NHL rejects Ilya Kovalchuk contract for cir*****venting salary cap

The National Hockey League has rejected the 17-year, $102 million contract that Ilya Kovalchuk signed with the Devils on the grounds it cir*****vents the league’s salary cap.

The news was first reported on TSN’s website.

That means the blockbuster deal likely must be reworked.

According to a person with knowledge of the contract who requested anonymity because he is not authorized to speak for the league on the matter, the Devils can attempt to reform and refile the contract. Alternately, the NHL Players’ Association can file a grievance within five days from Wednesday.

The deal is void until an arbitrator rules on the contract and that ruling must come within 48 hours of the grievance being filed. If the arbitrator rejects the contract, Kovalchuk again becomes an unrestricted free agent. If the arbitrator approves the contract, the league must do the same.

In an effort to keep Kovalchuk’s average salary (and cap hit) low, the Devils signed him to the longest contract in NHL history. Although he will be paid $11.5 million at its height, the average is just $6 million.

The current deal would pay Kovalchuk $95 million in the first 10 years and only $7 million over the final seven years. The last five years of the contract would pay him just $550,000 annually. The NHL has determined that the contract was lengthened solely to lower the cap hit and there are doubts that Kovalchuk would even play those final seasons.

http://www.nj.com/devils/index.ssf/2010/07/nhl_rejects_ilya_kovalchuk_con.html


15 Responses to NHL rejects Ilya Kovalchuk contract for cir*****venting salary cap

  1. Kev_Leafs says:

    So the NHL decided to rule based on their subjective interpretations of the CBA.

    If someone asks Kovalchuk if he is willing to play until he's 44 – and he answers 'yes', then the NHL has got very little to go on, in terms of the argument that this being signed today is a retirement contract.

    The only thing the NHL might have on their side is that the final five years of the deal pay Kovalchuk $550,000, which they could argue might be below the league minimum throughout the 2022-27 seasons.  Some of the 'long term' deals (Hossa, Zetterburg, Franzen) finish the last few years with 1 million dollar salaries – so the likelihood is slim that the minimum salary will be above 1 million, and perhaps that's why they weren't voided by the NHL.

    However, the NHL has already let precedents slip by : Savard signed a 7 year deal with $525,000 in salary over the last two seasons when he'll be 38 and 39 years old.  Pronger signed a 7 year deal with the final two years being $525,000 and he'll be 41 and 42 years old in the final two years. 

    The conspiracy theorists argue that the NHL wants Kovalchuk in LA because of lucrative television deals that simply won't occur if Kovalchuk plays in NJ.  Could that be a reason why this deal was voided?

    Also, after all the things Kovalchuk read…er…said at the press conference – how could he really sign with another team at this point?  If he does (sign with LA for example), the only thing he can say is that he did it for the money.  It's interesting that Bettman reportedly told Lou that the deal was under scrutiny and that it might be voided, but Lou did the press conference anyway on Tuesday.  Perhaps Lou felt that having the press conference would give him leverage if re-negotiating was made mandatory by the NHL?

    If the Devils are forced to take a bigger cap hit than the 6 million that they thought Kovalchuk was worth, then there will be some serious cap problems in NJ for the next couple seasons, and 'poaching' some players might be possible.  I'm glad that Burke and he are friends. 

    I feel this is going to be one for the lawyers, and I don't think the NHL has much to go on.

  2. dnmLeafs says:

    This site's arbitrary censoring is both hilarious, and a little depressing.

  3. JoelJoel says:

    Good catch, league. Who tipped you off, Hossa and Pronger?

  4. JoelJoel says:

    Censorship can ***** my ***** until I **** into the whole ****ing *****.

  5. albertateams says:

    If this goes to an arbitrator, I don't see how the deal could not be upheld the precdent has already been set. The NHL can't undo the existing loing term contracts already handed out. The time has long since passed (until the next CBA) for the league to do anything about these type of contracts. The only way this contract doesn't go through is if Ilya says he has no intention of playing until 44 or the Devils renegotiate the contract with Ilya in good faith without arbitration. Either way I don't see it happening.

  6. Kev_Leafs says:

    If the Devils knock off the last two years of the deal – the cap hit becomes 6.73 (until Kovalchuk is 42).  That's not a bad cap hit – but will the NHL allow to 42 when they balked at 44?  What guidelines are they following?

    If the last 4 years are gone the cap hit is 7.68 (until Kovalchuk is 40).  Is 40 okay, NHL?

    I'm sure Kovalchuk wouldn't mind giving up 1.1 or 2.2 million in either case – but the NJ cap situation looks a lot less rosy with 6.73 let alone 7.68 cap hits considering they'll have to resign Parise next year while still paying Rolston and Brodeur.

    But those two situations are if the Devils want to renegotiate based on the NHL's vague claims that Kovalchuk can't sign until he's 44.  But again, since they've allowed similar long-term deals as precedents I don't understand what the basis of their arguments are.

    Alternatively, the Devils might want to go the arbitration route – in all likelihood the arbitrator will rule in the Devils favour because of the precedents and without anyway of knowing for sure that Kovalchuk won't play out the duration of the contract – he has already publicly said that he would. 

    The problem with going to the arbitrator is that the situation – with Kovalchuk being UFA until a new contract is in place – could drag on for weeks.  Do they want to risk waiting that long?  Considering the Devils are over the cap – which they can't carry into training camp – do the Devils make cap-related deals without knowing for sure whether Kovalchuk will be on their team?

  7. cam7777 says:

    Yea, this is my feeling exactly.  Although, to be fair, they aren't concerned with the Pronger contract, because it will be on the books for the full duration, so Philly screwed themselves there.  If Pronger retires at 40, they're stuck with 5 million the cap until the contract ends, and no Pronger.

    They did let the Savard one slip, which maybe is because he's Canadian, and might actually stick around, and because Boston actually has managed to get guys like Recchi fairly cheap at older ages.  Still, that's pretty subjective.  I mean, everyone knows Kovy is going to bolt for Russia as soon as his salary dips, but you can't very well use that as an argument.

  8. Boston_Bruins says:

    Hossa is the best precedent for this deal. Signed up until he's 42 and he makes $3.5 million total over the last 4 years. Clearly a cap-cir*****venting contract. Although not as blatantly obvious as the Kovalchuk one it's pretty clear that he won't play out that contract.

    I comletely agree with what the NHL is trying to do to remove these contracts but it simply can't be done this way by making the Devils and Kovalchuk examples. It's not fair to them.

  9. Boston_Bruins says:

    What's a good way to get rid of these "lifetime contracts" (or at least limit their effectiveness)? The idea I heard that I like is that the minimum annual salary over the duration of the contract cannot dip lower than 50% of the maximum annual salary over the duration of the contract.

    ie. if Kovalchuk's highest paying single year is $11.5 million, the lowest amount he can make in a single year is $5.75 million at any point over the contract. 

  10. Kev_Leafs says:

    That rule is in effect currently – but it only applies to the first year and the second (the second has to be at least 50% of the first year).  So getting that rule into the next CBA shouldn't be that difficult, and the players shouldn't really complain because it keeps their annual salary high. 

    However, doing so prevents teams from shaving down the 'elite' player's salary against the cap, which is good in theory, but the players could see this as limiting the amount of 'jobs' available to mid-level players, because teams would sign the elite players (to high cap hitting contracts) and upper-level players and fill out their roster with lower-level players.  Guys like Torres, Poni, Stempniak – these mid-level guys (currently unsigned I know but not my point) would have less money available to them in terms of cap space if the likes of Pronger, Hossa, Zetterberg, Franzen, Kovalchuk, Luongo, Savard, etc… all had deals that 'accurately' represented their salary in the form of a cap hit.

    Also, LeBrun mentioned that there's an idea floating around that the average top five years – in terms of the player's salary – should be used to determine the cap number.  So, in Kovalchuk's case it would be 11.5 cap hit (ie: no one would sign him to that deal).  So the players wouldn't like that because it could limit their annual salary.

    Putting in a maximum term could limit the 'abuse' of the cap system.  If there were a seven year contract maximum, say, then yes you'd still have the Savard deal or Pronger deal, but you wouldn't get players in their prime inking contracts and willingly taking massive pay-cuts on the final two years of their seven year deal.  If maximum length contracts were the case, Kovy would have got about 9 million for seven years (until he was 34) with a 9 cap hit, then he would have signed another seven year deal (41 years old) where the last couple of years might be in the 550,000 range, so the cap hit would be 6.5).  But then, 'winning teams' like NJ wouldn't be able to afford the 9 cap hit, and lower market teams can't really afford those deals (1/4 of their budget); and do elite players want to be spread out throughout the 'lower market' teams? (the NHL would love that, but would the players?)

    I think the best would be a maximum length of contract and some form of the 50% rule.

  11. Kyleton says:

    Would it not be easier for the NHL to just say the salary the player makes for that season will be that seasons cap hit? Seems logical

  12. Kev_Leafs says:

    The problem with that is teams can totally doctor everyone's contract.  Ie: if Gaborik and Kovalchuk are on the same team – in season one Gab gets 4 million, Kovalchuk gets 11, then the following year Gab gets 11, Kovy gets 4. A weak example, but I think you get the idea – that teams can manufacture their salaries to get a whole bunch of great players to agree on off-setting contracts in order to get a lot of great players together on one team.  The NHL would hate this.

    Also, this could limit the amount of money that each individual player pockets – some times, like the Perron deal from yesterday, a player gets some thing like 1.4 in year one, but then 2.5 in year two of a deal – the cap hit is the average of the two, which cap wise appeases the team.  But if the cap was based on the players actual yearly income, then players wouldn't get that 2.5 million a year – granted in this case the player might just settle for the average both years.  But Kovy getting paid 11.5 for five year's of his 'voided' deal couldn't happen, because no team would stand for that high of a cap hit.  I don't think the players would like the actual salary too much, and in some cases, I'm sure the teams wouldn't like it either.

  13. Kyleton says:

    Well the whole point of it would be to limit the work around of the CBA. It would also serve the purpose of helping small market teams actually compete.

    Admittedly this would be more beneficial to owners rather than the players.

    As for doctoring contracts that is what is happening now. Using your example if Kovy made 11 in year one and 4 in Year Two then Gaborik made 4 In year one and 11 in year two both seasons would be 15 Million. So that is much closer to their actual worth anyway.

     

  14. albertateams says:

    I agree completely I hate these contracts but Kovy's is way too late to make a stand on. The ship has sailed until the next CBA to address these monster contracts.

    Luongo's deal is right there too. Stay's at min of 1 million but its just as obvious what the goal of added years is doing.

  15. frankinboltonleafs says:

    http://www.nhl.com/ice/news.htm?id=534725

    There is the NHL's response….I love being treated like a buck-toothed idiot. The CFL choose to treat their fans that way in the 70's…I never forgot that and haven't seen a CFL game since. Note to Mr Daly…..I'm not an idiot…how did it cir*****vent the CBA?

Leave a Reply