Mike Ilitch

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Mike Ilitch

Michael "Mike" Ilitch (born 1929) began the Little Caesars Pizza empire in 1959 with one store in Garden City, Michigan. His business expanded to about 4000 stores by 1999. One of the 400 wealthiest people in the United States, Ilitch invested the fortune he made in his hometown of Detroit. He bought several major professional sports teams, including the Detroit Red Wings (professional hockey) and the Detroit Tigers (professional baseball), as well as other local enterprises in an effort to revitalize the city.

Ilitch was born on July 20, 1929, in Detroit, Michigan, the son of Macedonian immigrants. Ilitch's father, Sotir, worked in the automobile industry as a tool-and-die maker for the Chrysler Corp. After graduation from Cooley High School, the Detroit Tigers professional baseball team offered Ilitch a $5000 bonus to sign. Ilitch requested double that amount, which the Tigers refused pay. Instead Ilitch spent four years in the U.S. Marine Corps, from 1948 until 1952, where he played baseball on base. When his tour of duty was over, Ilitch signed with the Tigers for $5000 and spent three years in the Detroit Tigers farm system, playing short-stop for the Tampa Smokers, among other teams. His family, however, did not support his career choice. According to Michael Oneal of Business Week, "Sotir Ilitch thought baseball was a bum sport."

In 1954, Sotir Ilitch arranged a blind date for his son with Ilitch's future wife Marian, then a Delta Airlines reservation clerk. They married the following year and eventually raised seven children: Denise, Ron, Michael Jr., Lisa, Atanas, Christopher, and Carole. Ilitch's career in baseball floundered. After breaking a leg, his career was over. To support the family, Ilitch worked for a cement company. He also worked as a door-to-door salesman for a dinnerware company and sold aluminum awnings. Ilitch thought his future was secure when he became a partner in an awning business. This, however, did not last long as his two partners insisted on buying him out.

The Pizza Business

Ilitch founded Little Caesars Pizza in 1959 with $10,000 he had saved. Ilitch had previously made pizzas to support himself when he was playing in the minor leagues. Of his initial interest in the pizza business, Ilitch told Pat Jordan of the New York Times Magazine, "I was fascinated by water and flour. You knead it into dough, put it in the oven, and it comes out baked. Wow!" Originally, Ilitch wanted to call his restaurant Pizza Treat, but his wife thought the name should be snappier and suggested Little Caesars, based on her nickname for her husband. When their restaurant opened in a strip mall in Garden City, Michigan, Ilitch handled the pizza production, menu, and marketing, while his wife handled the cash flow. By 1962, they had their first franchise.

Little Caesars expanded throughout the Midwest. By not offering delivery and keeping staff to a minimum, Little Caesars had low overhead. In the mid-1970s, Ilitch came up with a marketing idea that changed the pizza industry and greatly increased his fortune: "Pizza! Pizza!" Little Caesars sold two pizzas for one relatively inexpensive price. In 1980, the company had over 200 franchises, still primarily in the Midwest. By 1983, the company had 300 restaurants and a year later, their sales totaled $290 million. The company exploded with their first national advertising campaigns in the mid-1980s.

Between 1987 and 1992, Little Caesars grew at a compounded annual rate of 42 percent. By the 1990s, Little Caesars was an international enterprise, with stores all over North America and parts of Europe. The chain had $2.15 billion in sales and 4000 stores in 1993, making it the third largest pizza chain behind Pizza Hut and Dominos. Little Caesars owns and operates one quarter of those restaurants. By 1994, the number of restaurants swelled to over 4500 in the United States and Europe. Ilitch's personal fortune stood at $300 million in 1993; by 1998, it was estimated at $630 million.

Ilitch retained private ownership of Little Caesars from the beginning, and was active in many aspects of the operation through early the 1990s. The entire Ilitch family was involved in the business. His wife, Marian, was the company's chief financial officer. Each of the seven children worked for the company at one time or another, and many important business decisions were made sitting around the kitchen table. Such family involvement was not always easy. Michael Oneal of Business Week wrote, "Arguments flare up, and boundaries between family and work break down. Mike Sr. says it's often a struggle to balance the roles of CEO and father. As Little Caesars has grown, consultants have sometimes raised red flags about the company's family structure."

Ilitch used the profits from his pizza empire to promote urban development in his hometown. Since 1982, Ilitch has invested over $200 million in revitalizing downtown Detroit. He bought and renovated the Fox Theater, a 1920s movie palace, in 1987. He turned the Fox Theater into one of the most profitable venues of that size and moved the headquarters of Little Caesars into buildings attached to the Fox. Ilitch told Keith Gave of the Detroit Free Press, "I was born in Detroit and raised here. I came from zero. This community helped make me. It's nice to give something back."

Purchased Sports Teams

Ilitch's first venture into professional team ownership came in 1982, when he bought the Detroit Red Wings hockey club for $8 million. One of the National Hockey League's original six franchises, the Detroit Red Wings had not generated much interest, but Ilitch saw potential. Jack Falla in Sports Illustrated quoted Ilitch as saying, "This franchise is a sleeping giant waiting for someone to do something with it." He pumped money into the team and brought it back to life. By 1986, annual ticket sales surged from an anemic 1500 (less than 10% of the Joe Louis Arena's capacity) to near-sellouts. Within five years, the Red Wings regularly won their division championships and were contenders for hockey's ultimate prize, the Stanley Cup. In 1991, the National Hockey League awarded Ilitch the Lester Patrick trophy for his service to professional hockey. The value of his franchise was estimated at $200 million by the mid-1990s.

Ilitch and his family were enthusiastic about the sport, sponsoring youth hockey in the metro Detroit area. Falla in Sports Illustrated said Ilitch called himself "a fan with an owner's pocketbook." Ilitch was generous to his professional players, giving them unexpected bonuses. The only thing lacking in Ilitch's ownership experience was winning the Stanley Cup. He was ecstatic when the Red Wings finally captured the Cup in 1997 and 1998. Ilitch told Keith Gave of the Detroit Free Press, "This is the hardest job I've ever had in my life. Sometimes I wondered if we'd see it through to the end. But one of my strengths is perseverance and we hung in there." He would need these qualities when he bought the Detroit Tigers.

Took on the Tigers

Ilitch bought the Detroit Tigers in 1993 for $85 million in cash from rival magnate Tom Monaghan, owner of Dominos Pizza. Monaghan had outbid Ilitch for the team in 1983. Baseball fans expected Ilitch to do great things for the team, reviving the dormant Tigers as he had the Red Wings. Unfortunately, this was not easily accomplished, due in part to the differences between the two professional leagues. Ilitch found that he had to fight those already in place within his own organization. Baseball also featured higher salaries than hockey and different revenue sharing arrangements. Some of the Tigers high-priced early signings did not work out. Ilitch lost money for several years.

After a few seasons, Ilitch regretted buying the team. As Pat Jordan wrote in the New York Times Magazine, "Ilitch's experience with the Tigers has so soured him on the game he has always loved that he admits, if he had to do it all over again, he wouldn't. 'I should have done more research,' he says. 'But I got excited."'

Still, Ilitch remained determined. He gave up many of his duties at Little Caesars in 1993 to concentrate on his sports teams, especially the Tigers. One of his first orders of business was constructing a new stadium. This decision met with some resistance. Conservationists argued that Tiger Stadium, built in 1902, was one of the oldest and most beloved baseball parks in the league. Though Ilitch finally got the deal he wanted for his stadium in downtown Detroit, some locals believed he was greedy. They were critical of the manner in which the land was acquired, how the stadium would be financed, and the special treatment he received at the hands of the city government. Ilitch told Pat Jordan of the New York Times Magazine, "My problem is that I'm not politically astute. I have no chits to call in from politicians. I never needed anything from them. I just made my pizzas. I resent being tabbed as greedy. I could handle dumb."

Ilitch also invested in other local sports ventures. In 1988, he bought the Detroit Drive franchise in the Arena Football League. In 1993, he bought a professional soccer franchise in the Professional Soccer League, the Detroit Rockers. Ilitch also bought a farm team for his Detroit Red Wings, the Adirondack Red Wings as well as the management company, Olympia Arenas, Inc., that runs the Joe Louis Arena. He continued to expand his Detroit entertainment empire as well. Near his Fox Theater, he opened up a branch of the Second City Comedy Club. In 1996, Ilitch formed Olympia Development, Inc., a company that focused on developing real estate and entertainment in downtown Detroit. He also opened several upscale restaurants in the area.

After Ilitch turned his attentions away from his pizza business, Little Caesars began to suffer. Ilitch was forced to refocus his attention by 1997. When sales slumped and restaurants closed, he devised a new marketing plan and new products, closely analyzing the way Little Caesars did business to regain his share of the market.

Though Ilitch was very wealthy and successful, he was always seen as an average guy. Professor David J. Brophy told Oneal of Business Week, "Mike Ilitch is the kind of guy you'd like to have a beer with." Oneal went on to say, "Ilitch has never lost his Michigan twang or bar-stool wit." Another writer, Pat Jordan of the New York Times Magazine called him "timid," going on to say "Yet he acts less like a Caesar and more like a low-level employee who is terrified of his boss." Ilitch himself successfully lived by this philosophy, quoted by Oneal in Business Week, "Be humble and never toot your own horn. If you do something good, people will find out."