The Kovalchuk Deal: Rejected!

In a rather surprising turn of events, at least for me, the National Hockey League has rejected the deal I reported yesterday between the New Jersey Devils and Ilya Kovalchuk.

The NHL announcement was made just hours after Kovalchuk was introduced by the Devils at a press conference. The NHL says that the deal was rejected because it circumvents the league’s salary cap. The NHL apparently does not believe that the Devils organization had no expectations that Kovalchuk would be playing near the end of the lucrative contract.

It is, in other words, a way of artificially lowering the annual value of the contract and that’s a no-no.

The NHLPA now have the option to file a grievance with the NHL for the rejection and the process will go to arbitration. The contract, meanwhile, remains dead in the water.

The league has nosed around in this sort of top-loaded arrangements before and perhaps we had to expect, at least on some level, that something would be considered fishy about such a long contract offer. In the end, the NHL has decided that the deal wasn’t negotiated in good faith after all. Unlike the situations with Chris Pronger and Marian Hossa, there were a few red flags.

The CBA deals with the issue of circumvention in section 26:3 where it states in part:

(a) No Club or Club Actor, directly or indirectly, may: (i) enter into any agreements, promises, undertakings, representations, commitments, inducements, assurances of intent, or understandings of any kind, whether express, implied, oral or written, including without limitation, any SPC, Qualifying Offer, Offer Sheet or other transaction, or (ii) take or fail to take any action whatsoever, if either (i) or (ii) is intended to or has the effect of defeating or Circumventing the provisions of this Agreement or the intention of the parties as reflected by the provisions of this Agreement, including without limitation, provisions with respect to the financial and other reporting obligations of the Clubs and the League, Team Payroll Range, Player Compensation Cost Redistribution System, the Entry Level System and/or Free Agency.

Essentially the league found fault with the notion that the Devils actually had realistic expectations of Kovalchuk playing for the whole length of the contract. The CBA states that players signing contracts before the age of 35 can retire and have the balance of the contract be taken from the team’s cap. But the team has to make a good faith effort to ensure that the player doesn’t plan on skipping the balance of the contract just to collect the cheques.

So it’s likely back to the drawing board for Kovalchuk. It’s possible that the arbitration process may reveal something of use and it’s also possible that the Devils will augment the existing contract so that it fits under league specs. Regardless of what happens, the Kovalchuk saga still isn’t over.

Posted by Jordan Richardson.

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