It's shortly after 8:30 a.m., and the chairman of the company is rummaging through his desk in search of a personal talisman.
"My kids raid my drawers all the time," Geoff Molson says as he searches. "I've got Matt Duchene, John Tavares, Sidney Crosby." He flips through several more laminated cards before his face lights up. "Ah. There's [Chris] Chelios, Kirk Muller. Steve Shutt, look at that! Classic."
These hockey cards are the sort of memento many a middle-aged jock might keep at hand. But Molson's connection to these Habs of yore has a unique resonance: When he was a kid, his hero Shutt would playfully tap him with his stick on the way from the dressing room to the ice at the Montreal Forum.
That's the sort of thing that happens when you belong to a family that is as close to the Montreal Canadiens as...well, as close as beer is to hockey. Geoff Molson has the singular distinction of being both the last member of his clan to have an operating role in the eponymous brewery and the central player in the family's decision to renew its ownership of Les Glorieux.
In a town with lots of old money, the Molsons' is perhaps the oldest: John Molson founded the family business in 1786. (His descendants' net worth has been estimated at $500 million.) But in spending roughly $575 million to acquire the hockey club, its arena and a concert promotion business last year-more than twice what Molson Inc. got in 2001 for 80.1% of the team-Geoff Molson and his two brothers seemingly engaged in a very un-old money thing: Sell low, buy high.
What's more, the fabled Canadiens are in the longest championship drought in franchise history. One can't help but ask: Is this just another case of the sports business attracting owners that have more money than sense?
Part of the comeback to that question is that the Molson brothers take the long view. The family, while it made its name as one of Canada's biggest brewers of beer, also seems destined to own the Canadiens. This is no less than the fourth time an arm of the Molson dynasty has controlled the team.
The first Molson to run the Canadiens was Hartland, who bought the team in 1957 in partnership with his brother Tom, grandfather to the newest crop of owners. That year, the Canadiens were fresh from a Stanley Cup conquest, their ninth. Seven years later, the Molson brothers sold the team to their cousins David, William and Peter for a knock-down price of $5 million to keep it in the family. The trio in turn sold it to a syndicate of owners led by Peter and Edward Bronfman in 1971, tripling their money-a move that didn't exactly foster familial harmony.
The brewery, prodded by a deeply unimpressed Hartland Molson, bought the team-by then the finest squad ever to glide on an NHL rink-back from the syndicate seven years and four Cups later.
Family squabbles notwithstanding, 11 of the Canadiens' 24 Stanley Cups were won under Molson ownership. But the clan has also seen the team's glory fade. The seven seasons between the Canadiens' last Stanley Cup in 1993 and the brewery's decision to unload all but a 19.9% stake in the team in 2000 were among the leanest in franchise history. The Habs had missed the playoffs for two straight years-an unimaginable heresy for the league's oldest, winning-est team, and the first time it had happened since the early 1920s. The brewery had bigger things-that is, the global consolidation of its core business-on its mind than a sentimental sideline that had lost its sheen.
The young Geoff Molson and his brothers could only dream, at this point, of mounting a bid to buy the team. "I was too young to know how to do it," Molson says. "As a family we were much more focused on being a global beer company at that period of our history."
In the end, Colorado-based leverage artist George Gillett Jr. stepped up. It was the first time the Habs hadn't been owned by Canadians, or indeed, Montrealers-prompting gloomy reactions from pundits dismayed by the paucity of homegrown interest. Writing in The Globe and Mail, Rex Murphy groused that the sale was "more than melancholy. We really shouldn't have a trade in the limited store of our national symbols."
Geoff Molson and his brothers-members of the seventh generation of the family in business in Canada-literally grew up with the Canadiens. Their house was around the corner from the old Forum.
Eric and Jane Molson decided early on that the best way to contain their three boys was to put scuff-proof panels on the walls of their basement, place wire cages over the lights and condemn the area for all pursuits other than hockey.
"We used to goon it up a little bit...we played hockey all the time," says Geoff, who's now 40. Today he patrols the blue line in "an old man's league" a couple of times a week; the most accomplished player of the three, he played varsity at St. Lawrence University. Andrew, 42, still plays in a men's league in Montreal's west end. And Justin, 41, played in high school and later coached.
Every emerging generation in a business dynasty needs to reconcile itself with the family company: Who will join it? And of those who join, who will lead? Starting with summers working as a sales rep to depanneurs and bars in his teens, Geoff Molson seemed marked to take up the torch at the brewery.
Molson's first job after college was a year spent with Coca-Cola Co. in Atlanta. After completing an MBA at Babson College, he took a consulting gig in New York and then Boston. He joined the family company in Toronto in the late '90s, and then spent about five years at Molson USA. (The job's Colorado location reflected a distribution relationship with Adolph Coors Co.) By 2005, when Molson returned to Montreal-where he became vice-president of marketing at HQ-the beer business was well into its dramatic transformation, and the family was digesting the biggest decision in its history.
Long-time rival Labatt had long since been swallowed by Belgian giant Interbrew SA-part of a wave of mergers that began in the 1980s, when Molson and Carling O'Keefe joined forces. And south of the border, dominant brewers like Anheuser-Busch were vying for supremacy in the global market, with players like Heineken, Carlsberg and Mexico's Grupo Modelo also jockeying for position. Then, in 2002, South African brewery SAB acquired Miller, the second-largest American brewer. Two years later, Interbrew merged with Brazilian colossus AmBev. (That entity
in turn united with Anheuser-Busch in 2008.)
The writing was on the wall for Molson Inc. In 2004, Eric Molson announced the company would merge with Coors-another family company-in a bid to become a global brewing concern and achieve $175 million (U.S.) in annual cost savings.
Like the sale of the Habs to Gillett, the deal was seen in some quarters as an early entry in the annals of the Great Canadian Hollowing Out. Officially, it was as a merger of equals. That's the sort of cover story for a proud junior partner that is often quickly abandoned once a deal is in the public's rear-view mirror. But six years later, it appears it may indeed be the case-or at least it seems that Molson is no more the junior equal than it was to begin with.
According to David Kincaid, of Level 5 Strategic Brand Advisors, who has a long history in the beer industry, "compared to the other consolidations and mergers that have happened, this one is probably as close to a merging of equals [as possible]" The two families share voting control of the company, and each is allowed ao nominate five board members. But the company's main decision-making centre is in Colorado, its board is chaired by Peter H. Coors (Eric Molson retired as chairman in 2009), and the brewery is run by Peter Swinburn, a Coors hire. The Canadian arm has its own president and CEO, long-time Molson executive Dave Perkins.
Though the merged company had early growing pains, it seems to have stabilized of late. Molson Coors reported a 27% increase in profits in the second quarter of 2010, and the Canadian operation remains a bright spot in an otherwise flat North American industry.
But the future won't necessarily include a Molson in the company's management ranks. Geoff Molson, who hasn't been a VP since 2009, estimates he still spends one day a week at the brewery-he continues to sit on the board and plays an ambassadorial role at community events. "I was-and am-having a really hard time leaving an operating role at Molson, because I've worked there a long, long time and grew up in the environment," he said late last year.
All that's now left of the Molson family's operational role is vestiges-a parking space, a little-used office, an e-mail address.
In May, 2009, two of the Molson brothers pitched up at Eggspectation on de Maisonneuve Boulevard for their monthly breakfast date with their father.
Unbeknownst to the others, Geoff Molson had something big on his mind. He had hatched the plan with an old private-school pal-he won't say who. Together they gamed it out on a piece of foolscap during a flight to Las Vegas, where they were headed for a bachelor party. "It's funny: If you pull out that game plan, with a few exceptions, it came to life," Molson says.
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."
Multiple revenue streams notwithstanding, the family sees the Canadiens as a public trust. The stewardship mentality means Molson is not the sort of executive given to rash decisions.
That may explain why he endorsed the move to swiftly promote Pierre Gauthier as successor to general manager and executive vice-president Bob Gainey, who unexpectedly stepped aside just a couple of months after the sale closed. It was a conservative decision-Gauthier had been Gainey's assistant.
Last summer, it was announced that long-time team president Pierre Boivin would leave his job in June of 2011 (he will then join the team's board).
His successor? Geoff Molson. "When I step into Pierre's shoes, it will be heavy-duty work," says Molson.
Though Molson is avidly looking at ways to expand the business, he doesn't feel like being shoved along. There may well be deal-making possibilities on the real-estate front; Gillett at one point was involved in a venture with developer Cadillac Fairview, which in 2009 added Windsor Station to its holdings around the Bell Centre (it was rumoured during the Gillett era that he planned to build a 3,000-seat concert venue across the street).
Then there's the all-important question of broadcasting rights and revenues, which have become a lifeline for all manner of pro sports teams.
The Canadiens' deal with RDS-owned by Bell Canada-expires in 2014, and competitors Quebecor and Radio-Canada, which have ambitions to set up 24-hour specialty sports stations, covet Habs games. Until 2014, Molson says he's content to focus on expanding the Canadiens' media reach through the Internet and mobile streaming. But he's not done thinking about a pay-per-view Habs vehicle, even if he doesn't warm to it intuitively. "I think that was one of the biggest fears of the Quebec community," he says. "[RDS]does a great job and they're partners of ours. At the same time...we have to create value for the partnership. And so we're going to explore those avenues. The intent is not to all of a sudden say: 'If you want to watch the Montreal Canadiens, it's going to cost you 160 bucks a year on the NHL Centre Ice package.' " (The current annual price of that service is about $200.)
Besides, there's plenty of other stuff about the hockey business to keep a young executive awake at night. In 2001, an economist from the Université du Québec à Montréal predicted, given a 63-cent loonie, that the Canadiens wouldn't be able to survive in the city for more than five years. That forecast may seem irrelevant now, but the threat of a sliding dollar is still very real. If the loonie were to suddenly depreciate, the team's $59.4 million (U.S.) annual salary bill would be paid for out of revenues earned in slumping Canadian dollars.
Then there's the state of the league. The NHL is heavily subsidized by the six Canadian teams, which contribute tens of millions to revenue sharing. The league has had to bail out one of its Sunbelt teams (Phoenix), while several others (Atlanta, Nashville) are floundering amid tumbling attendance and sponsorship revenues, and still others (Florida, Dallas) have had to find, or search for, new owners.
But the Molsons have what those teams don't, and what only the Toronto Maple Leafs also have on a comparable basis: full control over their building, booming ancillary revenues, an unassailable brand and-most crucially-a rabid fan base that will shell out as much as $8,459 for a prime season's ticket.
But those fans need courting. The Habs are known to become a political football, as in September, when Parti Québécois language critic Pierre Curzi accused the team, which has a seemingly ever-declining francophone roster, of having become a federalist tool. (The public response from Molson, who is smoothly bilingual, was simple: "We are in the hockey business and not into politics.")
The flak aside, most owners would kill for the sort of passion Quebeckers have for their team. And there is a new hopeful sign for Molson: Last spring, the Habs made their deepest playoff run since 1993, reaching the conference final and playing eight home dates. Back-of-the-envelope calculations suggest those games grossed roughly $3 million each.
Could it really be that the merest of family touches will restore the aura of Geoff Molson's childhood memories of the musty Forum, where "you could practically smell the air and you knew they were going to win"?
"We haven't reached the ultimate, of where you walk into the building and you can sort of smell victory. But we're a step closer to that this year than we were last year," he says.
"So now the pressure's on to replicate."