The Chicago White Sox are one of two MLB franchises residing in Chicago, and despite having
a smaller fan base then their city-mates the Cubs, the White Sox have a unique history and a
huge upward trajectory. One of the oldest teams in the MLB at 117 years old the White Sox
have posted a 9120-8987, record over the years, resulting in a .504 Win-Loss. .Prominent in the
early 1900’s with success and scandal, but faltering in the late 1900’s, the White Sox turned it
around to win a world series in 2005. After 9 year playoff dry spell dating back to 2008, new
owner Jerry Reinsdorf and GM Rick Hahn have tripled the teams value between 2008 and 2017
and they appear to be turning the franchise around with a low cost long-term rebuild designed to
team maximize value. (Forbes 2017)

Originally named the White Stockings, owner Charles Comiskey moved the franchise to
Chicago in 1900 and they went on to beat their fellow city-mates the Cubs in the 1906 world
series. (Bova 2017) The White Sox acquired baseball legend “Shoeless” Joe Jackson in 1915,
who currently holds the third highest batting average in major league history, and they went on
to win the 1917 world series with him. (Baseball Reference n.d.; 1917 World Series n.d.)
Despite the early success, this era of White Sox history is overshadowed by the infamous “Black
Box Scandal.”

One of the biggest controversies in sports history, it was alleged that members of organized
crime paid White Sox players to fix the 1919 world series against the Cincinnati Reds. (ESPN
n.d.) Judge Kenesaw Mountain Landis oversaw the case that accused eight players, including
“Shoeless” Joe Jackson, of receiving money from gamblers to throw the game. Although they
were never proven guilty in court, all eight were banned from professional baseball permanently
when Judge Landis, as an externality, was appointed as the first ever commissioner of the MLB
and tasked with restoring integrity to the game of baseball. (ESPN n.d.) The “Black Box
Scandal” has been referenced many times in pop culture, appearing everywhere from the Great
Gatsby to the Godfather II.

Owner Charles Comiskey died and passed the franchise through two generations until being
sold to a group led by baseball Hall of Famer Bill Veeck in 1958, which led to their first world
series appearance since the “Black Box Scandal” in 1959. (MLB n.d.) Despite briefly flirting with
success, The White Sox lost many fans and baseball games throughout the 1960’s and 1970’s,
a struggle epitomized by the infamous “Disco Demolition Night” in 1979. (Dozer 1979)

Desperately trying to attract fans to their games, the White Sox advertised a promotion where
they would blow up a crate full of disco records on the field in between a double header against
the Detroit Tigers. The explosion destroyed part of the stadiums grass, but the real damage
came afterwards when over 5,000 fans stormed the field and began rioting, destroying things,
and stealing bases. (Dozer 1979) As fans built bonfires in the stadium and refused to leave, the
Chicago police department eventually had to break up the event which led to 39 arrests. The
field was unusable for the game the second night against the Tigers and as a result the White
Sox had to forfeit. (Dozer 1979) The public backlash towards the front office after this
compounded the White Sox unpopularity, which ultimately led to Bill Veeck wanting to sell the
team and different ownership groups trying to move the team to new cities such as Milwaukee,
Seattle, Denver, and Tampa. (Sullivan 2011)

Veeck insisted on selling the team to an owner who vowed to keep the team in Chicago, and
sold the team to Jerry Reinsdorf in 1981 for $20 million. (Forbes 2017) Instead of relocating, the
team remained in Chicago despite their struggles and in 1988 received public funding for a new
stadium from the state of Illinois. (Bova 2017) The new stadium led to good things in the 1990’s,
as the White Sox found a star player in hall of fame first baseman Frank Thomas who led the
team to 12 winning seasons between 1990 and 2005. The White Sox swept the Houston Astros
in the 2005 world series to earn the franchise their third world series win after an 88 year
drought going back to 1917. (Baseball Reference)

While the team has not made the playoffs since 2008, they have been implementing a long-run
rebuild following the promotion of Harvard Law Graduate Rick Hahn to General Manager in
2013. (Morrissey 2017) The White Sox record has improved each year since 2014, posting a
73-89, 76-86, 78-84 line. (Baseball Reference) Reinsdorf’s ownership appeared to be
committed towards a long term rebuild after trading expensive All-Star pitcher Chris Sale and
established veteran outfielder Adam Eaton for younger and cheaper prospects prior to the 2017
season. (Baseball Reference) This summer, the White Sox have traded away even more assets
for cheaper minor league prospects with more upside, prompting Rick Morrissey of the Chicago
Sun times to say that they are “acquiring so much talent over the last seven months that the Sox
have enough young players to field both sides of a minor-league all-star game or charter a
fraternity (Beta Alpha Tau? Tau Alpha Tau Eta Rho?).” (Morrissey 2017)

Further, this appears to be evidence that Reinsdorf’s primary goal for the White Sox is to build
value. In these three years between 2014 and 2017, the White Sox have nearly doubled their
value, going from an estimated $695 million in 2014 to $1.350 billion in 2017. (Forbes 2017)
Although the White Sox have steadily been increasing their payroll since 2014, ($88.5 million to
$109.5 million) they still are in the bottom 10 teams in the league in terms of overall payroll for
the 2017 season. (Fort n.d.) This penny-pinching rebuilding method of patiently acquiring talent
combined with the fact that the White Sox record has improved every year since shows that
management is not in “throw big money at free-agent players to win-now” mode but rather more
focused on a long term plan and is not in a rush to win in the short run. This cost-effective
business model is likely what has put them among the fastest risers in the MLB in team value.
Among all MLB teams, only 5 teams (Angels 31%, Phillies 34%, Astros 32%, Marlins 39%, Blue
Jays 44%) had a higher 1-year value increase percentage than the White Sox’s 29% last year.
(Forbes 2017)

This is likely the combination of a successful low-cost rebuild and playing in a major market.
According to Forbes, 38.3% of the teams value comes from their market despite sharing a city
with the objectively superior Chicago Cubs. (Forbes 2017) This is not surprising, as Chicago is
the 3rd largest population in the United States with an estimated population of 2.705 million
people. (U.S. Census 2016) The White Sox differentiate from their northern Chicago
counterparts Cubs in the fact that they identify with the “South Side” of the city, earning them the
nicknames “South Side Squad” and “South Side Hitmen.” (Baseball Reference)

White Sox Tickets prices have increased every year since 2014, with over an 11% increase in
ticket prices between 2015 and 2016 alone (going from $88.15 to $98.47.) (Fort n.d.) White Sox
Tickets are more expensive than 19 other MLB teams, placing the them in the top third of the
league. (Fort n.d.) This, combined with the fact that White Sox attendance has been in the
bottom 5 of the league since 2014, shows that the White Sox are not concerned with selling out
and profit maximizing. (ESPN n.d.) If they were, than they would lower their ticket price to reflect
their apparent lack of demand so that they could reach equilibrium and sell more tickets.

According to a 2013 article on Sports Business Daily, the Chicago White Sox television contract
with CSN Chicago is worth an average annual rights fee of $45.5 million and they have 40%
equity in the network. (Fisher 2013) Per the same report, only 8 teams were making more
annually from television than the White Sox. (Fisher 2013) This shows that their fan base likely
prefers to watch from home, and thus they will spend less money advertising for ticket-sales.
The Chicago White Sox play in the Bridgeport area of Chicago, Illinois where the median
income is $35,535. (U.S. Census 2016) Perhaps it is not in the average consumers disposable
income to attend White Sox games, especially at their increasing price, and so instead they
watch from their television and the White Sox do not sell as many tickets.

The naming rights to the White Sox Stadium, named Comiskey stadium after the original owner
of the team, were sold to U.S. Cellular for $68 million in 2003 and the proceeds were reinvested
into stadium renovations, most of which were aesthetic (Such as a jumbotron.) (ESPN n.d.) The
stadium was renamed Guaranteed Rates Field in 2016 after a private company bought the
naming rights on a 13-year deal. (Merkin 2016)

Ultimately, Reinsdorf’s rebuild at a low cost has the White Sox appearing the be on the upward
trajectory. The value of the franchise is compounding every year, and the team has stockpiled
young developmental talent in their minor leagues. If the plan can continue to pan out and the
White Sox can continue to increase their win percentage on a relatively small budget, watch out
for the White Sox to become world series contenders in 2019. Hopefully the players will be paid
enough so that they wouldn’t be persuaded by gamblers to fix the game on the 100th
anniversary of the “Black Box Scandal.”

Aside: Many gangster rappers of the 90’s such as Ice Cube, Dr. Dre, and Eazy-E frequently
wore White Sox hats as the black and white color scheme was more neutral than other teams. I
wonder if this had any uptick in demand for White Sox merchandise during the 90’s?