Get Ready to ROAR!

From the farm clubs to the big leagues, bankrolling and operating the Detroit Tigers involves hundreds of moving parts spread across several continents.
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On nights when Detroit’s baseball stars align, it’s a sublime scene at an outdoor theater known as Comerica Park. Men in cream-colored togs that are etched with a dark-blue Olde English “D” take their posts on a brilliantly lighted field of emerald turf and brown loam. On most of those evenings, at the end of the game, 40,000 fans — who have decided that nothing beats Tigers baseball for delivering a dividend on Detroit’s entertainment dollar — head home, buoyed by what they just paid to see and experience. Assuming, of course, the final score was acceptable.

This is how Tigers owner Mike Ilitch envisioned evenings for his team and for his town after he bought the club from Tom Monaghan in 1992. And yet, even for Ilitch and for his Ilitch Holdings Inc. empire, it is wildly expensive, this business of baseball stewardship. Ilitch oversees a cash-chomping monster at Comerica Park, with a mightier-than-its-market payroll that, at $132 million, was the fifth highest in all of baseball in 2012. Player paychecks should reach or exceed $152 million this year as part of an overall budget that could approach $250 million or more, including debt service on a 13-year-old ballpark (the team’s portion of the original construction loan was around $145 million).

Ilitch, though, appears at peace with his overhead and with his revenue. The Tigers, who until 2007 never drew 3 million fans in a single season, were among nine teams in 2012 to reach that milestone. It was the third time in six years the Tigers had crashed the mark. Their television ratings last year were, per capita, the highest in all of baseball. Their merchandise sales led Major League Baseball in 2011 and were second in 2012, behind the New York Yankees.

Listen to Lynn Henning talk about the Tigers on WJR’s Frank Beckmann Show with Ken Rogulski and Steve Courtney:

 

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Although financial numbers are secret and the team’s insiders are as tight-lipped as CIA sleuths, it appears the Tigers made money in 2012. Not a lot. But after player salaries, internal payroll (there are 100-plus full-time workers at Comerica Park and a slew of part-timers), the minor leagues, scouting, travel, etc., the Tigers likely made a profit last year.  Ilitch can take solace, also, in the Tigers’ rising net worth. A franchise purchased 21 years ago for $82 million was judged by Forbes in 2012 to be worth $478 million.

“When you get into historic brands, you’re able to have a little more cost certainty than with some other pro-sports teams,” says Maury Brown, president of Business and Sports Network in Portland, Ore. “You’re in position to take more risk in a market like Detroit with its ownership structure. And I imagine that’s what (Mike Ilitch) is doing with the Tigers. He’s competitive. He wants to win. He doesn’t want to leverage the farm, but he wants to win. And from that perspective, it makes Mike Ilitch and the Detroit market unique.”

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Ilitch’s formula is simple and consistent. He has done with the Tigers what he has always been glad to do with his twin Detroit sports team, the Red Wings — at least before a National Hockey League salary cap put the brakes on his annual romance with some of hockey’s gaudiest names, payroll be damned. Ilitch loved to collect super-heroes who helped him win Stanley Cups and fill Joe Louis Arena, just as Tigers customers now line up to see Miguel Cabrera, Justin Verlander, and Prince Fielder, to name three Tigers celebrities whom Ilitch is collectively paying more than $400 million.

“Fans want to see stars,” Ilitch has said, repeatedly, during media conferences to introduce Fielder or to offer massive contract extensions to Cabrera and Verlander. “And if you want stars, you have to pay the price. I don’t worry about the investment, I want to win,” he said to The Detroit News last summer. “That’s all I want to do is win.”

Ilitch, of course, most craves a World Series. For a man who turns 84 in July and who appeared frail at last October’s post-season celebrations, it would be helpful if a championship arrives soon. It could happen. Ilitch’s team is picked by Las Vegas bettors to again reach, if not win, this year’s crown. Meanwhile, Comerica Park’s box office is poised to sell another 3 million tickets. And so Ilitch will dream. And finance. And entrust his baseball executives — like his players, they are sweetly compensated — with the business of bringing Detroit a championship flag.

 

It is a reality far different from his first decade of ownership, when Ilitch dealt with a horrific product and with a front office and budget he mistakenly believed would craft a contender. Those years from 1994 to 2005, when the Tigers never once had a winning record, were ugly times for Ilitch and for Detroit’s baseball galaxy. The Tigers bottomed out in 2003 when they lost 119 games and won 43, missing by only one defeat from tying the infamous record of the 1962 New York Mets for having lost the most single-season games in big-league history.

It was a humiliating status for a team that in 1901 was born as an original member of the American League. Baseball graybeards nationwide have always, with reverence, lent Detroit the honorific “baseball town.” And as a one-time Tigers minor leaguer keen on a city’s and a team’s history, an embarrassed, frustrated Ilitch decided to re-craft and re-brand the team. He had already decided in 2001 to hire, at $2 million per year, a seasoned turnaround ace, Dave Dombrowski, who became Tigers president and CEO — and, by early in 2002, general manager, as well.

By the end of that squalid 2003 season, Ilitch was comfortable with Dombrowski and his lieutenants. Money followed: $40 million for Pudge Rodriguez in 2004; $151 million for Magglio Ordonez in 2005; a $154 million extension for Cabrera in 2008, three months after the Tigers had pulled off a stunning trade for the superstar slugger. Verlander was extended ($80 million) in 2012, with Fielder’s $214-million megadeal pulled off in 2012, a week after Victor Martinez ($50 million in 2010) was lost for the year to a torn knee.

Ilitch has placed as much value on his team’s generals as on his players. Dombrowski is perhaps the highest-paid team executive in baseball. Jim Leyland, the Tigers manager since 2006, draws an annual pay of $4 million, which is about as tall as the cotton gets for a big-league skipper.

Ilitch’s focus, however, isn’t big-league-exclusive. Rather, he tends to invest as freely in his feeder systems, the minor leagues, and in Latin America. It is because he understands perhaps better than some owners that paying stars like Cabrera, Verlander, and Fielder a fortune is wasted money unless he makes a parallel, but comparatively low-cost, commitment to scouting and to the minor leagues.

Consider that $152 million or so in big-league salaries the Tigers will pay this year. Ilitch and Co. will spend a fraction of that figure — $8 million to $10 million — on six minor-league teams, two Latin American hatcheries, and on scouts and travel that span every Podunk stop in America, beaches and outposts in Venezuela and the Dominican Republic, and cross-Pacific travel to Japan, Korea, Taiwan, and Australia.

Overhead is reduced now that Major League Baseball has in place a salary cap on the money that can be paid to sign high school and college players drafted each June. Ceilings are also in place for signing Latin American teens. This wasn’t the case prior to 2012. And it wasn’t the rule when Ilitch paid heavy bonuses to top prospects Rick Porcello ($7.3 million), Jacob Turner ($5.5 million), and Nick Castellanos ($3.5 million) ahead of the cap’s arrival in 2012.

The Tigers have made progress beyond Ilitch’s big-league pocketbook in building a contender. And nowhere has that ascent been clearer or more relevant than in the drafting and signing of amateur talent, those very areas where failures wrought a string of miserable seasons during the 1990s and into the next decade.

 

The Tigers now deploy layers of scouts on the big-league and amateur levels. Five full-time scouts work alongside director Scott Reid on the professional side, with each scout responsible for eyeballing teams and rosters in a particular American League or National League division. A deeper army guards the amateur flanks. David Chadd, a former Red Sox scouting director whose arrival in 2004 changed life for the better at Comerica Park, is a team vice president who, along with Scott Pleis, oversees scouting of high school and college players.

Sixteen full-time area scouts, responsible for two to six states, sweep high school and college fields for prospects who, eventually, could become one of the 3 percent of minor-leaguers who crack the big leagues. The 16 area scouts, whose odometers in a given year look like something rolled up by NASA, are joined by six full-time national cross-checkers — quality-control gurus entrusted with offering second opinions — and by eight part-time scouts who assist in specific areas of the country.

It is a comprehensive network of bird dogs. And it is separate from what might have been the Tigers’ most important foray in team history: Ilitch’s decision to establish a presence in talent-rich Venezuela, beyond a relationship already established in the Dominican Republic. In the days of Jim Campbell, the general manager who delivered the Tigers their last two world championships in 1968 and 1984, the Tigers were notoriously cool to Latin America. Finances probably explained most of Campbell’s indifference.

But those players, signed and developed for pennies on the dollar compared with U.S. costs, should re-seed a new era of contending teams in Detroit. Outfielder Avisail Garcia arrived late last season and made significant contributions to the Tigers’ postseason hopes. Bruce Rondon, meanwhile, is projected to be the team’s bullpen closer, while waiting in the wings are outfielder Danry Vasquez and second baseman Harold Castro.

These are players who were all signed in Venezuela, in addition to other players signed from the Dominican Republic, as 16-year-olds. They are groomed there or allowed to remain in high school until they reach 17, when they can legally move to the United States and to their first stop in the Tigers chain, that five-field complex in Lakeland, Fla., a former World War II airbase known as Tigertown.

Scores of young prospects reside there, the youngest sleeping in a three-floor dorm that’s as clean and as spare as a Red Roof Inn. They eat in a dining area where special care is taken to ensure the menu is healthy and that it also pays respect to Latin American tastes (quinoa, plantains, etc.).

 

On those Tigertown fields, almost all young prospects — from Latin America, or signed from the U.S. in the previous June’s amateur draft — begin their dream to reach the big leagues. This baseball nursery, which comprises several hundred young players, works something like this: Minor-leaguers, in step with their big-league colleagues, report to Lakeland in early February. With the exception of some elite prospects who are asked to join the big boys, the kid talent has its own clubhouse across a practice field and several hundred yards from the big-league locker room.
The youngsters work out separately, with a band of two-dozen minor-league managers and coaches. At the end of spring camp, as the big-leaguers head north, players who have been assigned to the four major levels of Detroit’s minor-league chain also depart for their April-to-Labor Day game schedules.

The stops are tiered, from bottom to top: low Single A (West Michigan, at Comstock Park, Mich.); Single A (Lakeland, Fla.); Double A (Erie, Pa.); and Triple A (Toledo). Prospects too young or too new to crack the Single-A-to-Triple-A assembly line remain at Lakeland for what is known as “extended spring camp.” It means they will continue their work at headquarters until two so-called “short season” minor-league teams begin play in June.

Those teams are the Gulf Coast League Tigers, a team primarily devoted to teens who arrive from Latin America or from high schools and colleges via June’s draft. More advanced players, including many who that summer have signed out of college, move to the short-season Single A stop at Norwich, Conn., which generally preps players for a next stop at West Michigan.
From there, if they are among the elite headed someday for Detroit, they move up the chain: to Single A Lakeland, and then to Erie — the Double A stop, and the level along with Triple A regarded across baseball as a threshold to the big leagues.

What does it all cost? Player salaries and staffing in the Dominican Republic and Venezuelan leagues — also known as “academies” — are miniscule compared with their potential return: as little as $300,000 a year. The six-team minor-league operations are a heavier investment, estimated at a combined $3 million to $4 million per year, including salaries, which is pocket change compared with big-league pay that averages about $4 million per player annually.

Managers and coaches in the minors rarely make six figures. Now that big signing bonuses have been all but outlawed by Major League Baseball’s new draft limits (the Tigers had a $2.1 million budget through Round 10 of the draft), most players are signed for nominal amounts: $25,000 or less, to a potential $1 million or more if the team cares to entice a blue-chip prospect away from entering or returning to college.

 

Pay scales reflect not only the odds prospects face in cracking the big leagues, but the bare-bones life that tends to be part of a baseball recruit’s daily life. Those early outposts, at Lakeland or Connecticut, pay a player about $850 per month — and only during the season. Get a promotion to Single A and you’ll earn $1,000 and change, money that climbs to about $1,500 a month at Double A, and just over $2,000 at Triple A, although by then players are paying for apartments they typically share with teammates.

Not everyone is on a budget so thin. Signing bonuses can offer a cushion for star prospects. Also, players signed as minor-league free agents, generally those with a touch of big-league experience who are free to seek greener pastures, might sign for six-figure salaries with incentive bonuses if they crash the big leagues.

The latter group is a necessary part of baseball business. Teams scramble to ensure organizational depth beyond a big-league club’s active roster of 25 players, which is the squad a manager directs each game. It’s important, and maybe a touch sad, that there are legions of minor-league prospects who have no realistic shot at making the big leagues, and who in many cases know it. They simply love to play baseball. Teams employ them for one reason: They need competitive bodies to provide a challenge for the thoroughbreds.

Minor-league meal money is paltry: $25 a day (managers and coaches receive $40 per day), compared with the $106 handed to big-leaguers. It is cruelly ironic that players whose developing bodies need a salad and high-protein entree can barely budget three-a-day trips to McDonald’s on that $25 ration.

Minor-league business relationships are a separate realm from the Ilitch/front office control over Tigers operations. Minor-league teams are independently owned within the leagues in which they compete (International League, Eastern League, etc.). Revenue is not shared. What the Toledo Mud Hens rake in at Fifth Third Field belongs to the Mud Hens brass.
Player and staff salaries are borne 100 percent by the parent big-league club. The minor-league club is responsible for uniforms, and for paying a 33-percent “reconciliation” fee on bats and balls the Tigers are obliged to provide. A-level teams pay 25 percent.

Minor-league teams pay for rooms, double-occupancy, up to 17 rooms per night. Any more and the Tigers pick up the tab, including single rooms for players who might be in the minors rehabilitating from injury. The Tigers, likewise, pay for medical supplies, with each team required to provide a whirlpool, hydroculator (used for pain management and in physical therapy), and a scale.

Triple A teams that take occasional airline flights pay for all travel for up to 30 people. If more are obliged to make a particular trip, the Tigers pay. Buses are used exclusively below Triple A and are the minor-league teams’ responsibility.

Scouts assigned to find and sign prospects that someday might morph into big-leaguers have life a bit cozier, at least in terms of compensation. A rookie scout might begin at $35,000 to $40,000 per year to $60,000 or as much as $75,000, with the best of the best hitting $100,000. Cross-checkers will likely earn $100,000 or more, with some scouting directors, depending upon their status and the club’s means, earning $150,000 to $350,000. Big-league scouts earn, on average, $150,000.

Throw it all together — the people, the dollars, and particularly the hope — and you come away with that elaborate ecosystem known as a big-league baseball franchise. It’s fascinating. It’s entertaining. And it’s expensive, as a certain Detroit Tigers owner will attest, even as he agrees a World Series parade crawling along Woodward Avenue would make it all worthwhile.

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