BC Business
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Tom Gaglardi does not recall his first flight aboard an airplane – he was only a year old – but everyone else in B.C. does. It was the flight that grounded his late grandfather’s legendary political career.
Editor’s note (May 2016): Tom Gaglardi, president and owner of mega-developer Northland Properties and owner of the Dallas Stars, is pehaps best known for his public spat with Francesco Aquilini over the ownership of the Canucks. But as on of B.C.’s few billionaires, he’s played a decisive role in shaping the province’s business community. From 2007, our profile of the man.
Tom Gaglardi does not recall his first flight aboard an airplane – he was only a year old – but everyone else in B.C. does. It was the flight that grounded his late grandfather’s legendary political career. For 16 years, Gaglardi’s gramps, Phil Gaglardi, was a colourful, outspoken highways minister for W.A.C. Bennett’s Socreds. He earned the nickname Flyin’ Phil because he logged more time on provincial government aircraft than any other politician – and because his car had a glovebox full of speeding tickets from “testing” his new freeways.
In 1968 the highways minister allowed his daughter-in-law Karen and tiny Tom to fly on the government’s Learjet from Kamloops to Seattle. The plane was headed to Wichita, Kansas, for maintenance and Karen was bound for Texas to show her parents her new boy. The plan was for mother and son to hop off in Seattle and catch a commercial flight, but they did not make their connection. So the pilot flew 20 taxpayer-fuelled minutes beyond Wichita and delivered the unofficial passengers to Dallas. It was exactly the kind of indiscretion on which Dave Barrett’s NDP lived to pounce. In the furor that followed, Phil Gaglardi was forced to swap his highways hardhat for a less glamorous welfare portfolio. He was voted out of office four years later and never returned to the legislature.
Today, seated in a comfortable booth at Moxie’s Classic Grill in Richmond, Gaglardi shakes his head when reminded of the scandal. “I don’t think Grandpa was even on the plane,” says the 40-year-old president of Northland Properties Corp. “The pilot made the decision. Grandpa took responsibility for it.”
Gaglardi may have inadvertently jinxed Flyin’ Phil’s Victoria reign, but the “boy” has long since redeemed himself by becoming a major asset in the family business. Northland Properties, founded by Gaglardi’s father Bob in 1963, has enjoyed consistent success in recent years.
The company’s holdings include the 35-hotel Sandman Inn chain and 100-plus restaurants under labels such as Denny’s, Moxie’s Classic Grill and The Shark Club Bar & Grill. Bob, at age 66, chairs Northland, while Gaglardi carries the CEO title. The elder Gaglardi has a particular interest in the company’s in-house construction branch and the Denny’s department. Gaglardi (the younger) is also CEO of the Sandman division, which is Canada’s fastest-growing privately owned hotel chain.
All the Gaglardi pucks seem to have found the back of the net of late, save for Gaglardi’s failed bid in 2004 to buy the Canucks from Seattle billionaire John McCaw. That spot of rough ice surfaced when Gaglardi joined two other B.C. scions, real-estate moguls Francesco Aquilini and Ryan Beedie, in an attempt to buy the NHL franchise.
The group was in negotiations with McCaw when Aquilini decided to back out of the bid. The remaining duo continued to haggle with McCaw for another seven months, only to have their bid rejected and 50 per cent of the team sold to an unexpected competitor – Aquilini.
The stealthy investor has since bought McCaw’s remaining share of the franchise, giving him the total package that was valued at $250 million in 2004 and includes GM Place on two hectares of downtown Vancouver. Gaglardi and Beedie say that Aquilini and McCaw failed to act in good faith and that Aquilini used confidential information from them to subvert their bid for the team.
The spurned parties are suing the Canucks owner and McCaw for the team and the keys to the Garage in what may be the most expensive private civil suit this province has witnessed. From April to October the legal soap opera unfolded in the ultra-secure courtroom built for the Air India terrorism trial at the Robson Square courthouse.
There were plenty of off-ice antics for Canucks fans to blog about, including the multi-decoy-limo arrivals McCaw used to dodge the paparazzi at his court appearances and a heated confrontation between Aquilini and Gaglardi during a chance meeting in a courthouse washroom. Gaglardi’s lawyer claims Aquilini warned his client in the john, “You better be careful.” Aquilini denied uttering the threat but did admit on the stand that, early in the trial, he had phoned Beedie twice to seek a settlement. Gaglardi says Beedie never returned the calls.
The tense proceedings continued through the summer. The case involves complex legal issues about the definition of partnership and the fiduciary duties of its participants. And for the feuding families, who sat on opposite sides of Courtroom 20 avoiding eye contact with one another, there is an added layer of complexity: Tom Gaglardi’s dad and Francesco’s dad Luigi are longtime friends and partners in a major ski resort being proposed for Garibaldi Mountain, north of Squamish.
Yet despite the ongoing drama, and despite the fact that he spent 15 days on the stand being pilloried by Aquilini’s barrister dream team, Gaglardi is looking remarkably relaxed at Moxie’s on a warm summer afternoon. He wears jeans, a pink plaid shirt and brown suede loafers. His tanned, pudgy mug, combined with a mischievous glint in his eyes, gives him a boyish face that seems at odds with his imposing six-foot, two-inch frame.
He is all-business teetering on all-play – like a veteran hockey player who has reported to training camp slightly overweight and can’t decide whether to lead his team in a pre-season prayer huddle or a locker room shaving-cream fight. Gaglardi’s diction is plain, his delivery fast and gruff. Nothing belies his wealth except an ingot-size silver watch twinkling under his cuff. The trial is on a lengthy break when we meet, long enough that he has been able to vacation with his wife and three boys, aged two, three and four, at the family “shack” on Kamloops Lake.
“My father built it 50 years ago,” Gaglardi says. “It’s a nice bungalow with a modern kitchen, exposed cedar ceiling and a big stone fireplace.” Perhaps the getaway is why Gaglardi seems relatively calm, or maybe the Gaglardis are simply a tough breed accustomed to adversity, as in the time the lights went out in Alberta.
“In the ’70s my dad had invested heavily in commercial real estate. We had half a million square feet of office space in oil-booming Calgary, all of it 100-per-cent leased. Then came the one-two punch: Trudeau enacted the National Energy Program in 1980, and Western Canada was hit by a big recession in 1981. It totally shut the lights out in Calgary and Edmonton. Interest rates soared. Oil-and-gas companies folded left and right. Within 18 months, only 30 per cent of our space was leased. Out of desperation, to try and keep a few tenants, we signed deals in which they stayed almost rent-free, paying just a nominal amount so that we could cover our taxes and utilities.”
Gaglardi was a student at Magee Secondary School when the economy tanked. He managed to keep his grades up, and for nine years he trained relentlessly as a ranked tennis player at the Shaughnessy Golf & Country Club and the Vancouver Lawn Tennis & Badminton Club.
“I had scholarship offers from the U.S.,” he recalls. (He also got his ass kicked by a young Grant Connell who, in fairness to Gaglardi, was a couple of years older than him.) By the time Gaglardi got to UBC, where he majored in economics and history, the family company was $120-million underwater. “I used to skip class and go to court to support my dad,” he reports.
With creditors circling Northland, Gaglardi quit university just shy of completing his undergrad degree, hung up his racquet and went to join his father, who had been grooming him to join the firm all along. Gaglardi had bused tables at the Georgia Street Sandman hotel when he was 13 and learned a host of different subtrades while helping build an office tower at 1185 West Georgia when he was 16.
His dad even gave him $200,000 when he was 21 so that he could partner with a friend to buy a big old house near Vancouver General Hospital. “My buddy brought this idea to me. We devised a plan to knock down the house and build a 12-unit condo, but before we could do so we received a nice offer on the property. We sold it and tripled our money.”
It was a nice hit for a first at-bat, but the little hobby deal meant nothing to the bankers stalking Northland. In the end, it was lawyer Ralph McRae who saved the company from complete annihilation. “He figured out that there was this little-used bankruptcy-protection legislation called the CCAA [Companies’ Creditors Arrangement Act] that had been developed during the Depression. He brought it to us and said, ‘I think I can make this work for you.’ We wrote a plan that was voted on by a majority of our creditors. They gave us a year or two to repay them without interest, and we were able to carry on with business and pay those who were named in the plan 100 cents on the dollar. It was a landmark case, our use of the CCAA. That’s the normal platform used today.”
Northland had narrowly dodged the bailiff and would continue to develop real estate, but with a greatly reduced portfolio of office space. Instead, the Gaglardis chose to focus on their hotel chain, which Bob had helped grow from a single Smithers motel in 1967 to a sleep empire that stretched from Cache Creek to Calgary. But the Sandmans had been neglected during Northland’s tumultuous times. The inns had old beds, worn carpets and boring lobby eateries called Heartlands. In a shocking move, Bob appointed his son, who was just 25 years old, to lead the ailing hospitality division.
“It was partly a publicity stunt,” admits Gaglardi. “It enabled us to say, ‘the old Sandman is dead. Come meet the new Sandman.’” Gaglardi immediately set about renovating every room in the chain. As for the weak-pulse Heartlands, father and son were unsure of how to proceed. Then one day in 1991, the answer walked into their corporate headquarters on West Broadway.
“He was a Denny’s guy out of California, up here scouting real estate, and he was anxious to look at some space that we owned,” Gaglardi explains. “We started talking about their success and suddenly the light went on. We bought the Western Canadian rights to the franchise and replaced our old hotel food division with shiny new Denny’s.” Business soared. Call it the pigs-in-a-blanket phenomenon. Travellers are more likely to book at a hotel with which they are unfamiliar if there is a name-brand eatery on the premises. Comfort food equals comfort sleep equals full coffers for the hotel that also owns the restaurant. The concept seems so simple, yet Northland was the first in Canada to try it on a large scale. “It was the turnaround point for our company,” says Gaglardi, who in 1998 bought the then-fledgling Moxie’s chain from an Alberta entrepreneur to add to the recipe.
The success of the new strategy is evident on St. Edwards Drive in Richmond, a short, curvy street zoned highway-commercial that hugs the on-ramp to the Oak Street Bridge. The Moxie’s, where Gaglardi plows into his teriyaki rice bowl, is attached to a 172-unit Sandman – a clean, functional, three-diamond snooze-and-drive. Also on St. Edwards, a Hail Mary pass down the road from the hotel, there lies a sprawling, five-hectare, former-Ramada property that Northland has stripped to the concrete and renovated as one of its two new four-diamond Sandman Signature hotels. (The other is at the Toronto airport.) After lunch we reconvene at the 440-unit Richmond Signature for a quick tour. Tom Gaglardi pulls up to the entrance in a new Bentley convertible. “My one indulgence,” he says.
Gaglardi’s thriftiness is confirmed in a phone call with Ryan Beedie, who has befriended Gaglardi since their failed bid to buy the Canucks. “I wouldn’t call him frugal, but he’s prudent,” Beedie says. “Tom doesn’t just go out and shop for the sake of shopping. When he bought the new car, I teased him: ‘Good for you, and by the way, while you’re at it, why don’t you buy a place at Whistler or get a better shack in Kamloops?’ He’s talking about building a new family retreat on the lake, so I think I’m getting through to him.”
The Signature’s lobby is hip and luxurious. Dark stone floor tiles and chipped-rock columns are illuminated sparingly by long, cylindrical sconces and pendants that resemble high-tech Japanese lanterns. The subdued lighting and modular, retro-’70s couches give the space a chill-lounge feel. Gaglardi chats informally with two desk clerks, asking them if they like their new uniforms.
He seems genuinely pleased when they say yes. Up on the 10th floor, in one of the newly refurbished $150-a-night suites, the colour palette continues to cycle through soothing coffee and chocolate browns. Tall leather headboards sprout brushed-nickel, goose-necked reading lamps. Guests can pimp their mattresses with pillow-top and memory-foam options. Gaglardi claims that many of his hotels sport this high level of trim, but it is hard to picture the Sandman Quesnel, for instance, welcoming its nightly contingent of truck drivers into such comfort.
No, the Signature is definitely an upscale departure for the Gaglardis. Even the restaurants on site will mark a new experiment for Northland. Going against his own formula of buying eateries that are proven winners, Gaglardi has helped hatch two new restaurant concepts: Cucumber Café, which is like a funky, upscale Denny’s; and Chop, a Keg-like steak house. (A new Shark Club will join them.)
He is straying into Jack Evrensel territory, but can he pull it off? It is easy to picture the big guy throwing his weight around as power centre for the Sandman Sharks – a recreational hockey team that he has passionately anchored for nine years – but it is more difficult to envision him going over mockups and menus with his two development chefs and five full-time interior decorators. He does not come across as an epicure or a Dwell subscriber.
When I ask him to name a mind-blowing meal he had on one of his culinary research trips, I expect him to rattle off a long list of trendy restaurants. Instead there is a long pause followed by a sketchy description of dining at a nameless eatery in Valparaíso, Chile. If Gaglardi does score with his new dining ventures, it will likely be because of a manic work ethic, fuelled by an intense drive to win.
As his wingmate, Peter Smith, says, “Whenever we need a big goal in a big game, he’s always there.”
Smith, a Vancouver diamond broker when he is not trying to put the puck on Gags’s stick, cites a Sandman Sharks highlight from eight years ago. “Gaglardi was heavy back then, before he was married, and skating really slow. We were teasing him because he had brought a girl he was dating to the rink. So, to impress her, or to shut us up, he got the puck behind our goal and took it coast to coast. Beat all five of their attackers. One of them twice.
When he got down to the top of their crease he couldn’t quite slip it past their goalie, but by that point we didn’t care, we were laughing so hard.” I ask Smith, How is this a big goal in a big game story? He explains: “You go through life and you only meet so many winners. You can count them on a single hand. And Tom’s one of them.”
In early 2008, B.C. Supreme Court Justice Catherine Wedge will finish going through the 18 phone-book-thick binders of testimony and will render her verdict in the Canucks sale case. Gaglardi seems confident his side will prevail, but it is interesting to note that he has joined forces with a quartet of NHL stars (Shane Doan, Jarome Iginla, Mark Recchi and Darryl Sydor) and bought the Kamloops Blazers WHL team. The deal closed in late October. No matter what the outcome, Gags will have his pro-hockey franchise.