Monday, August 09, 2010

Kovalchuk ruled to be free agent in landmark decision

by Bob Herpen
The Phanatic Magazine

An arbitrator has ruled in favor of the NHL in regard to Ilya Kovalchuk's contract with the New Jersey Devils.

The Devils signed the free agent sniper to a 17-year, $102 million contract in mid-July and the league subsequently rejected the deal on grounds that it circumvented the salary cap. The NHL Players Association quickly filed a grievance, saying the contract conformed to the current collective bargaining agreement.

Monday's announcement by arbitrator Richard Bloch means the deal becomes void and Kovalchuk again becomes an unrestricted free agent. The Devils and the Russian superstar's agent, though, can try to tweak the parameters of the deal and re-submit it to the NHL.

As a result of the decision, and under the terms of the current CBA, the league can fine the Devils up to $5 million and eliminate future draft picks.

"We want to thank arbitrator Bloch for his prompt resolution of a complex issue," said NHL deputy commissioner Bill Daly in a statement immediately following the decision. "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."

Terms of the contract were first reported by the Newark Star-Ledger. According to the paper, Kovalchuk was due to earn $6 million in each of the next two seasons, $11.5 million from 2012-17 and $10.5 million the following year. The salary was scheduled to fall off after that until he made $550,000 annually in the final five years of the deal. He would have been 44 years old when the contract was set to conclude in 2027.

The way the current collective bargaining agreement is structured, a player who signs a deal before the age of 35 can eventually retire and have his contract come off a team's salary cap; however, teams must negotiate in a good faith effort to have the player remain in the league for the duration of the deal.

It appears the Devils frontloaded the deal so Kovalchuk could have earned as much money as possible while providing the lowest possible cap hit for the team.

This ruling in the NHL's favor may now set a precedent where other clubs will have to be more careful not to violate the spirit of the law when working out future contracts.

Prior to last season, deals worked out by the Philadelphia Flyers to bring in defenseman Chris Pronger, by the Chicago Blackhawks to sign forward Marian Hossa, and by the Detroit Red Wings to ink forward Henrik Zetterberg came under scrutiny for being what was termed as "retirement contracts."

Kovalchuk's presumed deal with the Devils outstripped all three in terms of the number of years and amount of money invested.

The first-overall selection of Atlanta in 2001, Kovalchuk was dealt from the Thrashers to the Devils on February 4 with defenseman Anssi Salmela and a draft pick for three players and two draft selections.

He posted 41 goals and 85 points in 76 games last season, 10 goals and 27 points coming in 27 games with New Jersey. In a five-game first-round playoff loss, the 27-year-old added two goals and six points.
Kovalchuk was courted in the off-season by multiple teams, and reportedly had an offer from the Los Angeles Kings worth $80 million over 15 years.

In 621 games since entering the league in 2001, the Russian star has accumulated 338 goals and 642 points.

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