In his excellent recent article on the SSS, Mark Liptak is absolutely right that Jerry Reinsdorf will not sell the White Sox. And he’s absolutely right that it’s all about taxes, if I say so myself – which I’ve done a few times in the past.
Reinsdorf may have owned the White Sox for over 40 years, but he spent his entire adult life making sure that at first other very wealthy men and then himself steered clear , even remotely, to pay their fair share of the cost of running a city or state or nation. All legally of course.
Heck, Reinsdorf not only (perfectly legally, of course) avoid paying taxes in every way imaginable, including investing heavily in two areas of the biggest (perfectly legal, of course) tax scams of all, real estate and sports teams, but he blackmailed the pathetic politicians of Illinois (legally, of course) into paying him far more than he ever paid for the White Sox as part of the build of a new stadium when he threatened to move to St. Petersburg, Florida.
Crook? Of course (perfectly legal variety, of course). Horrible abuser of Illinois people? You bet. Suction cup? Never.
But that doesn’t mean the team can’t have new owners.
“HOW CAN IT BE?” YOU ASK
The probable reason – very probable reason – behind Reinsdorf’s failure to sell the White Sox is the incredibly stupid tax system that says inherited property is completely redone at the time of inheritance, so in this case the heirs don’t would only pay capital gains tax (and possibly recapture of depreciation, which would be at a higher rate) from that point – about $1.7 billion for the entire team, maybe $350 million for Reinsdorf stock if Jerry were to collapse tomorrow – instead of starting from the actual purchase cost, which was damn close to zero. This law probably cost a few million dollars in buying politicians to pass it, saving the heirs of the very rich trillions of dollars since.
Like many billionaires, Reinsdorf follows Leona Helmsley’s adage that paying taxes is only for the little people, and he certainly doesn’t consider himself one of them. Heck, he sees himself as the one the taxes should go to. After screwing his fellow countrymen all his life, he’s definitely not going to stop now.
Of course, while he has no doubt worked in every possible way to reduce inheritance tax as well, there will still be some to pay, perhaps nine figures. That must really eat your throat, right, Jerry?
What if you could even avoid them? And will you probably also benefit from future tax advantages for your heirs?
YES, JERRY, YOU CAN AVOID ALL TAXES WHILE GETTING THE NEW WHITE SOX PROPERTY
AND TRANSFORM YOURSELF FROM A HATED AND ARROGANT OLD JERK INTO A REVERED COMMUNITY HERO IN THE PROCESS
All you have to do is give the team away.
Of course, doing anything that helps someone else is against your principles, but think of posterity. From the movies about the Bulls to the hearts of Chicago sports fans, you’re nothing but an ignorant, greedy, greedy fool, all your successes on the backs of others, your failures your own.
You are despised, and not just for some sporting failures on the field, or even for being a crackpot. People pretty much spit your name out.
Think of those who have inherited this name. You want them to be despised too, to be turned away from with contempt?
There’s a way to avoid that, turn it around, and be part of Chicago and Illinois folklore in a good way.
GIVE THE TEAM? YOU LAUGH!!!!!!!!!
We are not talking about walking down the street, distributing shares. We’re talking about an official donation to a 501(c)3 non-profit organization, with all the tax benefits that comes with it. A tax manipulator (perfectly legal, of course) like you must like this.
Many super-rich people donate significant valued assets to charity. The White Sox donation of around $1.7 billion would be just a little larger than most. Or any.
And we’re not talking about blowing up your whole estate just to be loved for eternity. Your share of the White Sox is probably worth around $350 million – this follows assumptions that you only own around 20% although you prefer to be called “owner” – which is a pittance given your estimated net worth of 1, $8 billion. Your heirs will never miss it and they will love to be respected and admired rather than objects of contempt.
Are you screwing up some of your fellow shareholders? Sure. But, frankly, as quiet as they have been through decades of mismanagement, they deserve it. And most of them paid nothing for shares back then.
CAN A SPORTS TEAM BE RUN BY A NON-PROFIT (NON-PROFIT, THAT IS?)
The only case at the highest level of major sports is the Green Bay Packersowned by citizens, and this is only possible because the system was created before the NFL banned such ownership.
However, several minor league teams have belonged to the community at one time or another, most recently in Toledo and Memphis, and several summer college league teams still do.
The IRS actually has a charitable category for sports organizations, although it seems to be designed for smaller outfits, like youth leagues or a curling team. Still, why not go for a small increase in size?
Even better, arts organizations would certainly qualify, and there has been more written and discussed about the fine arts of baseball than the fine arts themselves, so calling a baseball team an arts organization should be eligible. 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 WHOM? WHERE SHOULD IT BE, TO WHOM?
One option would be to create a charitable foundation or trust, specifically for the donation and operation of the White Sox. It looks like it might be met with some mean looks from the IRS and threats of independence and the like, but you’re the tax expert, not me. It also might not seem perfectly altruistic to the audience.
A twist on this would be to donate to such a foundation, which in turn sells to a for-profit entity, but that would require more looks and no reputation boost.
This leads to a third option, donating to a very reputable existing charity. Help the world, or part of it, help your eternal reputation and that of your heirs, while screwing up governments and all taxpayers so you can maintain your life’s purpose – win-win -winner.
BUT WHICH CHARITY?
Large international entities would be tempting – the Red Cross, Doctors Without Borders, UNICEF, that sort of thing – but that would spread the benefits very widely and therefore have less impact per capita or per situation.
Best to stay local. After all, most of the abuse in Reinsdorf’s career has been inflicted on people in Illinois and specifically the Chicago area, whether financial or emotional.
There are many, many local charities worth supporting, but it would be best to spread all the wealth as widely as possible. So I suggest the White Sox donation to United Way of Metro Chicago.
Centraide would naturally transmit the largesse to dozens or hundreds of other charities, all checked to make sure they are functioning properly and doing good works. The United Way Board of Directors is made up of many extremely important and knowledgeable members of the community, but chances are few of them know anything about baseball, so it would be like you were always in control.
A donation worth $1.7 billion would eclipse UWay’s current handful 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 credit.
Obviously, United Way would probably prefer not to run a baseball team, tempting as the idea is for the people of Chicago, and will likely sell the team and get the proceeds from it – all tax-free at that stadium, which should warm the cockles of your heart, Jerry.
Anyone who’s ever worked for a company that’s been sold knows how it works – on Friday the new owners say nothing will change, and all staff should feel safe, and on Monday you walk in and there’s a new name on your office door. That should be the case here, with all non-union employees (and therefore not players) being asked to resign and asked to reapply 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 about baseball, hire competent front office and field management based on their perceived abilities and not a senile whim, and all will be well.
AND THE WHITE SOX AND THEIR FANS WILL BE SAVED!
Please don’t feel like you have to rush to do this, Jerry. By Monday, it will be fine.