Fact or Fiction: Jerry Reinsdorf is cheap

A common perception of Jerry Reinsdorf, chairman of the board of the Bulls ownership group, is that he's cheap.   That the Bulls are simply a cash cow where winning titles isn't important, and only the bottom line is.    In order to discuss whether this is true or not I've focused on Forbes' Business of Basketball series of articles and Business of Baseball series of articles to test Reinsdorf's spending patterns versus his peers.

Team 10 year Total Operating Income Average Operating Income Peak Operating Income
Bulls 437 43.7 59
Lakers 321 32.1 48
Suns 258 25.8 40
Pistons 214 21.4 40
Rockets 165 16.5 36
Celtics 154 15.4 26
Clippers 117 11.7 22
Spurs 112 11.2 27
Wizards 103 10.3 29
Raptors 77 7.7 29
Jazz 76 7.6 28
Heat 75 7.5 21
Knicks 63 6.3 31
Kings 53 5.3 21
Hornets 49 4.9 22
76ers 37 3.7 18
Warriors 34 3.4 14
Cavaliers 34 3.4 14
Magic 28 2.8 13
Hawks 25 2.5 13
Bobcats 22 5.5 12
Timberwolves 2 0.2 9
Thunder/Sonics -2 -0.2 7
Nuggets -3 -0.3 25
Pacers -11 -1.1 10
Nets -31 -3.1 9
Bucks -54 -5.4 5
Grizzlies -104 -10.4 1
Mavericks -152 -15.2 3
Blazers -276 -27.6 -1

As you can see, the Bulls have had the highest average operating income of any franchise over the past ten years as well as the highest peak operating income. Their average profit each year is in fact higher than the peak profit of every team in the NBA except the Lakers who had a single year of peak profit above the Bulls average.

In the past ten seasons, the Bulls have had the most profitable franchise in eight of the ten and finished second in the other two years. This is without even generating large amounts of extra playoff revenue that other franchises had over that period. The average operating income per year in the NBA over the past decade was 6.2 million while the Bulls pocketed 43.7 million over that period.

It's blatantly obvious that the level of acceptable profit for every team in the NBA is at a far lower threshold than that of the Chicago Bulls. They appear to be the thriftiest team in the NBA by a fairly large margin when comparing profits to salaries.

However, Jerry Reinsdorf operates another team in town as well, the Chicago White Sox. Let's compare the spending habits of the Bulls and White Sox.

Revenue Operating Income Player Expenses Salary % of Revenue
126.4 43.7 47.7 37.74%
134.8 13.5 78.1 57.94%

Over the past ten years the Bulls revenue has nearly matched the White Sox while their profit margin has been about three times as high. Reinsdorf has approved almost double the player expense for the White Sox that he has for the Bulls. It certainly appears that when it comes to the White Sox, Jerry Reinsdorf is in fact far from cheap. While I didn't have an extra hour to compile all baseball numbers, when looking at the revenues/salaries around the league, the White Sox do not fit the profile of a cheap franchise at all and spend inline with their earnings relative to the typical team.

In conclusion, based on the profits, revenues, and player expenses, Reinsdorf is running the Bulls as a cash cow.  He's not putting the appropriate amount of funds back into player salaries that other team owners in the league do.   He's also running the team quite differently than the White Sox (different rules of course).

Filed under: Uncategorized

Tags: bulls, cheap, chicago, jerry, nba, reinsdorf

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  • You have to remember, there's no salary cap in baseball. Once he passes into the luxury tax for the Bulls, he's essentially giving away something for nothing, unless they're contending.

  • Your funny last paragraph almost makes me say:

  • The Bulls can win 20 games and still sell out the UC, the WHite Sox can't afford that. Until that changes, I don't really see much changing. Isn't it also true that Reinsdorf isn't really just the sole guy/big owner and that he just does what the board tells him to do? If so, there's really no point in comparing it, and the blame is misguided

  • Doug

    The last two posts have been among the best reading on the Bulls for me ever!! I just made you site my favorite page and home. It

  • That's a pretty good ROI for an initial investment of $16 million.

  • Doug,
    The Bulls don't have any competition for the basketball market in Chicago. The White Sox have to deal with Cubs and their profitability is directly a result of attendance which is directly a result of how good the product is. Out of the last 19 years, there have been 5 that the White Sox weren't playoff contenders on some level. They actually have been pretty decent. Baseball and basketball are completely different business models that shouldn't be compared to one another.
    For all the complaining about the Bulls not spending enough money, who have they lost because of it? Gasol and Gordon. Here's the catch. Both guys have/had HUGE question marks not related to the contracts.

  • "However, one would expect a team winning titles to be massively profitable." - I have little doubts that they were. but I also expect that payroll accounted for a bigger share of expense, although that time salaries were meager compared to today's.

    "The point is that he has rejected moves to improve the team due to finances while pocketing a surreal amount of money." - This, again, sounds like counting someone else's money. I am sure that the same people who scream now that Reinsdorf is cheap were blasting him for vastly overpaying for Ben Wallace. And no one said then that Reinsdorf was cheap -just incredibly stupid. "The point is" that he has his own ideas how to manage the team, both in terms of sports achievements and financially. Everyone of us has also his own ideas. Buit Reinsdorf has money (and, by the way, puts in and risks his millions.) That's why his opinions matter while mine and yours don't. Does it make him always right? - Of course, not but none of usis always right either. And even if, say, you or I, always choose the right thing and always choses wrong, it still does not matter because it's his money and his business... Imagine if I come to your draft party and start telling you how to re-arrange your furniture. Being nice guy you'll simply not invite me next year and somebody witth a temper like mine will kick the guest like that out the house right away. Yet you run this party for us, fellow Bulls fans, so don't we have a say in what furniture you must have?

    "Fans deserve better based on how much they pay and how much other teams pay vs their revenues." - This is an interesting statement. Have you renewed you season tickets? - Then you deserve what you get (I assume that the answer to my question was positive.) You haven't been coerced, and you have plenty of other chopice, like watching all of the games on TV. This is the "deserve" part. And I am sure you would agree with me that comparison with other teams is totally irrelevant. (If you don't beleive I suggest the following: use an example of someone's wife who lost / gained some weight to convince your own wife to do the same and see what happens.)

    Have a great weekend, and please don't delay your report on Taj Gibbson for too long.

  • Robert can you say DOMINATED!!

  • Wow great analysis Doug! Too bad the Bulls are the red headed step child of the family considering the amount of $ spent on the White Sox. We deserve better especially since the Bulls are making so much $! Why are we making $ anyways with Jordan & Pippen and our championship streak a distant memory?

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