August 09, 2010
The NHL has successfully defended its decision to reject the New Jersey Devils' 17-year, $102 million contract with free-agent winger Ilya Kovalchuk(notes), as arbitrator Richard Bloch has ruled against the NHLPA's grievance. The news was first reported by Liz Mullen of Sports Business Journal.
The NHLPA was widely viewed as having the upper hand here, as other franchises had exploited a loophole in the collective bargaining agreement to front-load contracts and bring down the total salary cap hit for long-term deals. From Tom Gulitti of Fire & Ice:
That means Kovalchuk is free to sign with any team. The Los Angeles Kings, who held extensive talks with Kovalchuk before he signed with the Devils, reportedly are still interested. SKA St. Petersburg of Russia's Kontinental Hockey League also has made it clear that it still wants Kovalchuk.
The Devils can try to negotiate another contract with Kovalchuk that the NHL would approve, but that would involve a less favorable salary cap hit for the Devils or less money for Kovalchuk -- or both.
From NHL deputy commissioner Bill Daly:
"We want to thank Arbitrator Bloch for his prompt resolution of a complex issue. His ruling is consistent with the League's view of the manner in which the Collective Bargaining Agreement should deal with contracts that circumvent the Salary Cap."
There's no question that the Devils were trying to get around the salary cap with this contract, which paid $95 million in the first 10 years and then spread out the rest until Kovalchuk would be a 44-year-old player making $550,000. Which, as any rational human would imagine, he'll never be, having retired well before that time. According to Sportsnet, Bloch wrote in his ruling that the Kovalchuk deal "is a retirement contract" and that it goes "well beyond the typical retirement age for NHL players."
The $6 million annual cap hit would keep the Devils from jettisoning salaries this season and leave them financial room to sign players like star scorer Zach Parise(notes) next summer, making Parise and Kovalchuk the marquee players in a post-Marty Brodeur Devils era.
It still might happen; just not for 17 years and $102 million.
The dispute, in summary: After weeks of courtship, Kovalchuk decided to sign a 17-year, $102 million contract with the New Jersey Devils. It's the same loophole used on other long-term deals like those for Roberto Luongo(notes) and Marian Hossa(notes), though it had never been exploited this emphatically.
The team went ahead with a press conference at the Prudential Center the day after the signing despite knowing the NHL may still reject the contract for circumventing the salary cap (and despite its own general manager's misgivings on that practice).
The evening of July 20, hours after that press event, Kovalchuk's contract was spiked by the NHL; on July 26, the NHL Players Association filed a grievance on Kovalchuk's behalf. Systems arbitrator Richard Bloch heard the case late last week, and the "Summer of Kovalchuk" saga took its latest turn Monday.
The NHLPA isssued this statement:
"The NHLPA is disappointed with the Arbitrator’s ruling to uphold the NHL’s rejection of the contract between the New Jersey Devils and Ilya Kovalchuk.
"The NHLPA is currently reviewing the decision and will have no further comment at this time.”
Essentially, the NHLPA has allowed the NHL to draw a line in the sand on these "lifetime" deals before having to negotiate them out of the next CBA. (And despite the current CBA not clearly defining this sort of deal as illegal.)
That's huge, because young players like Steven Stamkos(notes) and Drew Doughty(notes) and Parise may have been in line for the same kind of cap-massaging deals that Kovalchuk, Hossa and others have received.
Does it close the loophole? Hell no. But it will send a chilling effect through the teams and players and agents that will look to exploit it, which was the point to begin with. It's gravy that the NHL actually won the damn case.
Kovalchuk making below minimum wage (by then) at 44 was deemed preposterous by an arbitrator. Hossa making $1 million at 42 and Roberto Luongo still tending goal at 43 while making $1 million -- every bit the insult to our intelligence that Kovalchuk's career projections were -- were deemed possible by the NHL in its approval of the contracts.
As usual, a good day for the NHL is also a reminder of how its meek, hypocritical, tacit endorsement of cap circumvention in the past produced the Devils' Kovalchukian Absurdity. It's all cheating; the league just found the right contract, the right player and the right franchise to smack in the mouth with a rolled-up newspaper.
If only the Devils had the good sense to end the deal at 43. Because 44 is "well beyond the typical retirement age for NHL players," apparently. What a farce for all.