Special Report September 26, 2007, 7:52PM EST

The Detroit Tigers Are Roaring Again

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While most teams would have shied away from rolling those dice, both deals have paid off, culminating in a trip to the World Series. That performance helped Dombrowski lure slugger Gary Sheffield from the Yankees for over $14 million a year.

What's the lesson for other franchises? Despite the burden of a $101 million payroll, which has more than doubled since 2003, the Tigers are making money. Even when the team bleeding cash, Ilitch's other businesses were raking it in, often helped by relationships with the Tigers. His Little Caesars Pizza empire sells a lot of pies at Comerica. And Ilitch profited nicely from real estate developments that skirt the ballpark, which he built with state assistance in 2000. Still, Ilitch says neither the pizza nor the real estate deals offset team losses.

MLB Assistance Will Keep Dropping

That was then. Now Ilitch says the Tigers are a legitimate money-maker. One indication of their improving financial health: Team revenues are up 11% this year, to an estimated $180 million. Of course, with revenues up, the Tigers will get less from Major League Baseball's revenue-sharing program, which funnels cash to poorer teams to help level the playing field. And league assistance will keep dropping as revenues rise and the Tigers pay down debts.

But the franchise should be able to thrive without MLB largesse. Detroit isn't a small market like Pittsburgh or Kansas City. It's a sports-crazed town of 5.5 million people. "Ilitch realized that he has one of the bigger markets and a new park," says Andrew Zimbalist, professor of sports economics at Smith College. "If he plays it right, he can make out on his investment. He's looking at a Red Sox-type business model."

To even get mentioned in the same breath with the Red Sox, Dombrowski had to rebuild the organization that underlies any team. In 2003, the year after Dombrowski joined, Baseball America rated the club's minor league system 29th out of 30 teams. So Dombrowski started bringing in talented scouts. Now, Baseball America ranks the Tigers farm system 14th in the league.

Ilitch says he has hit his first goal with the Tigers, which was drawing more fans than the Red Sox. That took some savvy marketing. With Detroit's economy suffering, the team had to offer value deals, says Bob Raymond, Tigers vice-president for ticket sales. Now on weeknights, families can get four tickets, hot dogs, and drinks for $63. Last season, Ilitch gave away a General Motors (GM) car at every weekend game.

Going After Boston and New York

Filling the stands is just part one of Ilitch's strategy. Next, he wants the Tigers to be serious rivals of the Yankees and Red Sox in the pennant race every year. His plan is to build a first-rate farm system (he just inked high school pitcher Rick Porcello to a $7.3 million deal) and fill in the gaps with big-name veterans. Despite a fattening payroll, he still spends half what George Steinbrenner does and two-thirds of what the Sox shell out. But Ilitch has his boundaries. He won't go after Yankees star Alex Rodriguez if he's available after this season. "That could take $30 million," Ilitch says. "We're not ready to make that leap."

Although a string of injuries crippled this season's playoff bid, Ilitch thinks the Tigers can be consistent contenders. Having spent so much to turn around the team, he has to believe. Should fans again desert the club, he would be left with expensive contracts and falling revenue. "If you fall down in the [standings] and attendance drops, it's a risk. It's dangerous," he says. As Mr. I knows, you can't steal second and keep your foot on first.

Welch is BusinessWeek's Detroit bureau chief.

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