Hold That Thought: Kovalchuk's Contract Rejected By NHL

 

After 19 days of arduously tracking Ilya Kovalchuk’s free agency, it seemed just too easy for it to all be over with an announcement Monday afternoon of a 17-year pact for $102 million with the New Jersey Devils. And it appears that it was. Let this escapade continue.

Late Tuesday evening, approximately nine hours after the Devils formally reintroduced Kovalchuk in an afternoon press conference, news broke that the National Hockey League rejected the contract on the grounds that it circumvents the collective bargaining agreement. Nick Kypreos of Sportsnet reported that the basis of this rejection is that the contract is a “retirement contract" with far too much money being paid out in the first 10 years. The league does not feel as if Kovalchuk, 27, will play for those backend years of the deal that would take him to 44 years of age, according to TSN's Darren Dreger. And both New Jersey and he mutually agreed to drastically lower the salaries for the final six years with the purpose of artificially lowering the hit against the Devils’ salary cap.

Circumvention is defined by Section 26.3 of the CBA:

(a) No Club or Club Actor, directly or indirectly, may: (i) enter into any agreements, promises, undertakings, representations, commitments, inducements, assurances of intent, or understandings of any kind, whether express, implied, oral or written, including without limitation, any SPC, Qualifying Offer, Offer Sheet or other transaction, or (ii) take or fail to take any action whatsoever, if either (i) or (ii) is intended to or has the effect of defeating or Circumventing the provisions of this Agreement or the intention of the parties as reflected by the provisions of this Agreement, including without limitation, provisions with respect to the financial and other reporting obligations of the Clubs and the League, Team Payroll Range, Player Compensation Cost Redistribution System, the Entry Level System and/or Free Agency.

There are two options for the Devils and Kovalchuk at this point. They may either restructure the contract and re-file with the league, which is obviously the easier route. Or, they can go the hard route and the NHLPA can file a grievance on Kovalchuk’s part. According to James Duthie, Kovalchuk is quite fond of the contract he agreed to and would more quickly pursue that latter option. The Player’s Association has five days in which to file a grievance, at thich point the NHL and NHLPA must seek the services of a mutually agreed upon independent arbitrator, according to Kypreos.

By way of Tom Gulitti's Twitter and his interpretation of Section 11.6 of the CBA, "the league must immediately approve and register the contract" if the arbitrator finds in favor of the Player’s Association (i.e., Kovalchuk.) Contrarily, the deal would become null and void, and Kovalchuk would return to unrestricted free agent status should the arbitrator rule in favor of the league.

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A mix of uproar, shock and confusion surrounds this decision by the NHL. While a 17-year deal clearly carries with an assumption that the player likely won't honor it in its entirety, this is hardly the first contract of this nature to surface around the league. There are several “lifetime contracts” in the NHL structured specifically to lower annual cap hits and come off the books after early player retirement. Kovalchuk’s is just the first that the league put the kibosh on. Everything else has just been afforded a stern point of the index finger.

For starters, comparisons to the contracts of Rick DiPietro and Alexander Ovechkin – the second and third longest deals, respectively, in the NHL behind Kovalchuk’s – are inaccurate. While they are long-term, lifetime deals, they do at least pay each player a legitimate amount of money each year during the duration of the contract. Ovechkin will see $10 million in the closing years of his deal, while DiPietro’s compensation remains the same at $4.5 million for each year of the 15 in his contract. Neither deal consists of backend manipulation.

The contracts of Chris Pronger, Marian Hossa and Roberto Luongo are, however, very comparable to that of Kovalchuk’s. They all include final year salaries far lower than the figures during probable playing years and were structured that way in an effort to lower their respective teams’ cap hits. So why does the league now stand up and put an end to this lack of disregard for the CBA, as opposed to the several contracts before Kovalchuk’s that did the same thing?

There has yet to be answer to that question, and it would quite frankly be too easy to assume that it is because they are either making more than the league minimum in those questionable seasons (Hossa and Luongo) or have a few less years than Kovalchuk’s league-record 17-year contract. We'll have to wait for an official league responde to understand their discrepancy.

But the mere fact that the league finally stood up and put an end to these contracts should really be applauded. The NHL should not be forced to live with these abusive contracts that even Lou Lamoriello agreed should not be allowed just because they’ve let them slide before. It was clearly never happy with these types of deals in the first place and the one afforded to Kovalchuk was the last straw.

Also, just because the league has not formally taken action against the other contracts of this nature does not mean they still can’t. As pointed out by CapGeek, there is no limitation to which Commissioner Gary Bettman may investigate these days. Therefore, Kovalchuk’s contract may just be the first to be dealt with as he works backward to rectify the ones that came before it. It’s unlikely this will happen, but he is apparently within his rights to do so.

Nobody should really be that surprised or angered by this rejection. It was bound to occur at some point. Far too many teams, players and agents were colluding with each other to figure out ways to pay out desired salaries while reducing cap hits with low-compensation retirement years. This was clear abuse of the system put out there for everybody to see with absolutely no denial by all parties involved. It is clear circumvention.

It is about time the league finally did something about, but better late than never. Continuing to a turn a blind eye to this general lack of regard and respect for doing things the right, not necessarily legal, way will only further the problem.