REJECTED: The NHL Takes a Stand

Ilya Kovalchuk was unarguably the biggest fish available in the National Hockey League’s free agent sea this offseason. He is only 27 years old and has scored 40 or more goals in each season since the NHL lockout in 2004-05. Whatever club he signed with was likely to see an offensive boom for the coming seasons. After reportedly rejecting a $100 million offer from the Atlanta Thrashers, the club that drafted him first overall in the 2001 NHL Entry Draft, he was traded to the New Jersey Devils shortly before the Olympic break in February.

Following the season, it was rumoured that the Devils, New York Islanders, Los Angeles Kings, and even several teams in the Russian KHL were interested in signing Kovalchuk. But on Monday afternoon, after weeks of specultaion and negotiation, word came that Kovalchuk had signed a whopper of a deal: 17 years, $102 million. Although not the richest deal in terms of salary (still Alexander Ovechkin’s at $124 million), it was the longest contract signed since the lockout. The average salary for the course of the contract worked out to $6 million per year. However, like most long term deals signed in the past few seasons, that wasn’t actually the way the deal was supposed to work. Here’s how it would breakdown:

• 2010-11: $6 million
• 2011-12: $6 million
• 2012-13: $11.5 million
• 2013-14: $11.5 million
• 2014-15: $11.5 million
• 2015-16: $11.5 million
• 2016-17: $11.5 million
• 2017-18: $10.5 million
• 2018-19: $8.5 million
• 2019-20: $6.5 million
• 2020-21: $3.5 million
• 2021-22: $750,000
• 2022-23: $550,000
• 2023-24: $550,000
• 2024-25: $550,000
• 2025-26: $550,000
• 2026-27: $550,000

(from The Globe and Mail)

Kovalchuk would be paid $95 million of that money in the first 10 years of the deal and only $7 million in the final 7 years. A drop from an average salary of $9.5 million per year to $1 million is enormous. In all likelihood, Kovalchuk would likely retire after the first 10 years. The Devils would then have his contract off the books and would have the salary cap space free.

While the contract may seem long, and it seems highly unlikely that Kovalchuk will continue to play until 2027, stranger things have happened. And these contracts have been around for the past few seasons with Mike Richards, Marian Hossa, and Henrik Zetterberg benefiting from them. Clubs have been looking for creative ways to sign players, and this seems to be the most creative way.

But after the Devils and Kovalchuk held a press conference in Newark on Tuesday afternoon to announce the signing, the NHL did something it hadn’t done before: it rejected the contract. The official statement on NHL.com stated that the contract was a circumvention of the Collective Bargaining Agreement. While the league has always been uncomfortable with these extra long term deals and has even scrutinized a few (Hossa’s for one), this is the first time it has taken this stance.

What happens next remains to be seen. But I’d bet the deed to my condo that the NHL Players’ Association is going to have something to say about this. One commentator speculated that this is the NHL’s first shot against the PA’s bow with respect to the next round of CBA negotiations, which aren’t all that far away. The NHL is going to try to limit these contracts in the next CBA, and this could be the first step. Additionally, Don Fehr, the former head of the Major League Baseball Players’ Association, has been consulting with the NHLPA over the past year or so. If he is interested in becoming formally involved with the union, this may be a notice to him that the NHL won’t be pushed around. However, the NHLPA will want to show that it won’t take this rejection lightly either. I would expect a grievance to be filed by the NHLPA on behalf of Ilya Kovalchuk before the weekend.

So is the “decade deal“, as I’ve called it before, dead? We’ll see. Whatever is going to play out over the next few days should be very interesting. It’s possible that Kovalchuk and the Devils will go back to the bargaining table and negotiate a new deal with a different pay structure. It’s also possible that both sides will walk away and that Kovalchuk will accept the deal from the Kings that had been speculated for so long. And there’s always the possibility that he could go back to Russia and sign a rich deal with a KHL club. I expect to see Kovalchuk stay in North America, either with the Devils or Kings, but anything is possible at this point, and for the moment the contract is dead. Stay tuned.