Kovalchuk contract controversy continues

As I’m sure you have all heard by now, the NHL’s decision to reject Ilya Kovalchuk’s 17-year contract with the New Jersey Devils was upheld by the arbitrator.

In short, it was determined that the structure of the deal clearly was an attempt to circumvent the current salary cap as defined by the CBA given that the contract would have paid Kovy $95 million over the first ten years while only saddling the Devils with a $6 million cap hit per season.

As for the decision itself, while I was surprised the arbitrator sided completely with the NHL, I can’t say I disagree with his decision. To me it’s pretty much clear that the two parties were trying to bend the rules via creative accounting and eventually you have to start enforcing the rules.

But wasn’t the same thing happening with the contracts signed between Marian Hossa and the Chicago Blackhawks…and for that matter Chris Pronger’s with the Flyers? There is certainly an argument that can be made to that point. But since this one assumed Kovalchuk would play to the age of 44 and that it was so egregiously front-loaded, clearly the NHL had to step in and put an end to the nonsense.

The way I see it is that the league was put on alert last summer with Hossa and Pronger’s deals, waited to see if the abuse remain in the “questionable” range, but were forced to act when Kovy’s contract went so far over the line of acceptability.

What will be the outcome of Kovy's contract problem?

  • Kovy and NJ will work something out (56%, 121 Votes)
  • Kovy will play for another NHL team (8%, 17 Votes)
  • Kovy is heading to the KHL (13%, 29 Votes)
  • He becomes a greeter at Walmart (23%, 49 Votes)

Total Voters: 216

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But what happens now?

Well, as for Kovalchuk and his agent, his Grossman, they could reconvene at the bargaining table with the Devils and re-hash a deal. Another option is that Ilya could act upon his second free agency period this summer and take a second look at what the Los Angeles Kings have to offer…or he could follow the handful of other Russian players and make his way over to the KHL.

Of course, Walmart is hiring too.

As for the rest of the league, the gauntlet has been thrown down and teams now know Bettman is going to enforce the rules. Sure, some may say he should have done so last year…that it matters not if you go one inch out of bounds or one mile. But here is where they decided to finally say, “enough is enough”… for better or worse.

For us, it simply means the Kovalchuk contract controversy continues…at least for a little while longer.

But hey, it’s August. What else do we have to ramble on about?

94 comments Add your comment

SomaAtl95

August 10th, 2010
5:08 pm

Dude, thats puckedup!

Hockey Biltong

August 10th, 2010
5:10 pm

The NHL can’t have it both ways.They drew a line in the sand and now must define it. Without definition, there will be hell to pay from all parties trying to worm their way around the cap.

Hockey Biltong

August 10th, 2010
5:13 pm

You want short stories, try reading Roald Dahl. “Over to you” or Kiss Kiss”, come to mind…..just my 2 cents.

World Be Free

August 10th, 2010
5:18 pm

I agree with others that the arbitrator was wrong here. So based on this, let the other contracts go and move forward. There is NO benefit to reopening the other deals and reworking them. The NHL should be happy with one victory and don’t go any further. There is no benefit and there will a price to pay for reopening and reworking all these deals. Like I said earlier, let it go and move forward.

The league needs to measure what we might gain versus what we might lose. The NHL has NOTHING, NOTHING to gain by reowrking these deals. a number of owners will be pissed and the union will be furious, as we come up on a new collective bargaining agreement.

Darren

August 10th, 2010
5:23 pm

I think there’s a huge difference between being paid $2.1 million the last year of your contract, and six consecutive years of being paid $550,000 not long after being paid $11.5 million per season.

Unless you go with Red Light’s suggestion, how do you define, in writing precisely what is considered cap circumvention?

It seems like the argument is basically “we know it when we see it”, although they screwed the pooch with letting the Luongo, Pronger, et al deals go through. I think the fact that they were not denied when first signed will make it extremely difficult for the league to go back now and have an arbitrator retroactively rule those contracts null and void.

Larry Flynt

August 10th, 2010
5:26 pm

Carful opening up Pandoras box with Cox around!!!!

Not Blind

August 10th, 2010
6:22 pm

One option is to have a limit on the salary drop off in the later years. Some percentage of the highest year’s salary. As an example, the dollar amount of the lowest year’s paycheck must be 75% of the highest year’s paycheck. Or the dollar amount must be at least 75% of the previous year’s or said another way, the maximum decrease per year would be 25%.

Rhythmpenguin

August 10th, 2010
6:34 pm

I like your thinking Not Blind

Not Blind

August 10th, 2010
6:42 pm

The NHL could just say to the players, GM’s, etc. “If your proposed contract is outside these general parameters then we are going to challenge it”.

Jack

August 10th, 2010
6:48 pm

I don’t mean this in a negative light. Sounds like he is knee deep in the braves blog.

Red Light

August 10th, 2010
6:55 pm

Not Blind:

If Jim Slater was offered a 17-year deal that was “front-loaded” at $1.5 million per year for the first 10 years of the contract and he played for the league minimum for the final seven years, would the league try to void the contract?

That wouldn’t qualify under your 75 percent rule. In fact, no low-end player could ever make more than $734,000 one year and play for the league minimum the following year. I know it’s a drastic example, but those must be considered too.

Not Blind

August 10th, 2010
7:17 pm

Firstly, 75% is just a number. In the end it could be 60% or 80% or any number the NHL deems appropriate.

On your Slater scenario, the salary numbers could be juggled to make it work BUT why spend brain energy worrying about the lower priced contracts ? It’s the highend guys that get the CBA circumventing contracts.

HookyBob

August 10th, 2010
7:28 pm

The NHL had to challenge this contract. 20, 25, even 30 year contracts would be next. This mayv

HookyBob

August 10th, 2010
7:28 pm

The NHL had to challenge this contract. 20, 25, even 30 year contracts would be next. This mayv

Joe Friday

August 10th, 2010
7:38 pm

“The NHL has NOTHING, NOTHING to gain by reowrking these deals. a number of owners will be pissed and the union will be furious, as we come up on a new collective bargaining agreement.”

Yep. You follow any of the players on Twitter? the reactions from the players is ranging from incredulous to irate. This was the single most mind numbing thing I’ve ever seen a league do, and I saw the American league put in the designated hitter (WTF?)

Joe Friday

August 10th, 2010
7:39 pm

I mean not just Kovy, but they’re now investigating Savard’s, Hossa’s, etc. . . . mind numbingly idiotic . . .

Jack

August 10th, 2010
7:45 pm

If NHL did not force contracts then there would be no reason to have a salary cap.

Not Blind

August 10th, 2010
7:46 pm

The Duncan Keith contract mentioned above would NOT be outside the parameters of my proposal. It has resonable and progressive salary reductions each year.

Badger Bob

August 10th, 2010
7:48 pm

RL’s suggestion makes the most sense and will therefore be rejected out of hand by all parties (most of all the players, who suffer most with a “real” cap that is really enforced). We will end up with a contract evaluation formula more complex than the buy-out formula.

I’ll be the lone wolf who doesn’t see a problem with how things have gone down. When the CBA was written, with the first ever salary cap in the NHL, all future eventualities could not be predicted. I think they actually did a decent job anticipating many of the potential ways teams might skirt the cap (like side contracts for “no show” jobs). The lawyers identified the potential loopholes and started pressing the boundaries. In response, the next CBA will tighten or close the loopholes. It happens in every other kind of business or area of government regulation – it is how laws evolve. Why should the CBA be any different? (my solution is to get rid of all lawyers, but that’s not going to happen either…)

To say Kovy’s contract can’t be voided because those others were accepted is the ludicrous thing. Kovy’s went well beyond ALL of those in duration AND age at which it ends AND degree to which it tails off. If it wasn’t rejected, there’d truly be no end to cap evasion. It is a good day for hockey, period.

HookyBob

August 10th, 2010
8:12 pm

Whoa!!!…. posted twice without intending to. Let me finish my thoughts…

The NHL may very well have used the old “slippery slope” argument when presenting their case. I do think Kovy’s contract pushed past the questionable limits set by Hossa, Louango, Pronger in many areas. He’s the oldest when it is over, the term is the longest, it has the longest & lowest tail, greatest dif between max and avg years, etc.

To those who say Kovy’s contract had to be accepted because Hossa’s et al were,… I’d normally respond with,…”Try telling the highway patrolman that those other cars were speeding too.” However, in this case the NHL has implicitly validated those other contracts when it initialy accepted them. For this reason I don’t believe they will go back and review other “long tail” contracts.

To me this ruling doesn’t open a box of problems,…but rather further clarifies the upper boundaries on what is acceptable. We may not know the boundaries exactly but we do know that 44 is too old, and 6 years at $550 K is too long and low a tail. The algorithm is taking shape. Good thing too,..as I expect Mr Tiller is looking for some guidance on his contract.

World Be Free

August 10th, 2010
8:34 pm

Joe, yeah I expect the players to get pissed if this goes any farther. Frankly, I don’t blame the players if they did. If the league agreed to a contract then honor it. You can’t go back now.

All this because of Kovy, Gross-bag and Lou.

Joe Friday

August 10th, 2010
9:03 pm

“For this reason I don’t believe they will go back and review other “long tail” contracts.”

Uh, they already are, genius. And that’s why it’s “ludicrous” . . .

Joe Friday

August 10th, 2010
9:06 pm

“If the league agreed to a contract then honor it. You can’t go back now.”

Precisely. but that’s what they’re doing . . . the only thing more inane than the arbitrator not following precedent is the league now opening up the contracts that have already been signed and accepted . . . by them! “ludicrous” or outright lunacy, whatever, the NHL is making a farce (more of a farce?) of itself . . .

Badger Bob

August 10th, 2010
9:16 pm

JF, can you clarify your statement “the arbitrator not following precedent”. No contract has gone to an arbitrator to determine cap circumvention, so there’s no precedent there. No contract has gone to a guy’s 44th birthday, so no precedent there. No contract has been that long. No contract has tailed off so precipitously. No contract has had such a dollar or % spread between peak and tail years. This contract itself had no precedent, so clearly the arbitrator had to set a precedent.

I agree the NHL shouldn’t even dream of reopening any other contracts, but if you’re going to claim the arbitrator was wrong on his Kovy ruling, then back it up.

World Be Free

August 10th, 2010
9:45 pm

I have never been a Bettman-hater, but if this all unfolds as we fear it might, he needs to go down.

R. Stroz

August 10th, 2010
10:00 pm

By the time this is over, any other players, who have their contracts tossed, should channel their anger toward Kovy and Grossman.

Had the NHL’s version of Don King, in the name of Jay Grossman, hadn’t pushed the limits, Pandora’s box would have remained closed.

However, Kovy and Grossman fouled this up “big time.”

Badger Bob

August 10th, 2010
10:05 pm

Peter Chiarelli, regarding the NHL looking into Savard’s contract: “The League informed us upon their registration of the contract on December 1, 2009 that they would be investigating the circumstances surrounding this contract. From that point on, they commenced their investigation and it has been ongoing since then.”

So I guess the NHL can’t be accused of going back on something they’ve registered, since it seems to have been a “conditional” registration. NHL can be accused of handling this all slowly and horribly.

Hokie P. Clisters

August 10th, 2010
10:23 pm

The Kovy saga appears to be taking its toll on my friend, Elrod. While watching a baseball game yesterday, he took note of some of the new flat billed hats the youngsters were wearing. He then complained that these guys were circumventing the cap.

Jack

August 10th, 2010
10:26 pm

World be Free you are the first person that I heard that did not hate Bettman. Unfortunately he has not given us many reasons to approve of his work.
With that said I can’t see how the NHL can be in the positon to review contracts they already approved. This situation is grave considering we have a new CBA agreement that needs to be agreed to.

Elrod from Hall County

August 10th, 2010
10:33 pm

Actually Hkie P., I thought “circumventing the cap” wuz sumpthin’ they did to little boy babies just after they wuz birthed.

Brendan

August 10th, 2010
10:35 pm

Jack

August 10th, 2010
10:44 pm

Brendan great points. Its hard to understand that if owners are complaining of losing money that they would sign such ridiculous contracts.

Brendan

August 10th, 2010
11:14 pm

I tell you, it does make me very uncomfortable to hear that the NHL is reinvestigating contracts that it has ALREADY approved. It seems to me, that the time to INVALIDATE them was at their submission. Like in this case, with Kovalchuk. But once approved, “too bad, so sad,” you had your chance, NHL.

Now, if memory serves correctly, the only time salaries ever got scaled back happened as a consequence of the lockout. Namely and precisely, that the NHLPA agreed to a 24%, across the board, rollback of salaries. Indeed, “collective” bargaining. That’s not what’s happening here. Even slightly. What this is … is a joke. It’s too late to invalidate, once approved. The bigger question is … “Why did the NHL ever APPROVE these contracts in the first place?” I have no idea. I wondered that myself.

Now, in total seriousness, right about the time the Blackhawks got in trouble for not making ‘timely’ qualifying offers, they also rigorously began contract negotiations with Marian Hossa. I remember, CLEARLY, that the NHL said, “We’ll be investigating the possibility that ‘early retirement’ was discussed during contract negotiations.” And then … POOF! Nothing! We heard ABSOLUTELY NOTHING MORE on the subject. And that ‘pussyfooting’ has led to this.

Better LATE than never, right? That’s how I see it. The NHL drew the line in the sand. The line of demarcation is now set. No longterm deals past age 42. Not unless the salary is still ’somewhat plausible’ for the player. I.E., can’t be the ‘league minimum.’ If EVER, EVERR, EVERRRR there were an entity that procrastinated more than Don Waddell and the Atlanta Thrashers organization … it’s the Offices of the National Hockey League … when it comes to contract ruling. If the NHL is still looking into Marc Savard’s contract eight (8) full months later … and 13 months later, with respect to Marian Hossa, that’s just pathetic. Rule. Immediately. And if you don’t, by procrastinating, then the contract is valid. There’s got to be a ‘time limit’ for nixing these deals. There just has to be. And it ought to be included in the language of the next CBA. And I’m sure it will.

To me, it’s CLEAR that Kovalchuk’s deal needed to be invalidated. And I had no problem with that decision. I still think it took too long for them to ultimately decide to nix it, but … at least they did.

Brendan

August 10th, 2010
11:24 pm

Jack, thanks.

Trixie, </strong, help! I'm in the 3rd class steerage on the grand steamship.

Badger Bob

August 11th, 2010
12:55 am

Here’s the optimist’s view on what NHL has done. The “pending investigations” of those four contracts (Luongo, Hossa, Pronger & Savard) were intended to be warning shots by the NHL – essentially communicating to all agents and GMs that these contracts were at the edge of what would be acceptable and that anything beyond would be challenged. Kovy’s certainly went beyond.

The NHL can use the “pending investigations” as leverage against NHLPA to “encourage” them not to sue over the Kovy contract. Something like “Don’t sue, and we’ll close our investigations”. Let’s hope this is what is playing out.

OmniFan

August 11th, 2010
6:50 am

There’s a lot not to like about Gary Bettman, but he’s one of the best things going for the continuation of NHL hockey in the ATL. He’s doggedly stuck to his non-traditional market strategy and actively de fended troubled franchises. We may not be as lucky with his successor. He has his bumbles and he sure doesn’t come across like a Hockey Guy, but when Jim Balsillie comes sniffing around, it’s good to have Bettman in the Commissioner’s office.

Spud Webb

August 11th, 2010
7:54 am

Betman=Selig

Get The Puck Out

August 11th, 2010
7:59 am

These guys are playing hockey and getting paid very well. I think i’m gonna see if my employer will give me a 17 year contract for my welding expertise. I’ll take less in the last few years…..

World Be Free

August 11th, 2010
8:00 am

Jack, if you read Omnifan’s post you will know why I do not hate Bettman. Omnifan is right, as Bettman has supported the game in non-traditional cities, including my native Buffalo when the team was in trouble because of bad ownership (even worse than Golisano). I would hate to be the commish of any of the 4 major sports, these are tough jobs. The days of Bart Giamatti, my last real favorite commissioner in any sport, are done.

Brendan-right on- exactly my point. Not only has the league approved them, it was their team management people that wrote the contracts to begin with. Who can you invalidate your own work?

glovesave29

August 11th, 2010
8:57 am

Looks like this is just posturing…which is good. Bettman and Daly proved their point with Kovy’s contact.

http://slam.canoe.ca/Slam/Hockey/NHL/2010/08/10/14982756.html

kracker

August 11th, 2010
9:15 am

Yes, Glovesave, that is well and good. As most of us have said, attempting to undo already-approved contracts will only enrage players and union officials for no practicle reason.

I do think we all should track these players w/ the all but non-existent final year payouts to see when they retire. They should all have to recite ad naseum how, when they signed their contract, they fully expected to fulfill every last year of it and how sorry they are not to be able to meet their obligation to the organization, blah blah blah. The same goes for each GM, though most will probably be long gone from the team.

kracker

August 11th, 2010
9:29 am

Good news!!

ajcthrashers Thrashers president Don Waddell: “Our season tickets are up over last year at this point. Our renewals are way up over last year. “

Badger Bob

August 11th, 2010
10:42 am

oh kracker, I think you’ve just spurred another Sage rant with that post!

Badger Bob

August 11th, 2010
12:36 pm

With their signing of Dman Jordan Hendry, the Hawks are within a couple players of being set and punting Huet to the minors should get them cap compliant. The Roons are probably hoping to dump Thomas on somebody to get them cap compliant. There may be fewer moves and opportunities remaining than we thought.