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NHL wins contract grievance case against Ilya Kovalchuk; Kovalchuk a free agent once again

Aug 9, 2010, 5:26 PM EST

Thumbnail image for Thumbnail image for Thumbnail image for kovalchuklouvanderbeek.jpgIn a stunning turn of events today, systems arbitrator Richard Bloch has handed down a stunning decision today, rejecting the NHLPA grievance against the NHL over Ilya Kovalchuk’s 17-year, $102 million contract making Kovalchuk an unrestricted free agent once again.

In an unprecedented situation, the NHL has won the day and the question that hangs in the air here is: What sense does it make? Numerous other contracts have been crafted the same way as Kovalchuk’s contract with the Devils was yet his is the deal that gets bounced by the league. Picking when to start a fight and decide what’s good and what isn’t is the remarkable part of all this and the NHL may have picked a case where they stood to win in an easier battle than with other contracts. After all, the final four years of the now nullified deal with the Devils was set to earn Kovalchuk the league minimum all in an effort to drive his cap hit down. From a common sense perspective it looks like a clear means to get around the rules of business.

The problem here with common sense is that the law of the land in the NHL has deviated away from that previous to this one contract. Other deals see the money fall off the table towards the end of a contract in an effort to get the cap number reduced but those deals were approved by the league. What made this contract different? You have to suspect that the number of years in order to make it happen are a leading cause as there’s no other contract in the NHL as long as 17 years. Sure, there’s Rick DiPietro’s 15-year contract with the Islanders but at no point does the money disappear on it. That contract, by the books, is a straight-forward deal.

NHL Deputy Commissioner Bill Daly issued a statement on the proceedings today:

“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.”

What’s next for the once-again-free-agent Ilya Kovalchuk is that he’ll most likely try to work out a new contract with the Devils that better fits the confines of the structure of previous deals that were completed and approved by the league previously. Whether this means Kovalchuk ends up taking less money or years or both remains to be seen. Using Marian Hossa’s contract with the Blackhawks would be a good starting point to reconstruct a deal. While Hossa’s deal stretched the CBA to the limits, it was still approved.

garybettman2.jpgIt’s also possible that the highly questionable years in Kovalchuk’s deal could be lopped off, thus making his cap hit a lot harder to take for the Devils. There’s also the possibility of tweaking the money so Kovalchuk isn’t making nearly the league minimum in the last four years of the deal. After all, Kovalchuk says he’s going to play that long and the Devils are willing to pay him for that long, putting your money where your mouth is is a good way to back that up.

Since he’s a free agent once again, it’s possible that the Los Angeles Kings could re-enter the bidding process given that their contract offer for the Russian superstar was something a bit more within the confines of what’s allowable in the NHL. Given the future labor ramifications this result in the hearing might have, it’s also possible that Kovalchuk just aims for a short-term deal with any team that might want to make a run for him knowing full-well that the NHLPA and the owners are going to be in for a labor blood war in 2012.

As for the Devils, there’s a possibility that they could be fined by the NHL or docked draft picks for circumventing the salary cap. Fines range up to as much as $5 million dollars and could be used against the salary cap itself so as to more effectively punish the team.

We’ll have more analysis on top of this as the night and the days progress, rest assured this is just the start of what figures to be a long and very ugly future as the league and the players union are concerned. For Ilya Kovalchuk, it’s back to square one as far as finding a new team to play for is concerned.

  1. HockeyTown - Aug 9, 2010 at 7:08 PM

    Fine them 5 Mill a year for the length of the contract. No other owner will try to push the envelope again.

  2. Rndmacts - Aug 9, 2010 at 7:24 PM

    There were two major differences with this contract and others, first was the number of years where he would earn less than the NHL minimum and secondly the contract left NJ over the salary cap, if the NHL agreed to this contract they were saying to other players, big deal about your contract. If NJ were serious about the validity of this contract in the first place they would have cleared some cap room in advance. It was slap in your face obvious that the contract was written to circumvent the rules and nothing else. Don’t compare to Hossa’s contract where the price reduction is for what, one year not five.

  3. jerry - Aug 9, 2010 at 7:29 PM

    Was there a specific contactural violation in the wording of his contract; it seems a tad subjective that they voided the contract. On what specific grounds?
    I have long thought that the NHL PA needs to hire some top notch attorneys and/or consultants to aid them.Wasn’t embarrassing enough to go strike a few years back and return for less money. Now the league is nullifying what seems like a valid contract.

  4. mike - Aug 9, 2010 at 8:11 PM

    Intent to circumvent the CBA is grounds for voiding a contract according to the CBA. It seems that there is clear intent based on any measure i can come up with. 1. The contract is designed to lower the cap hit from what it actually is to a more palatable #. This alone is an intent to circumvent, while it may have been let go many times it is a loophole but the GM intent is there. 2. The average age of retirement for a nhl player is a major determining factor. While there are a few players who have played into their forties, active players in their forties or approaching can be counted on one hand – Chelios (just retired), Lidstrom, Recchi, Guerin? (39 i think), Selanne? Kariya, Tkachuck. Maybe there are a few others, my point is that if 5 or so players out of the 600-650 roster players in the league make it to 40, and only 1 in the last 25 years has made it to 44, then it is reasonable to also assume that Kovalchuck’s contract was a retirement contract. 3. Lou Lamoriello who helped draft the CBA said in a press conference the day of the signing that contracts like this should not be allowed, in a sense saying they violate the intention of the CBA, but that they don’t explicitly break the rules. He shouldn’t have said that. It proves his intent in this case to circumvent a document he directly helped in creating. That’s my take as a law student.

  5. gafarr - Aug 9, 2010 at 9:44 PM

    for a similar offense ,the team committing
    should have to be fined ,a luxery taxe of 10 million $.
    then that would stop all this nonsense.

  6. Hockyfan??? - Aug 11, 2010 at 8:44 AM

    It seems the Hockey contracts are as incomprehensible as the game.

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