Detroit’s Pizza Mogul Looks Toward Barstow

 

This is the story of a man who, in his hometown of Detroit, must look like a combination of Ray Croc and Ted Turner.The man is Mike Ilitch. Yes, his last name is spelled exactly like the middle name of the Russian composer Peter Ilitch Tchaikovsky.

 

Mike and Marian Ilitch founded Little Caesars Pizza in 1959. Mike  was born July 20, 1929, in Detroit, Michigan. He is an American entrepreneur and owner of the Detroit Red Wings and the Detroit Tigers. In addition to his sports ownerships, Ilitch is the founder and owner of Little Caesars Pizza since 1959, which has become an international fast-food franchise. He has been at the center of Detroit’s downtown redevelopment efforts when he purchased and renovated the Fox Theatre, and relocated his headquarters into its offices. Several vacant buildings under his ownership, such as the Madison-Lenox Hotel, have been demolished for ‘new development’; the site of the historic Madison-Lenox for example, now serving the city of Detroit as a parking lot. Mike Ilitch is a first-generation American of Macedonian decent and is married to Marian Bayoff Ilitch.

 

A graduate of Cooley High School, Mike Ilitch entered the U.S. Marine Corps for four years. After his return home to Detroit, the Detroit Tigers offered him a $5,000 bonus if he would sign to play baseball, but Ilitch turned down the offer. Instead, he went into the pizza business. With the help of his wife, Marian, the Ilitches opened Little Caesars Pizza Treat in Garden City, Michigan, the first of what would become many thousands of restaurants through franchising.

 

Today, the family’s entities remain privately held. In 1999, the Ilitches established Ilitch Holdings, Inc. to provide their various enterprises with professional and technical services. They hold the titles of chairman and vice chairwoman, respectively. The combined total revenues for these enterprises in 2004 reportedly exceeded $1 billion. Mike Ilitch has routinely shown up on Forbes Magazine’s annual list of the 400 Richest People in America, but in 2005 he slipped off the list.

 

Marian Ilitch reportedly divested herself of any personal interest in the Detroit Tigers’ organization in 1998 to pursue interests in Detroit’s emerging casino gambling industry. (An MLB rule forbids joint ownership of a baseball team and gambling facilities.) She acquired a significant interest in the Motor City Casino and, in 2005, purchased sole controlling interest. According to Forbes Magazine, “Michiganders who once flocked to nearby Canadian slots are now… staying home.”

 

She independently pursues other gambling interests doing business as Gateway Casino Resorts, LLC and Barwest, LLC among others names. The Barwest Company is the reason that we are featuring them here in the Business Journal. Marian is planning to open two Indian casinos, one on New York’s Long Island and the other just up the 15 Freeway in Barstow. She has already invested some $10 million to acquire land and research contracts for these projects and yet she calls them “iffy” and sees them as not happening for some years. Still, when it happens, remember that you read it here first.

 

Mike and Marian have seven children. They appointed two of their children co-presidents of Ilitch Holdings, Inc. in 2000: son, Christopher Ilitch, and daughter, Denise Ilitch, an attorney. After a well-chronicled four-year struggle for control between the pair of siblings, in July 2004, Christopher Ilitch was named to the new post of CEO and president. Denise Ilitch, left the privately-held company “to pursue other opportunities.”

 

Little Caesars, despite its unique marketing and advertising success, has shrunk by more than 2,000 stores since the early 1990s and slipped from being number three in the pizza industry to number four, behind Pizza Hut, Domino’s and Papa John’s.

 

“We did 36 consecutive years of increases in volume and earnings, and then things fell off,” says Ilitch. Mrs. Ilitch takes a more focused view. Recognizing that her husband is more of a financial genius and less of a marketer she observed that, “If we ever went public, I would have to fire him.”

 

In his hometown of Detroit, Mike Ilitch and his family are one of downtown Detroit’s largest abandoned property owners. Their portfolio of abandoned properties include the Adams Theater, Fine Arts Building, United Artist, Detroit Life Building, and Blenheim Building. While other building owners have successfully renovated a number of buildings surrounding their properties, Ilitch Holdings has been behind the curveball when it comes to developing their own properties in Detroit. Despite placing development signs on most of the Ilitch-owned buildings in Detroit for the 2006 Super Bowl, he is pushing to demolish most of the structures he owns, and successfully, though controversially, gained the demolition of the Madison-Lenox Hotel in May 2005.

 

In 1982, Mike Ilitch bought the Red Wings from Bruce Norris for $8 million, and eventually turned the team into a contender for the Stanley Cup. After building the team with the help of Jim Devellano, the Red Wings won back-to-back championships in 15 years since his purchase. The Detroit Red Wings' success would include another championship in 2002. Prior to the 2004-05 NHL lockout, Forbes Magazine ranked the Red Wings as the fifth most valuable franchise in the NHL despite a $16 million operating loss.

 

Ilitch purchased the Detroit Tigers in 1992 (ironically from fellow pizza magnate Tom Monaghan who founded Domino’s Pizza), for baseball was a sport that he had played as a youth. However, under his ownership, the Tigers have logged losing records in 12 out of 13 seasons. In 2006, the Tigers made the playoffs for the first time in 19 years under the legendary Jim Leyland. Forbes Magazine ranked the Tigers #22 out of 30 teams on its 2005 list of most valuable teams. The Tigers’ franchise is highly leveraged, with only two other teams carrying higher debt to value ratios on their ledgers.

 

Illitch moved the struggling team from Tiger Stadium (which was built in 1912) into newly-built Comerica Park. He financed approximately 50% of the $350 million facility and the taxpayers of the greater Detroit-Wayne County, along with federal grants, covered the balance. Various Ilitch Holdings, Inc. enterprises manage and operate Comerica Park and its concessions. In 2005, the Detroit Tigers hosted MLB’s 76th All-Star Game at Comerica Park. All-Star Week in Detroit produced the highest grossing revenue in the history of the All-Star Game. However, although his previous Tigers’ teams did not enjoy much success, enduring 12 straight losing seasons, the 2006 Tigers made the playoffs and defeated the Oakland Athletics, four games to none, in the 2006 American League Championship Series to make it to the 2006 World Series, which they lost to the St. Louis Cardinals.

 

Ilitch was one of the early team owners in the Arena Football League, starting up the Detroit Drive in 1988, somewhat as a filler team for summer dates in the Joe Louis Arena, although Little Caesars was also one of the major sponsors of the AFL during the time Ilitch owned the Drive. The Drive was one of the most successful teams in the early days of the AFL, both on and off the field. They generally had strong attendance (although much of that was due to discounted or giveaway tickets), and the Drive was in the Arena Bowl in every year of their six-year existence, going 4-2 in the title games. After Ilitch bought the Tigers in 1993, he decided he didn’t want to own another franchise that would take away fans from the Tigers, so he sold the team off and they moved to Worcester, Massachusetts.

Some critics have stated that Ilitch was unwilling to spend money on both of his franchises, allegedly favoring the Red Wings. This claim is supported by the fact that the Tigers started to spend real free agent money only during the 2004-05 NHL lockout. Others state that he is out of his depth as a baseball owner, a claim supported by the fact that he held on to General Manager Randy Smith for so long. Smith was the GM who acquired the players on the 2003 Tigers, which set the American League record for the most losses in one season (119). Another opinion is that he didn’t even try to field a competitive team during the Red Wings glory years.

 

However, although his previous Tigers’ teams did not enjoy much success, enduring 12 straight losing seasons, the 2006 Tigers made the playoffs and defeated the Oakland Athletics, four games to none, in the 2006 American League Championship Series to make it to the 2006 World Series.

 

Mike Ilitch was inducted into the Hockey Hall of Fame in 2003 as well as the United States Hockey Hall of Fame in 2004.

In Stanley Cup history, only eight women have had their names engraved on the trophy; Marian and their three daughters have each had their names engraved on the cup three times.

 

Ilitch Charities for Children (ICC) is a charitable foundation established by the Ilitch family. Among other things, the ICC sponsors Little Caesars AAA Hockey Scholarship to encourage amateur sports.

 

Marian and Mike Ilitch have seven children: son, Christopher Ilitch, (born June 1965) is CEO and president of Ilitch Holdings, Inc.; daughter, Denise Ilitch (born November 1955) is an attorney. Other children are Ron Ilitch; Michael Ilitch, Jr.; Lisa Ilitch Murray; Atanas Ilitch; and Carole Ilitch Trepeck.

 

It has been reported that there is no apparent heir to either the Little Caesars’ business, Motor City or the sports’ teams. In fact they have hired an estate-planning consultant. There is no telling how this may affect the Barstow casino project. Still Ilitch insists, “This will remain a family business. We are not planning on selling anything.”