Puck Daddy - NHL

(UPDATE: Sports law blogger Eric Macramalla on Team 1200's Offside blog breaks down the Kovalchuk decision and linked up the full 20-page arbitration decision for all the world to read. Kudos to you, sir.)

What did arbitrator Richard Bloch accomplish, in the big picture, in upholding the NHL's rejection of Ilya Kovalchuk's(notes) 17-year, $102-million contract and ruling against the NHLPA?

As Nicholas Cotsonika wrote Monday night on Y! Sports: "What, exactly, are the rules? They aren't clear. At least they aren't clear enough."

If a 44-year-old Kovalchuk playing in the NHL is "not impossible, but it is, at the least, markedly rare" according to Bloch, the assumption was that, conversely, a 42-year-old Marian Hossa(notes) was "possible" because "6 of some 3,400 players have played to 42."

But that would assume the Hossa contract was legal.

Or the Marc Savard(notes) contract. Or the Roberto Luongo(notes) or Chris Pronger(notes) contracts. As James Mirtle reports in the Globe & Mail, Bloch actually found in the Kovalchuk ruling that there are grounds to "withdraw" those contracts specifically -- for circumventing the salary cap and violating the Collective Bargaining Agreement.

From the Globe:

Bloch also noted that several other long-term contracts are under investigation for circumvention, listing deals given to Vancouver Canucks netminder Roberto Luongo, Boston Bruins centre Marc Savard, Philadelphia Flyers defenceman Chris Pronger and Chicago Blackhawks winger Marian Hossa as raising similar red flags to Kovalchuk's rejected contract.

"While the contracts have in fact been registered, their structure has not escaped league notice," the decision reads. "Those players' contracts are being investigated currently with at least the possibility of a subsequent withdrawal of the registration."

This calling out previous contracts was presented in a footnote to this thought in Bloch's ruling:

"The elements of this Agreement are unique. They include the age of the Player, the dramatic diveback after 11 years, the notable frontloading of the compensation, the relatively minimal payment during the 6-year tail of the contract and the clear incentives and ability of the team to move the Player out and likely rid itself of the continuing salary cap burden during the out years of the contract.

"All this supports the League's conclusion that it is reasonably unlikely the last years of this contract will be performed. The record reflects that the result of this SPC, considered in its entirety, is to artificially extend the term of that agreement, thereby decreasing the annual salary cap figure and increasing the Club's payroll room in a manner that serves to defeat the intentions of the parties as manifested in the Team Payroll Range provisions."(23)

Here's the footnote ... legalese, ahoy!

(23) It is true, as the Association observes, that the NHL has registered contracts with structures similar to the Kovalchuk SPC PA Exh. 8 reflects a list of 11 multi-year agreements, all of which involve players in their mid to late 30's and early 40's. Most of them reflect reasonably substantial "diveback" (salary reductions that extend over the "tails" of the Agreement). Of these, four such agreements, with players Chris Pronger, Marc Savard, Roberto Luongo, and Marian Hossa reflect provisions that are relatively more dramatic than the others. Each of these players will be 40 or over at the end of the contract term and each contract includes dramatic divebacks.

Pronger's annual salary, for example, drops from $4,000,000 to $525,000 at the point he is earning almost 97% of the total $34,450,000 salary. Roberto Luongo, with Vancouver, has a 12-year agreement that will end when he is 43. After averaging some $7,000,000 per year for the first 9 years of the Agreement, Luongo will receive an average of about 1.2 million during his last 3 years, amounting to some 5.7% of the total compensation during that time period. The apparent purpose of this evidence is to suggest that the League's concern is late blooming and/or inconsistent.

Several responses are in order: First, while the contracts have, in fact, been registered, their structure has not escaped League notice: those SPCs are being investigated currently with at least the possibility of a subsequent withdrawal of the registration. It is also the case that the figures in Kovalchuk's case are demonstrably more dramatic, including a 17-year term length, a $102,000,000 salary total and precipitous drop that lasts for the final six years of this contract.

Is Bloch claiming that "the possibility of a subsequent withdrawal of the registration" is due to the NHL investigation or the fact that be believes they circumvent the cap like Kovalchuk's? I'd argue it's the former, in reading the full decision. 

The notion that the NHL would double back and invalidate the Hossa deal seems farfetched because he's one year into it; not so Luongo, Savard and Pronger, whose extensions all begin next season.

(Perhaps the Detroit Red Wings should be thankful both Johan Franzen's(notes) 11-year deal and Henrik Zetterberg's(notes) 12-year deal are one season old. Ditto the Calgary Flames, who won't have to answer for the $3.5 million salary drop for Miikka Kiprusoff(notes) from 2012-2014.)

If the NHL had a shred of constancy, it would torch those cap-circumventing contracts before they begin next season, with the wind of this arbitration win at its back. But that would assume this Kovalchuk fight was something more than a scare tactic that somehow turned into a legal win for the League, despite its tacit endorsement of previous cap circumvention and the nebulous nature of the CBA the cheaters helped write.

Boy, if the NHL's decision to fight this contract didn't send a chill through the franchises, players and agents, this open-ended investigation stuff from Bloch was like ice cubes down the back ...

Meanwhile, Mark Everson of the NY Post has more from the Bloch ruling on Kovalchuk, with two major points:

1. The fact that the contract went from a no-movement clause to a no-trade clause after the 11th season ended up being fairly significant in the ruling:

Bloch noted that the no-trade switch provided the Devils a waiver route to get out of the final years of their $6 million cap hit, and combined with the larger issue of the massive front-loading of the contract, violated Article 11.6 (A)(i) of the CBA, which lists circumvention as a valid reason for voiding a contract.

"The league has sustained its burden," of proving circumvention, Bloch's verdict read. "Accordingly, the grievance protesting that action will be denied."

Perhaps it was easier to opine that Kovalchuk wasn't playing to 44 when his escape route was so clearly spelled out.

2. As has been reported elsewhere, Bloch "pointedly suggested that the Devils and Kovalchuk did not intend to circumvent the CBA" according to Everson. This is key, because an intentional circumvention could have led to financial penalties for all involved.

But clearly, just like anyone attempting to craft a long-term deal until the next CBA war, they had no idea where the line was drawn either.

(Ed. Note: The headline originally said "targets," but in reading the ruling I decided that was a bit sensational. It certainly puts those contracts in the same breath as Kovalchuk's, but "targets" made it sound more urgent than it is.)

Related Articles

Puck Daddy

Add to My Yahoo RSS

Related Photo Gallery

Y! Sports Blog