Chicago White Sox: Understanding who’s running my team

One of a series of articles looking at the front office structure of each major league team. Today, we take a deep dive into the Chicago White Sox.

Chicago White Sox

• Owner: Jerry Reinsdorf
• Executive Vice President: Ken Williams
• Senior Vice President/General Manager: Rick Hahn

Reinsdorf is MLB’s senior owner, having purchased the team from Bill Veeck in 1981. Originally a CPA and attorney, Reinsdorf in 1985 added the NBA’s Chicago Bulls to his stable of teams, and for many years was one of both sports’ most active owners.

He has not, however, generally tore through chief operating officers with the frenetic pace one tends to see among actively involved owners. Including Roland Hemond, who he inherited from Veeck, he has employed only a half dozen general managers, and aside from Ken Harrelson (1986) their average tenure has been 9.5 seasons.

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The other factor is that Reinsdorf will be 84 in February and he has grown more hands-off with time.

That has worked to the benefit of Williams and Hahn. Williams came to the Sox as a player in the 1980s, returned as a scout late in 1992, and became a special assistant to Reinsdorf in 1994. That began a relationship that continues to this day.

Williams replaced Ron Schueler as general manager following the 2000 season, remaining in that position until being elevated to the new position of executive vice president following the 2012 season. It was under Williams’ leadership that the Chicago White Sox won the 2005 World Series.

Williams’ promotion took place in tandem with the elevation of Hahn, previously his top assistant, to Williams’ old position.  The pair have worked in tandem since Hahn came to the Sox as a 31-year-old with degrees from the University of Michigan, Harvard law and the Kellogg Business School at Northwestern.

The fact that Williams and Hahn have operated jointly for more than 15 years suggests that it would be foolish to view the team’s decision-making process in any context other than as a duality.

Like almost every MLB franchise, the White Sox’ valuation has grown markedly in recent seasons. Forbes estimates it today at $1.6 billion, nearly a four-fold increase over the just-concluded decade. By MLB standards, that is almost precisely mid-range. Statista puts team revenues at $272 million, up from about $210 million over the decade.

Their developing roster – think Eloy Jimenez, Yoan Moncada, Michael Kopech and Tim Anderson – demands a steep rise in payroll, and that’s precisely where the White Sox find themselves entering 2020. Cot’s Contracts projects as much as a $158 million 40-man payroll this coming season, and while that’s not extraordinary by industry standards, it will smash previous franchise milestones.

The current team record is $132 million set in 2016.

On the field, Williams and Hahn have failed to date to put together a winner. Since Hahn’s promotion, the Sox have never finished above .500, only once placed above fourth, and their winning percentage is .433.

Based on the net change in Wins Above Average,* the average impact of Williams-Hahn on Sox team fortunes has been -7 games per year, with only one season (2014) producing a net positive impact.

Sox fans are betting – not without reason – that those numbers are poised to turn around with the development of all of the team’s recent youthful acquisitions. The team’s winter moves reflect a desire to balance all that youthful development with some maturity. The new faces include catcher Yasmani Grandal (four years, $73 million), pitcher Dallas Keuchel (three years, $55 million), and DH Edwin Encarnacion (1 year, $12 million).

Going forward, the challenge facing the Chicago White Sox is probably revenue-driven. Inevitably they are compared with their far richer cross-town rivals, the Cubs, who have a broader audience, deeper traditions, twice the franchise value, and substantially more money.

To get ahead moving forward, the South Siders need to figure out a way to jack that $272 million team revenue significantly. At present, the Sox are plowing 58 percent of that back into on-field salaries, one of the highest percentages in baseball and a percentage that is probably unsustainable over the long term. Assuming that young core blossoms, their salaries will blossom as well.

Consider the decade-long revenue growth, from about $210 million to $272 million. That’s about 30 percent or 3 percent per year. Again to cite the Cubs as a comparison, North Side revenues increased by 75 percent over the same decade…that’s more than twice the growth rate on the South Side.

Since attendance has actually declined at Guaranteed Rate Field over that period, — from about 2.2 million to about 1.7 million last season — one necessary step is to resuscitate customer interest in the team. That leaves substantial room for growth: the franchise attendance record is just a few bodies short of $3 million, although that record was set back in 2006.

The Chicago White Sox generated about $37 in revenue per fan in 2019, so a half-million attendance jump puts $18.5 million in the team’s pocket. That still leaves ancillary revenue streams – licensing, ballpark-related real estate and perhaps media – as usable supplementary options.

The Sox have not recently been particularly creative in those spheres, and Reinsdorf isn’t getting any younger.

*This calculation is obtained by determining the net impact of all player transactions on team performance for the season(s) in question. Wins Above Average is a zero-based offshoot if Wins Above Replacement; thus, the final figure suggests the degree of positive or negative movement in the standings attributable to front office moves.