fell below 1.5 million. It was a stunning coup: a publicly financed building with downside protection. Reinsdorf was portrayed as a ruthless businessman who had held the city hostage and snookered state politicians. No one much cared when he said that the St. Petersburg deal would have been $9 million a year sweeter because of television rights, but he had stayed put because he didn't want to be remembered as Chicago's Walter O'Malley.
Still, the White Sox drew more than 2.5 million fans each of their first three years at the new Comiskey Park, from 1991 through '93, and Reinsdorf was riding high when the team appeared to be headed for the World Series in '94. Then in August the players struck, and a month later the Series was canceled for the first time in 90 years.
While Reinsdorf didn't single-handedly cause the strike, he might have helped prevent it by siding with the large-market teams, which at first were against increased revenue sharing. "The 10 big-market clubs had a caucus," Reinsdorf says. "We stayed with the small-market clubs. We felt for the long-term interests of the game, we had to have revenue sharing. Otherwise the Pittsburghs and Milwaukees couldn't compete, and that was no good for the game. You have to have strong teams to play against."