Wednesday, July 21, 2010

NHL Rejects Devil's Kovalchuck Deal - Now What?

Yesterday the NHL rejected Ilya Kovalchuck's 17 year, $102,000,000 contract with the New Jersey Devils, basically on the grounds that it violates those basic tenets of the current Collective Bargaining Agreement (Section 26.3) that stipulate no contract should overtly seek to circumvent the CBA. What's that mean - well basically it means the League believes the deal went at least one if not a couple of bridges too far in mitigating the average salary cap hit of the deal by extending it's duration beyond that point which a reasonable person would assume both parties expect to honor it through it's full length. While I think it's fair to say the deal is suspect at best, what happens now should be fun to watch. First Kovalchuck could now ask the NHLPA, his union representation to appeal the decision and take it to an arbitrator.

If Kovalchuck asks the ruling be appealed through the NHLPA it should be interesting to see what the NHLPA does? On the other side, if you're the Devils perhaps you go back and offer Kovy a 15 year deal with the same basic structure and average Cap hit - then what? Many around are touting that this is a good thing for hockey as it puts people on notice of where and when the bounds ought to be set relative to these long term deals, etc. Others cite the inequity these mega - deals create under the escrow requirements of the current CBA for those solid but not superstar players around the league, etc. Me - here's what I think - the whole situation is and will be very problematic for both the NHLPA and the NHL no matter what you feel about this deal. The next set of events regardless of course are not likely to be anything but bad for "hockey" - both owners and players. Here's why - the next steps, either way, are going to lay bare some very real issues - issues that are contentious and ones that will cause discord both between the parties and within their respective groups/leadership during the next CBA. If any of us thought the issues during the next CBA negotiations and leading up to them were going to center on a transfer agreement between the NHL and the KHL; and the NHL's continued participation in the Olympics - I think it will be safe to say after the next two months, we'll all agree that won't be the case at all.

Further if you were hoping the signing would end the discussion of "Kovy-gate" or whatever you want to call it, sorry this will now go on for at least the next 8 or so weeks.

Here's the issues likely to now come into play depending on the courses of action pursued by Kovalchuck and the Devils.

First let's assume Kovy, under the advice of his agent, tells the NHLPA to appeal the ruling and request arbitration. I think that's a fair bet since, it really doesn't cost Kovy anything other than continuing to explore other options besides signing with the Devils - I'd do it wouldn't you? What are the effects and issues, well first lets all realize the NHLPA is currently a headless organization that is run by a committee of player resp from each team - player reps who are largely those solid but not superstar players from each team - also largely Canadian players. As has been chronicled in posts over at SBN - these are the same guys who get hurt by the front end of the Kovalchuck deal, those years that are at or close to league maximum salaries. That said if they don't take up this cause, the farce that is Professional Sports Athletes Unions gets exposed for all to see. Seriously do you think Samuel Gompers and Eugene Debs were thinking about organizing and covering people who under a collective bargaining agreement make 15 - 20 times that of an average wage earner, honestly do they need to organize to ensure they get a fair salary and working conditions? On the other side, does anyone honestly believe the rules and laws governing either the US or Canada's labor force were in any way, shape or form put in place with any sort of considered thought relative to groups such as the NHLPA and the NHL or the NFLPA and the NFL? I don't think so, and in the end do any of us - the fans and citizens of these two nations want professional sports to be anything other than a "pay for performance" meritocracy where in general the average careers are relatively short and the professionals playing the sports on the ice/field, etc. are at the tops of their game? Why do I mention this because it's important to realize all sorts of external considerations that might affect arbitration of other labor disputes, etc. are likely NOT to apply and the basic words of the CBA AND similar prior precedents and how they are playing out would/should very much bear on any arbitration decision. However, before that were to happen all sorts of testimony that would linger and create issues going into the next CBA would have to be brought to the table and argued/discussed. If you think a particular players RFA arbitration ever got ugly, wait till you see this one if it doesn't get settled before then. Because regardless of whether the NHLPA takes up the cause or even more so if they do not, the fireworks would beign on the players side of things between the superstars and everyone else. Not because escrow and these sorts of things hurt one group and not the other - because they hurt both groups significantly but in very different ways.

On the other side, similarly if I'm the Devils, I'm pretty pissed at the league so all I do is go back and fashion a 15 year, $102M deal and submit it. I get Lamoriella and Kovy in front of the media and I say, okay so it was a gimmick, Kovy's number is 17 so we went for the 17 year deal. I mean it's no more stupid/less gimmicky than Sidney Crosby's (#87) $8.7M deal. However, I feel there's plenty of precedent for this deal, after all Chris Pronger has a 7 year deal that has him playing until he is 42;Marian Hossa has a 12 year deal that has him playing through age 42; Rick Di Pietro has a 15 year deal that has him playing and paid by the Islanders until he is age 40; per his current contract Henrik Zetterberg will be playing through age 41; and the list goes on.

Here's what I think I say to the arbitrator if I'm Kovy and the Devils in working to get him to overturn the leagues ruling and compel them to approve the current contract. "Sir, the deal on the table now has Mr. Kovalchuck playing 17 years until he is 44 and it's frankly not without precedent. Further, Mr. Kovalchuck has been a durable player throughout his NHL career so it's not unreasonable for he and the New Jersey Devils to feel confident with proper conditioning and fitness training, which he currently does, he can play to the same/similar age as Chris Cheleos,Rod Brind'Amor, Mike Modano and Ray Whitney. Then let the fireworks begin on the owners side of things. Further he doesn't take near the beating that guys like Pronger take or dish out so we all (team and Kovalchuck) believe he can and will be able to contribute to the organization and want to play for 2 more years than Pronger contributes to the Flyers or Hossa does for the Blackhawks. We believe the most recent and most similar precedents for approval of this deal is the Pronger and Hossa contracts arrived at last season. In both those cases contract terms and structures that are substantially similar when the age of the player both at contract signing and the end of the contract term are considered, were approved with no intervention or issue cited by the NHL. We respectfully submit this agreement is in all ways similar and was indeed negotiated in good faith and with the intention of the entire deal being played out by both parties and ask the Leagues' determination be overturned and the deal be allowed to stand as negotiated in good faith by both parties. Thank you for your due consideration."

Lest we forget that the CBA is basically a series of compromise by all parties that sets in place ground rules that make sure the participants both the Owners/League and the Players don't "kill the goose that lays the golden eggs." Around and within that framework each participant is basically a highly competitive INDIVIDUAL looking to get an edge - a personal edge in virtually every case. Did the Kovalchuck 17 year contract cross the line - probably. Is the league's current action in the best interest of "the game." Despite the overall tone/etc of posts around the blogsphere that it is, I have some serious doubts. Further I think the next two months will provide us the answer. In the meantime, while I think to a fair degree they (the NHL) had little choice if they were to remain relevant in these matters, and in that light their actions were to some degree inevitable; there is no doubt in my mind that the looming expiration of the current CBA just got a whole lot harder for both sides.

On the matter of a transfer agreement - I think the KHL just got more leverage and between now and January, the NHL will really push and get one done. Relative to the Olympics - any change in what's going on just came off the table, unless the owners want to put doing away with the escrow AND removing the reason for it from the next CBA on to the table. That doesn't mean the NHL pushing for other changes in the International Hockey calender, etc won't now become more important to them.

In any case at the end of all this I still see Ilya Kovalchuck wearing a Devils uniform, under a long term contract, with a total value of around $100M and an average salary cap hit of $6.8M or less. There's too many precedents for the NHL to keep that from happening. If I'm Kovy and Lou - I go craft a 14 year deal that's for $95M and pays Kovy $4M between ages 36 and 41 vice $3M between ages 37 and 44 ... and takes another $6M off the earlier years when his likely to loose it to the CBA max salary anyway, then the average Cap hit is ~$6.85M though still very front end loaded so it basically has the same structure both he and the Devils obviously want. In the end he has his blockbuster contract; the Devils have the player they want for as close to the Cap hit they were looking for, and the NHL really would have a hard time saying no to the deal... That or something like it is also how this whole thing could quickly get concluded without creating a total mess for both the League and the NHLPA to have to sort out going into preparations for the next CBA negotiations. Of course if reason always prevailed around the NHL, we'd have someone's names engraved on the Stanley Cup the champions of the 2004-2005 season.

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