In his excellent recent SSS article Mark Liptak is absolutely right in saying Jerry Reinsdorf won’t sell the White Sox. And he’s absolutely right that it’s all about taxes, if I do say so myself — which I have a few times in the past.
Reinsdorf may have owned the White Sox for more than 40 years, but he has spent his entire adult life making sure that at first other very rich men and then he himself avoid coming even remotely close to paying their fair share of the cost of running a city or state or nation. All perfectly legally, of course.
Heck, Reinsdorf not only (perfectly legally, of course) gets out of paying taxes in every conceivable way, including investing heavily in two areas of the greatest (perfectly legal, of course) tax scams of all, real estate and sports teams, but he famously blackmailed Illinois’ pathetic politicians (perfectly legally, of course) into paying him far more than he ever paid for the White Sox in the package he got to build a new stadium when he threatened to move to St. Petersburg, Fla.
Con artist? Sure (perfectly legal variety, of course). Horrible abuser of the people of Illinois? You bet. Sucker? Never.
But that doesn’t mean the team can’t have new ownership.
“HOW CAN THAT BE?” YOU ASK
The probable reason — very probable reason — behind the failure of Reinsdorf to sell the White Sox is the incredibly stupid tax system that says that inherited property gets a complete do-over at the time of inheritance, so, in this case, heirs would only pay capital gains tax (and possibly depreciation recapture, which would be at a higher rate) starting from that point — $1.7 billion or so for the entire team, maybe $350 million for the Reinsdorf share were Jerry to keel over tomorrow — instead of from the actual cost of purchase, which was damn near zero. That piece of law probably cost a few million dollars in the purchase of politicians to pass it, saving heirs of the very rich trillions since.
Like many a billionaire, Reinsdorf follows the Leona Helmsley adage that paying taxes is only for the little people, and he certainly doesn’t consider himself one of those. Heck, he considers himself one to whom taxes should go. After a lifetime of screwing over his fellow citizens, he’s certainly not going to stop now.
Of course, while he has no doubt worked every possible angle to reduce inheritance taxes as well, there will still be some of those to be paid, perhaps nine figures worth. That’s got to really eat at your craw, doesn’t it, Jerry?
But what if you could even avoid those? And probably get your heirs future tax benefits as well?
YES, JERRY, YOU CAN AVOID ALL TAXES WHILE GETTING THE WHITE SOX NEW OWNERSHIP
AND TURN YOURSELF FROM A HATED, ARROGANT OLD JERK INTO A REVERED COMMUNITY HERO IN THE PROCESS
All you have to do is give the team away.
Sure, doing anything that helps anyone else goes against your principles, but think of posterity. From movies about the Bulls to the hearts of Chicago sports fans, you’re nothing but an ignorant, greedy, grasping jerk, all his successes on the backs of others, his failures all his own.
You are despised, and not just for some sportsian failures on the field, or even for being a tightwad. People pretty much just spit out your name.
Think of those who have inherited that name. You want them to be despised as well, for people to turn away from them in scorn?
There’s a way to avoid that, to turn it all around and become part of Chicago and Illinois folklore in a good way.
GIVE THE TEAM AWAY? YOU HAVE TO BE KIDDING!!!!!!!!!
Not at all.
We’re not talking about walking down the street, handing out shares. We’re talking about an official donation to a 501(c)3 non-profit, with all the tax advantages that provides. A tax manipulator (perfectly legal, of course) like you has to like that.
Plenty of super-rich folks donate large appreciated assets to charities. The White Sox donation of $1.7 billion or so would just be a little bit bigger than most. Or any.
And we’re not talking about blowing your whole estate just to be beloved unto eternity. Your share of the White Sox is probably worth about $350 million — that’s following the guesses you own only about 20% despite preferring to be called “owner” — which is a pittance given your estimated $1.8 billion net worth. Your heirs will never miss it, and they’ll love being respected and admired instead of objects of scorn.
Would you be screwing over some of your fellow stockholders? Sure. But, frankly, as silent as they’ve been for decades of misrule, they deserve it. And most of them paid zilch for stock way back when.
CAN A SPORTS TEAM BE RUN BY A NON-PROFIT (NON-PROFIT ON PURPOSE, THAT IS?)
The only case at the top levels of major sports is the Green Bay Packers, owned by the citizenry, and it’s only possible because the system was created before the NFL banned such ownership.
However, several minor league teams have been community-owned at one time or another, most recently in Toledo and Memphis, and several summer college-league teams still are.
The IRS actually has a charity category for sports organizations, though it seems to be designed for smaller outfits, like youth leagues or a curling team. Still, why not go for a little size enhancement?
Better yet, arts organizations definitely would qualify, and there has been more written and said about the fine arts of baseball than the actual fine arts, so calling a baseball team an arts organization should qualify. If the IRS raises an eyebrow, dozens of movies and plays and hundreds of books could be used as supporting evidence.
BUT GIVE IT TO WHO? OR SHOULD THAT BE, TO WHOM?
One option would be to create a foundation or charitable trust, specifically for the donation and the operation of the White Sox. That seems like it might run into some nasty glares from the IRS and threats about arms-length and such, but you’re the tax expert, not I. It also might not strike the public as perfectly altruistic.
A twist on that would be donating to such a foundation, which in turn sells to a for-profit entity, but that would call for more glares and no reputation enhancement at all.
That leads to a third option, donating to a highly reputable existing charity. Help the world, or part of it, help your eternal reputation and that of your heirs, yet still screw the governments and every taxpayer so you can maintain your life’s goal — win-win-win.
BUT WHICH CHARITY?
Big, international entities would be tempting — the Red Cross, Doctors Without Borders, UNICEF, that sort of thing — but that would spread the benefits very wide, and thus have less impact per capita or situation.
Better would be to stay local. After all, most of the abuse of the Reinsdorf career has been of the people of Illinois and specifically of the Chicago area, be it financial or emotional.
There are many, many local charities worthy of support, but it would be best to spread all the wealth as widely as possible. So I suggest the donation of the White Sox to the United Way of Metro Chicago.
The United Way would naturally pass on the largesse to dozens or hundreds of other charities, all of them checked out to make sure they are run properly and do good works. The board of the United Way is composed of many extremely important and skilled community members, but it’s probable that few of them know anything about baseball, so it would be just like you were still in charge.
A donation worth $1.7 billion would dwarf the current UWay handle of just under $100 million, but I’m sure they’ll be able to cope. And I’m sure they’ll give the Reinsdorf family huge amounts of credit.
Obviously, the United Way would probably prefer not to run a baseball team, tempting though the idea may be for Chicagoans, and will likely sell the team and take the proceeds — all tax-free at that point, which should warm the cockles of your heart, Jerry.
Anyone who has ever worked for a company that got sold knows how it works — on Friday, the new owners say nothing will change, and all personnel should feel secure, and on Monday you come in and there’s a new name on your office door. That should be the case here, with all non-union employees (and hence not the players) told to hand in their resignations and invited to re-apply for their jobs, which none of them will get. Or at least very, very few of them.
Presumably, the new owners will know a little something about baseball, will hire competent front office and field management based on perceived ability and not some senile whim, and all will be well.
AND THE WHITE SOX AND THEIR FANS WILL BE SAVED!
Please don’t feel you have to rush to get this done, Jerry. By Monday will be fine.