Rumours had been floating since December of the previous year that Gillett was thinking of selling. Because Geoff Molson had been appointed to the Canadiens' board of directors, he got the first call when Gillett did solicit offers a few weeks later.
But the team he was flogging was not the team that the brewery sold. In his eight years at the helm, Gillett was blessed with remarkable luck. Not only did the Canadiens improve on the ice, but two developments kept the NHL salary monster at bay: The Canadian dollar appreciated spectacularly, and in 2005 a $39-million (U.S.)per-team salary cap was imposed after a bruising lockout (the cap now stands at $59.4 million U.S.).
Gillett ramped up the team's revenues through aggressive marketing, inked lucrative television and radio contracts, and built up a spiffy sideline in the concert promotion business. But the naming rights to the Bell Centre were spun off at a steep discount to raise cash. As a source close to the business joked before the sale of the Canadiens was concluded, "If he could have figured out how to securitize the hot dogs, he would have." Gillett also is reported to have taken healthy dividends from the team.
When Gillett called, Molson's first task as a board member was to assess the brewery's position and the rights it held under the ownership agreement. But it wasn't long before Molson started having other ideas. "The more I got into it, the more I realized: This is possible," he says of his ownership ambitions. "The echoes we were getting around Quebec were so powerful, it felt like the right thing to do as well."
When the idea was broached at breakfast, Eric Molson's advice was simple: Go slow. "He said we should carefully tread water here and let's understand this a little better," the younger Molson says.
There was no shortage of interest in the team. Apart from some foreign tire-kickers, an A-list of wealthy Montrealers was lining up to bid: former Habs great Serge Savard; W. Graeme Roustan, who owns hockey equipment giant Bauer; and two consortiums, one piloted by Quebecor communications magnate Pierre Karl Péladeau-keen to grab a piece of the team's lucrative broadcast action-and the other by Claridge investment head Stephen Bronfman.
Two weeks before the first bid deadline of June 10, 2009, Molson went public with his interest; he quickly assembled his ownership group. His roster of partners would, in the end, include Bell Canada, the Thomson family's Woodbridge Co. Ltd., the Quebec Labour Federation's Fonds de solidarité, transportation entrepreneur Michael Andlauer, former Montreal Stock Exchange head Luc Bertrand and National Bank.
The bid was soon bolstered by a growing anyone-but-Quebecor sentiment-rumours were afoot that Péladeau was warming to the idea of carrying the Canadiens on a pay-per-view channel.
The contest came down to the evening of June 19. Roustan had a maximum number in his head, and the bids quickly exceeded it; Quebecor's board stood by for an emergency session to approve an improved offer; Bronfman's people were in a boardroom in the Bell Centre waiting for word. Molson, however, was in Virginia for a wedding. By this point, he'd concluded that his bid hadn't won. "I was staying at a friend's house. My phone rang at 2 in the morning. It was a real shock to me. It was like: 'Holy shit!' " he recalls.
The Molsons' return to the ownership perch-Geoff is the only brother active operationally-was finally wrapped up on Dec. 1, 2009, after several months of ironing out the details of the deal. The many changes to the original structure included a decision to buy the remaining 19.9% of the team from the brewery for $46 million (U.S.).
Skeptics might look at the Canadiens and see an overpriced fruit from which no more juice can be wrung, but Molson isn't bothered by that kind of talk.
Documents that leaked out during the sale process pegged the Canadiens' annual revenues, as of 2007-'08, at $288 million, and the concert promotion company's receipts at roughly $100 million. It's safe to assume the $45-million operating profit the team declared has since improved. The same is true of the $10-million profit from the entertainment group, now known as Evenko.
Molson's $575-million purchase was the richest deal ever involving an NHL team, and well above Forbes' valuation of $339 million (U.S.). Around the same time, the league bought the Phoenix Coyotes out of bankruptcy for $140 million (U.S.), and the Tampa Bay Lightning were sold for $170 million (U.S.). (However, neither deal included an arena changing hands.)
"We met with dozens of potential partners. Some see the thing today as expensive, others see it as a long-term investment, and some are somewhere in between," says Molson. "We view this asset as an investment for a very long period of time. The potential to create more value is there. It could be broadcasting, it could be real estate, it could be entertainment."