It was March 31, 1984. My buddy Benji Schneider and I were high up in the rafters of Madison Square Garden, chaperoned by Benji’s dad, to see Van Halen.

None of us had any idea that we were about to see David Lee Roth’s final tour with the band, after which Van Halen became Van Hagar, with former Montrose frontman Sammy Hagar on vocals. To this teenage metalhead, the founding fathers of “Big Rock” were never the same.

Hagar fans point to 1977’s Red album as a classic. Critics point to it as an exercise in stupidity, with lyrics like:

“Red, red! I want red/ There's no substitute for red/ Red, red! Paint it red/ Green ain't mean compared to red!”

And now a lyric from Diamond Dave:

“I live my life like there's no tomorrow/And all I've got I had to steal/Least I don't need to beg or borrow/Yes I'm living at a pace that kills/Runnin' with the devil!”

Emotions tend to run high when the Roth vs. Hagar topic is broached. But one thing isn’t in dispute -- Sammy Hagar may pale in comparison to David Lee Roth as a vocalist, but he’s one hell of a businessman.

In 1992, Hagar’s entrepreneurial streak emerged under the bright sun of southern Mexico, as he opened the Cabo Wabo Cantina.

“My original vision…started out with the Cabo Wabo Cantina in Cabo San Lucas, Mexico," he told BusinessWeek. "I wanted to build a little tequila bar, where I could go and play acoustically with my friends, hang out, and, of course, drink tequila.”

The other members of Van Halen reluctantly invested a total of $400,000 in the venture, which opened with a launch party sponsored by MTV (VIA) and 300 fans flown in for the event.

But at the time, Cabo San Lucas was a sleepy fishing village without much infrastructure or enough tourism needed to support such a place. After several years of losses (Hagar pegs the dollar figure at about $40,000 a year), the rest of the group pulled out and Hagar took sole ownership.

Not long after, Cabo San Lucas saw a tremendous increase in popularity. By 1998, the town began welcoming cruise ships to its harbor. New hotels were built. And Cabo Wabo stopped bleeding cash and began turning a profit.

“I didn't give a crap about profits,” Hagar said. “I thought if this place could just break even it would be a great place to play.”

No stranger to the pleasures of the distilled juices of the agave plant, Hagar set out to produce his own tequila to sell -- and enjoy -- at Cabo Wabo.

“I had no intention of starting a tequila business,” he said. “I just wanted this to be the best tequila in the world and sell it in the bar. Period.”

He stumbled upon a tiny distillery in Jalisco, run by the Rivera family, that produced about 20 cases a year, mainly for family and friends. Hagar struck a deal with the Riveras for small batches of the handcrafted spirit, which he dubbed, naturally, Cabo Wabo tequila. It arrived at the cantina in jugs, vats, and five-gallon gas cans. But, while it may not have come in elegant packaging, the product itself was superb.

“My first intention was just to have this little tequila brand for my friends at the cantina and then bring it to America," Hagar said. "I thought it'd be awesome if we did 10,000 cases a year. Our first year, we sold 37,000 cases. Then it exploded.”

Unlike many of Hagar’s albums, Cabo Wabo gets quite a bit of respect from reviewers, recently taking home double gold medals at the San Francisco World Spirits Competition. As Joel Selvin, the San Francisco Chronicle’s senior pop music editor wrote, “Hagar’s tequila got something he never had -- good reviews.”

About the brand, Hagar said, “I’m more proud of it than anything. And it's gotten such attention that my ego is saying I want the whole world to taste this tequila. I realized that I was being a small independent label that had a hit record and now I needed a big label.”

In 2007, the self-described “Red Rocker” sold an 80% stake in Cabo Wabo to Italy’s Gruppo Campari for $80 million, while hanging onto the remaining 20%. Now, Cabo Wabo shares the number two position in the United States super-premium tequila market with industry heavyweight Don Julio. Patron occupies the number one spot.

In overall sales, the most popular tequilas in the States are Diageo’s (DEO) Jose Cuervo, Fortune Brands’ (FO) Sauza, and Casa Herradura from Brown-Forman (BF.A).

Figures released by the Distilled Spirits Council of the United States show 2008 tequila volume up among super-premiums by 10.6%. Tequila as a whole accounted for almost $1.6 billion in gross revenues last year.

Hagar's profitable tequila venture has allowed him to focus again on his musical career, for better or worse. He is currently touring with his new group, Chickenfoot, which includes former Van Halen bassist Michael Anthony, guitar god Joe Satriani, and Red Hot Chili Peppers drummer Chad Smith.

When Hagar was asked by an interviewer about the band, he responded that “Chickenfoot could rival Led Zeppelin.”

Does it really? Descriptions of Chickenfoot’s debut album refer to it as “ho-hum”, “serviceable”, and “fowl”. One reviewer summed things up by writing: “Holy s**t, does Chickenfoot suck” and “Everything about this band is f*****g terrible.”

Perhaps the reviewer's experience would have been more pleasant had it been accompanied by a few shots of tequila.