Arbitrator Sides With NHL

At the end of business day on Monday, the NHL released the arbitrator’s ruling, upholding the league’s rejection of Ilya Kovalchuk’s contract with the New Jersey Devils.

While it is disappointing that earlier precedence already set by the NHL dealing with these controversial long term contracts was not the main factor in siding with the NHLPA in their grievance on behalf of Kovalchuk, the NHL does have a point.

“We want to thank Arbitrator Bloch for his prompt resolution of a complex issue,” NHL deputy commissioner Bill Daly said. “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.”

The contract was deemed as being a “retirement contract” where a reasonable person could doubt that a player of Kovalchuk’s caliber would still play past 40 years of age for less than what the league minimum will be seventeen years from now.  It is not to say that he wouldn’t, but only one player ever has.

Craig Custance of the “Sporting News” provided the following excerpt from arbitrator Richard Bloch’s ruling:

“The overall structure of this SPC reflects not so much the hope that Mr. Kovalchuk will be playing in those advanced years, but rather the expectation that he will not. This is a long contract –17 years — the longest in NHL history. That, in itself, poses no contractual problem, for the reasons discussed above. But Kovalchuk is 27 years old, and the agreement contemplates his playing until just short of his 44th birthday. That is not impossible, but it is, at the least, markedly rare. Currently, only one player in the League has played past 43 and, over the past 20 years only 6 of some 3400 players have played to 42.

The dynamics of this SPC, with particular reference to its final six years, are such that there is scarce reason for either Player or Club to continue the relationship. The incentives are strongly to the contrary. By year 11, the Player will have received $98,000,000 of his $102,000,000 contract, constituting some 97% of the bargain. One may reasonably ask, as the League does, whether a player who had been averaging some $9,000,000 a year will be satisfied to continue the rigors of an NHL season for a salary that (1) will average slightly more than $550,000 a year, (2) will represent a 95% reduction against previous average earnings and (3) will undoubtedly constitute compensation well below the then-applicable major league minimum. The economic incentives are not limited to issues of the Player’s preferences, alone. During the final six years, the comprehensive “No Move” restriction will have been reduced to a “No Trade” clause. This additional flexibility will allow the Club to, for example, place the Player on waivers or send him to the minors. Here again, one may reasonably ask whether this Player would, at that point, accept such repositioning as an alternative to seeking continued employment outside the League or simply retiring.

The System Arbitrator here concludes the SPC terms themselves demonstrate this agreement ‘has the effect of defeating’ the provisions of the CBA, with particular reference to the Team Payroll Range language. For these reasons, the finding is that the League has sustained its burden of demonstrating its actions in rejecting the agreement were in accordance with the bargained authority under Section 11.6(a)(i). Accordingly, the grievance protesting that action will be denied.”

While early reports stated that there was still no determination yet if any disciplinary action would be sought by the NHL against the Devils and Kovalchuk for purposely circumventing the CBA, Lou Lamoriello issued the following statement:

“We have reviewed and respect Arbitrator Bloch’s ruling in the Kovalchuk matter. We also note and appreciate his finding that nothing in his opinion should be read as suggesting that either the club or Ilya Kovalchuk operated in bad faith or on the basis of any assumption other than that the Standard Player Contract was fully compliant with the CBA. That has been our consistent position throughout.

“While we do not currently have a contract with Ilya Kovalchuk, discussions have resumed and we are hopeful that a contract will be reached that meets with the principles in Arbitrator Bloch’s award and the NHL’s approval.”

The only thing left now is for the Devils and Kovalchuk return to the negotiation table now that he has returned to being a UFA.  If the option of re-working a deal with the Devils still does not fit within the guidelines, his other option would be to head to Russia.

The issue here is not whether Kovalchuk can work a deal with the Devils or not. The issue is whether he can work out a deal that will get the stamp of approval by the NHL. His beef is not with the Devils. His beef is with the NHL.

His desire to remain with the Devils is evident now that his agent has returned to the negotiation table just hours after the decision was handed down.

Kovalchuk is currently in Russia with his trainer, preparing for the upcoming season. Now that his job was placed in limbo, don’t be surprised if the KHL attempts to make an active play for him once again.

If the Devils and Kovalchuk cannot create a reasonable contract that does not ‘circumvent the CBA’, and if a deal cannot be reached that is approved by the NHL, Kovalchuk will have no choice but to head to the KHL where a deal can be made and approved for whatever he wants.

The KHL is his last choice. In the past, he has scoffed at the idea of playing in the KHL. It is not an ideal environment for him, his family or his career. But if forced to, he will have no choice but to head back to the motherland.

As for 2012, the stage has been set. The signs are all there that a lockout is forthcoming.

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  1. The Snowball Effect Begins « Michelle Kenneth's Hockey & Musings - August 10, 2010

    [...] The Snowball Effect Begins August 10, 2010 by mkenneth1 Yesterday evening, the NHL released the arbitrator’s decision. As predicted, the arbitrator sided with the NHL. So far this saga is continuing to prove another prediction I gave before Kovalchuk even re-signed with the Devils: Kovalchuk’s contract would be the apocalypse of it all. [Fore more information: Go To Inside Hockey] [...]