May 13 (Bloomberg) -- The Molson family’s decision to own the Montreal Canadiens for a third time drew cheers in a city recognized as the birthplace of organized ice hockey. It’s turning out better than they may have forecast.
The Molsons, who owned the National Hockey League’s most successful team from 1957-71 and via their Molson Inc. brewing company from 1978-2001, led a group that bought back the team from American George Gillett a year ago. Molson Inc. sold it for about $179 million; ESPN reported that the repurchase price was more than $550 million.
The Canadiens won a decisive Game 7 last night against the defending champion Pittsburgh Penguins after a season marked by injuries to players such as defenseman Andrei Markov and forward Michael Cammalleri. Montreal made the playoffs as the bottom seed in its conference, then knocked off the No. 1 Washington Capitals in the first round.
“For us, this is already a good investment.” said Gaétan Morin, 50, executive vice president of Solidarity Fund QFL, the venture capital arm of Quebec’s largest labor union that is part of the Molson investor group. “Quebeckers are immensely proud of this team.”
Les Habitants, as they are known to French Canadians, have won an NHL-record 24 Stanley Cups in their 101 years as a franchise, but none in 17 years. Last season, their 100th, was particularly painful: After team executives predicted a championship contender, the Boston Bruins swept them in the first round of the playoffs.
Nothing stokes the passion of Montrealers like the Habs, a nickname taken from the French settlers of the Quebec wilderness. A theology professor at the University of Montreal even taught a course called “The Religion of the Montreal Canadiens.”
When Hall of Famer Maurice Richard died 10 years ago, about 115,000 people filed past his casket in the team’s downtown arena.
Now, in North America’s largest French-speaking city, cars bearing flags with the franchise’s bleu, blanc et rouge logo have become ubiquitous. The city’s Societe de Transport de Montreal buses congratulate the team with messages on their front display panels.
Montreal’s 21,273-seat Bell Centre sold out in about four hours after the Canadiens announced plans to show the game live on the arena’s high-definition scoreboard. Tickets cost C$7.50 each, and the team will donate proceeds to a foundation it runs.
The Canadiens have sold out 246 consecutive regular-season and playoff home games, a streak that began more than five years ago. The city is recognized as the birthplace of organized hockey by the International Ice Hockey Federation.
The Molsons are even more a part of Montreal than the Canadiens. Englishman John Molson founded North America’s oldest brewery on the banks of the St. Lawrence River in 1786, going on to build Canada’s first steamboat and starting a bank that grew to 125 branches by the time it was acquired in 1925. Molson Inc. merged with Adolph Coors Co. in 2005 to form Molson Coors Brewing Co.
Montreal has a Molson Street, a Molson Park and a Molson Hall at McGill University. The Alouettes, Montreal’s Canadian Football League team, play their home games at Percival Molson Memorial Stadium, named after a McGill alumnus killed in World War I.
Andrew Molson, one of the investors in the family-led group, declined to comment on the family’s investment two days ago, referring requests to team spokesman Donald Beauchamp. Beauchamp said team executives never comment on financial matters.
Each Canadiens home playoff game can generate C$2 million to C$3 million in ticket sales, said Bruno Delorme, a marketing professor at the John Molson School of Business at Montreal’s Concordia University. The school is named after the Molson family patriarch and sits eight blocks from the old Montreal Forum, where the team played from 1924 to 1996.
“The Molsons paid a lot of money for the Canadiens, but there’s much more to this asset than just the hockey part,” Delorme said.
The Molson group also acquired Evenko, a concert business, which says it has sold about 15 million tickets in its eight years of existence. Revenue figures for the unit are private.
Michael Cramer, who teaches sports business at New York University, said the strength of the Canadian dollar will play a bigger role than that of the hockey team in determining what kind of return the Molson-led group can make on the Canadiens. Canada’s NHL teams earn broadcast and ticket revenue in Canadian dollars, while paying player salaries in U.S. dollars.
Buoyed by rising commodities prices, the Canadian dollar has gained about 15 percent against its U.S. counterpart in the past year, trading at 98.28 cents at 11:15 p.m. New York time yesterday. One Canadian dollar bought 65.08 U.S. cents when Gillett completed the acquisition of the Canadiens in July 2001.
Gamble on Currency
“It’s one of the best brands in sports,” Cramer, the former president of hockey’s Dallas Stars and baseball’s Texas Rangers, said of the Canadiens. “It’s easy to justify that price if you believe the currency is going to stay about where we are. That’s the biggest gamble on anything related to a Canadian team: the currency.”
Geoffrey Molson, who chairs the investment group that owns the Canadiens, was reminded how much the team means to Quebeckers in September.
He got a standing ovation from Solidarity Fund shareholders and executives when he showed up to address the fund’s annual meeting in Montreal and present Quebec Labour Federation President Michel Arsenault with a Canadiens jersey bearing his name. On a video clip that the fund posted on YouTube, shareholders can be heard chanting “Go Habs Go,” the rallying cry for the team.
“All we need in 2010 are good returns and a Stanley Cup,” Arsenault said in French, triggering further cheers.
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