NHL fights back in contract battle by rejecting Ilya Kovalchuk deal with Devils
Thursday, July 22, 2010
The longest contract in NHL history lasted all of 24 hours.
The league on Wednesday formally rejected Ilya Kovalchuk's 17-year, $102 million contract with the New Jersey Devils, one day after the all-star left wing signed it and was introduced at a Prudential Center news conference in Newark. The NHL's contention is that the structure of the contract -- Kovalchuk was due to earn $98.5 million of the contract's value in the first 11 seasons -- was in place to get around the salary cap.
In recent years, a number of long contracts aimed at lowering a player's cap hit while providing the team with future financial flexibility have been approved. But Kovalchuk's landmark deal, which wouldn't have expired until he was 44, pushed the boundaries of what's acceptable and what's not -- and the NHL decided it was time to push back.
Under the terms of the rejected contract, Kovalchuk's salary started at $6 million annually, escalated to $11.5 million, then dropped to $750,000 and again to $550,000 in each of the final five years of the deal -- when it is possible, if not likely, that he will have retired. The dramatic drop in salary at the end of contract would have lowered Kovalchuk's annual cap hit to $6 million.
"I don't like the structure of the deal," Washington Capitals owner Ted Leonsis said Tuesday on Jim Rome's syndicated radio show. "I don't think it's right, but I don't have a say in it. But I don't know of other wings that are playing when they're 44 years old, so we'll see what happens."
The NHL Players Association has five days to decide whether to file a grievance, in which case the union and the league will choose an arbitrator to uphold or overturn the decision. A union spokesman said in a statement that it was "evaluating the options available to us."
If the players' union does not file a grievance, or an arbitrator rules in favor of the league, Kovalchuk will remain an unrestricted free agent. The Devils also have the option to negotiate a new contract with Kovalchuk and submit it to the league for approval. Until then, however, the Russian winger "is not entitled to play under the contract," Deputy Commissioner Bill Daly said Wednesday in a statement.
One sports business expert said the league will have a tough time proving to an arbitrator that the Devils did anything wrong.
"If they circumvented the spirit of the CBA, and that's all they did, that's fine," said Howard Bloom, publisher of Ottawa-based sportsbusinessnews.com. "Did they do something that's slightly unethical? Did they do something that's still legal? That's the question. As far as I can tell, they figured out a way that the player could count $6 million a year against the salary cap. If it's a loophole that the league left in there and [Devils General Manager] Lou Lamoriello figured out a way to exploit that loophole, all power to Lou."
Lamoriello said in a statement on Wednesday: "We are extremely disappointed that the NHL has decided to reject the contract of Ilya Kovalchuk. The contract complies with the terms of the Collective Bargaining Agreement."
Interestingly, a day earlier Lamoriello expressed reservations about the deal's structure, telling reporters, "we shouldn't have these" kind of contracts.
Lamoriello also pointed out there is plenty of precedent for the Devils' deal with Kovalchuk. Marian Hossa's 12-year contract with Chicago ends when he's 42 and drops from $7.9 million to $750,000 in the final two seasons. Henrik Zetterberg's 12-year contract will keep him in Detroit until he's 40 and descends from $7.75 million to one million in the last two seasons. Chris Pronger's seven-year contract in Philadelphia ends when he's 42 and declines from $7.6 million to $525,000 in the final two seasons. Roberto Luongo's 12-year extension with Vancouver gradually declines from $10 million to $1 million in the final two years. Luongo will be 43 when the contract expires.
Kovalchuk's contract, though, surpassed all of those in length and in front-loaded money.
The Russian winger was the best player available in free agency this summer, perhaps the best to ever hit the open market. A dynamic scorer who has topped 40 goals each of the past six seasons, he was courted by New Jersey, Los Angeles, the New York Islanders and a team in Eastern Europe's Kontinental Hockey League.
Kovalchuk amassed 41 goals and 85 points last season with New Jersey and Atlanta, the team that dealt him in February after he rejected a 12 year, $101 million offer to remain with the Thrashers.
Bloom said he believes the next round of collective bargaining in two years will prevent teams from excessively front-loading contracts.
"This is simply a loophole that should be corrected," Bloom said, "and it will be."