In 1965, the unexpectedly successful American Football League wanted to expand to Atlanta. Smith, then an executive vice president at the Life Insurance Company of Georgia, was awarded an AFL franchise, but reneged on his agreement when the older National Football League offered him a franchise. 

He paid $8.5 million on June 30, 1965, for an NFL team based in Atlanta. Smith secured exclusive rights to Atlanta–Fulton County Stadium, where the Falcons began play in 1966 and played there for 26 seasons. Smith was instrumental in the construction of the Falcons' next stadium, the Georgia Dome, threatening to move the Falcons elsewhere if a new stadium was not built. When Smith backed out from the AFL agreement, the AFL franchise was then awarded to Miami, which would start play as the Dolphins in 1966.

Smith continued to manage day-to-day operations of the team until 1990, when he turned control of the team over to his son Taylor Smith. The team was sold to Arthur M. Blank in 2002 for $545 million.

On Interstate 985 in the northern suburbs of Atlanta, Exit 12, for Spout Springs Road, leads to the Atlanta Falcons training complex in Flowery Branch and is named in Smith's honor.