For tight pennant races, this year’s American League is something to behold with just two weeks remaining. In the East division, the defending World Champion Red Sox were outpacing the $208 million Yankees by just 1 1/2 games through Sunday. The West finds familiar rivals the Angels and A’s separated by 1 1/2 games as well, as both teams fight through injuries to key players.

At first glance, the race in the Central doesn’t appear as close, with the White Sox holding a 3 1 /2 game lead over the Indians. But the Tribe has shaved 11 1/2 games off that lead since August 1 by winning 32 of 43 games and 12 of their last 13. At the same time, the White Sox, themselves surprise contenders, have gone a middling 22-23, losing seven of their last 10 while hearing I-told-you-so’s from pundits who wondered how a team with no offense could be 57-29 at the All-Star break. These two began a three-game series yesterday in Chicago and will close the season with a three-game rematch in Cleveland, so the Central crown is still in play. And among the three divisions’ runners-up vying for the wild card, the Indians appear to have the best shot.

The Indians not only hold a 1 1/2 game lead on the Yankees for the wild card, but their remaining schedule is more favorable. With seven games against the hapless Royals and Devil Rays as well as the two White Sox series, the Indians’ opponents’ weighted winning percentage is .478, while New York’s is .501 and Chicago’s is .526.

Whether the Indians follow through or not, this season already marks a new chapter in a baseball revival that began a decade ago. Cleveland hasn’t won a World Series since 1948, and in the quarter-century of two-division play that lasted from 1969 to 1993, they finished above .500 only four times, maxing out at 84 wins in 1986.

But divisional realignment, fortuitously timed with the evacuation of barren Municipal Stadium (“the Mistake on the Lake”) and the opening of the state-of-the-art Jacobs Field, sparked a renaissance in the Rust Belt city. From 1995 to 2001, the Indians won 652 games, third only to the Braves and the Yankees, along with six division titles and two pennants, finishing first or second in attendance all but once. Their new bandbox of a ballpark helped create potent offenses capable of scoring as many as 1009 runs in a season on the strength of big bats like Manny Ramirez, Jim Thome, and Albert Belle.

But the bandbox cut both ways, and the Indians always seemed one or two pitchers away from total dominance. General manager John Hart built an offensive juggernaut, but he could never land a big fish to anchor the rotation. In his latter days, he drafted poorly and sacrificed numerous prospects at the altar of contention, trading bats like Brian Giles, Richie Sexson, and Sean Casey before they developed into stars.

Hart departed in November 2001, leaving his 34-year-old assistant, Mark Shapiro, to dismantle the mini-dynasty via unpopular moves such as trading Roberto Alomar and letting Thome and Omar Vizquel depart as free agents. The team fell to 74-88 in 2002, and though they would slide even further, a pair of deals that summer began laying the groundwork for their resurgence.

First, Shapiro sent staff ace Bartolo Colon to Montreal for a package including prospects Grady Sizemore and Cliff Lee. A month later, he sent ancient pitcher Chuck Finley to the Cardinals for a pair of prospects including the brilliantly named Covelli “Coco” Crisp. Three years later, Sizemore is the team’s centerfielder and leadoff hitter, mixing speed (20 steals, 11 triples) and pop (20 homers); Crisp starts in left field and is batting .306 AVG/.351/.472 SLG in the no. 2 slot; and Lee is a dark horse Cy Young candidate with a 17-4 record and a 3.75 ERA.

Shapiro has rebuilt the Indians on the cheap, relying on youth (including 37-year-old manager Eric Wedge), homegrown talent, and prospects acquired via trade. The team’s Opening Day payroll of $41.5 million – one-fifth of the Yankees’ – ranked 26th among 30 teams. Just four players make more than $3 million; the top salary belongs to pitcher Kevin Millwood – also a Cy Young candidate – at $7 million. Coming off a season marred by elbow problems, Millwood didn’t cash in on the winter feeding frenzy which saw less accomplished pitchers like Carl Pavano, Jaret Wright, and Kris Benson get lucrative multi-year deals. Though his record stands at a deceptively meager 8-11 due to poor run support, Millwood leads the AL with a 3.02 ERA.

Perhaps the best illustration of Shapiro’s strategy is the core lineup that’s fueled this run. Cleveland’s five most productive hitters – Sizemore, Crisp, catcher Victor Martinez, designated hitter Travis Hafner, and shortstop Johnny Peralta – all rank among the top four in the league at their positions according to Baseball Prospectus’s Value Over Replacement Player metric, which measures how many runs a player is worth over a readily available bench warmer, like Bubba Crosby. Their combined salary: $1,999,900.

By comparison, the average major league salary is around $2.5 million. (See accompanying chart.) By even better contrast, the Yankees’ top five hitters – Alex Rodriguez, Derek Jeter, Jason Giambi, Gary Sheffield, and Hideki Matsui – are making a combined $78.2 million this season.

Shapiro has taken a page from his predecessor’s playbook by signing his promising youngsters to reasonable longer-term deals that buy out their arbitration years, a period that can get costly and generate friction between player and club. Martinez, who has supplanted Jorge Posada as the league’s top offensive catcher, signed a five-year, $15.5 million deal in April. Hafner signed a three-year, $7 million deal shortly thereafter. Nominal ace C.C. Sabathia, a grizzled five-year veteran at 25, signed a two-year, $17.5 million extension. Expect Shapiro to follow suit with his other young stars once they’re eligible for arbitration.

Those young stars, a solid rotation, and a stellar bullpen that leads the majors with a 2.85 ERA may not add up to enough to unseat the White Sox or edge out the perennial powerhouses this year. But there’s no question that the Indians are the team of the future – the question is whether that future has already arrived.

Mr. Jaffe is a writer for Baseball Prospectus. For more state-of-the-art information and commentart, visit www.baseballprospectus.com.