The NHL’s Blindside Hit

We are now at Day 21 of the Ilya Kovalchuk saga.  It took 19 days for the Kovalchuk decision to be made.  He decided on Day 17 (his lucky number) that he was going to play for the New Jersey Devils.

On Day 20, the Devils held a press conference to officially announce that Ilya was a Devil for life, inking a 17-year deal for $102 million.

Later that night, the NHL rejected the contract and issued the following statement:

National Hockey League Deputy Commissioner Bill Daly today issued the following statement regarding the free agent contract forward Ilya Kovalchuk signed with the New Jersey Devils: “The contract has been rejected by the League as a circumvention of the Collective Bargaining Agreement. Under the CBA, the contract rejection triggers a number of possible next steps that may be elected by any or each of the NHLPA, the Player and/or the Club. In the interim, the player is not entitled to play under the contract, nor is he entitled to any of the rights and benefits that are provided for thereunder. The League will have no further comment on this matter pending further developments.

No one can say they didn’t see this coming.  Everyone knew that no matter what contract was offered to Kovalchuk, it would be investigated.  But to be rejected altogether by the league…that is the shocker and many are calling foul play.

There are a lot of sketchy elements throughout all of this.

The Numbers

The way the contract was designed has Kovalchuk making $88.5 million by the time he turns 35 years old.  Afterwards, he is slated to make $13.5 million, with the first $10 million at the ages of 36 and 37.  That leaves $3.5 million for the final 6 years of his contract.  That averages out to $583,333 per season.

The way the contract was structured has him making $550,000 per season in the final five years.  That’s almost the same as what a rookie would make today!

Throw in inflation in the year 2022, and $550,000 isn’t what $550,000 means in today’s terms.  It would be much less.  It would be the equivalent to $522,500 (today) if inflation averages at 5%.  It’s a guarantee that rookies will be making more than that in 2022-2027.

Based on that minuscule amount at the back end of the contract, it would appear to the NHL (and everyone else for that matter) that Kovalchuk doesn’t really plan on playing out the final years of his contract.  That alone would cause the NHL to say that the Devils are trying to circumvent the CBA (collective-bargaining agreement).

In order for this contract to look 100% legit, if the Devils dished out something closer to the actual average of $6,000,000 per season, this contract would look like it was a real contract, comparable to what happened in Alexander Ovechkin’s deal where he is paid $9 million in the first six-years, and then $10 million in the final seven.  [SOURCE: Tom Gulitti]

Let’s take a look at the current numbers:

(age 27)        2010-11: $6 million
(age 28)        2011-12: $6 million
(age 29)        2012-13: $11.5 million
(age 30)        2013-14: $11.5 million
(age 31)        2014-15: $11.5 million
(age 32)        2015-16: $11.5 million
(age 33)        2016-17: $11.5 million
(age 34)        2017-18: $10.5 million
(age 35)        2018-19: $8.5 million
(age 36)        2019-20: $6.5 million
(age 37)        2020-21: $3.5 Million
(age 38)        2021-22: $750,000
(age 39)        2022-23: $550,000
(age 40)        2023-24: $550,000
(age 41)        2024-25: $550,000
(age 42)        2025-26: $550,000
(age 43)        2026-27: $550,000

[Age is based on his age at the start of the season.  He will be 44 in 2027.]

The way the contract is currently designed with Kovalchuk receiving $550,000 per season in the final five years, is what has put the stopper on this contract.  Who do they think they’re fooling?  As compared to other players who had front loaded contracts, they are still making $1 million and on up after the age of 40.

What player to the degree that is the type of player as Ilya Kovalchuk wants to be paid less than a rookie in his final years?  Not even Brendan Shanahan would look at deals less than $1 million at the age of 40.

The contract is not a realistic contract.  It is the type of contract that looks like a retirement contract…the type of contract where you can expect the player to not play out their entire contract after a certain age.  Based on the current design of the contract, we can expect to see him play the first 10-11 years of the contract, and not the final six years.

Based on that alone, the NHL does have justification in telling the Devils they are rejecting the design of this contract.  It’s almost a joke.

They are not necessarily rejecting 17-years and $102 million.  They are rejecting the complete design of how Kovalchuk will be paid during those 17-years.  A restructured contract would need to look remotely closer to the final years of the other big contracts that are currently the precedence (Roberto Luongo, Marian Hossa, Alexander Ovechkin, etc.).

The way to fix this contract to meet NHL approval all rests within the final six years.  They need to up the dollar amount to $1 million per year (at the minimum).  By so doing, they will need to restructure the middle years.  Luckily for them, they only need to trim $2.5 million in the middle years.

To be on the safe side, the Devils should up the ante to $1.25 million (similar to Mark Recchi’s contract).  Either way, Kovalchuk would still be able to get his $102 million in 17 years, just not the bulk of it in the early stages.

The Ramifications of the Contract

Earlier this summer, I stated that Kovalchuk’s contract will be the apocalypse of it all.  That was long before he made any sort of decision to sign or before anyone knew the numbers.  Ends up that prediction is ringing true right now.

What is happening now with the rejection of his contract is the realization across the league that this is a precursor to what may happen in 2012…a lockout.  Players and agents have been screaming ‘foul’ since the announcement of the rejection Tuesday night.  They have all been saying the same thing that’s been mumbled all summer long…a lockout is coming.  The rejection proved that it was definitely forthcoming.

In essence, Kovalchuk’s contract did become the apocalypse of it all…the final straw that broke the camel’s back.  If it was three years ago, this never would have happened.

Kovalchuk entered free agency in the most unfortunate global economic times the NHL has ever seen.  It takes a village to sign the Russian to a contract this time.  GMs are not able to be so free-wheeling as they were just a few short years ago with Chris Drury, Scott Gomez and Daniel Briere when they were signed to their outrageous contracts.

After the NHL’s rejection, if Kovalchuk became a free agent once again and decided to head back home to Russia, no one would blame him.

There is a sense of duty that the NHL has to protect the league, the owners and its players.  To lose Kovalchuk in this mess to the KHL…can’t say that there won’t be a lot of angry people.  The NHL owes it to everyone to keep Kovalchuk under wraps in the NHL for the rest of his hockey playing career.  The NHL does not need to become the league that he scoffs at (like he had before with the KHL).  The NHL’s best interests is to keep the Russian winger in the league.

As for the Devils, in the grand scheme of things, they owe it to their fans to completely secure Kovalchuk.  It is quite humiliating and a knife to the heart for fans to experience the glorious moment of knowing Kovalchuk wanted to sign with their team, to finding out only hours later that the marriage was not legally binding.

It was almost like a celebrity wedding…marriage and annulment all in the same day.

Here is Lamoriello’s official statement:

“We are extremely disappointed that the NHL has decided to reject the contract of Ilya Kovalchuk.  The contract complies with the terms of the Collective Bargaining Agreement.  We will have no further comment until the process outlined in the CBA is complete.”

The thing about legalities in marriages, is that if something didn’t work out ‘legally’, you work towards fixing the legal issue so that you can remain married…that is, if you still want to be married to each other for life.  In this case, the Devils believe that they did not violate the terms surrounding the CBA and that it should be legal in terms of the agreement.

Whether this becomes a situation where this requires a whole new contract where Kovalchuk is aware that the league still has the upper hand, not him, or just a more amicable $102 million contract, the Devils have to do what it takes to secure him.

In the meantime, we need to all prepare for the 2012 hockey apocalypse…a lockout.

New Jersey Needs Kovalchuk

I’ve emphasized in the past just how important bringing Kovalchuk to the Devils means for New Jersey.  The city of Newark needs someone like Kovalchuk to bring in more revenue to help build their city around.  The focal point is resting on Prudential Center.  The city is looking to turn itself around.  They need Kovalchuk to make it happen.

The whole purpose of bringing the Devils to Newark by co-signing on to their new arena was to help create a better Newark.  They wanted to make it a thriving city.  They needed the success of the Devils to do that.

The Devils have been slow to start the evolution, even though it is there.  Unfortunately, the changes are happening during a slow period in the economy.  Last year’s attendance dwindled thanks to the state of the global economy.

Fortunately, the trade for Kovalchuk in February defied the recession.  It brought fans from all over the Tri-State area just to see him, whether they were a Devils fan or not.  Kovalchuk was the man that sold out tickets and merchandise, creating the revenue that both the Devils and the city needed.

Everyone wins with Kovalchuk on the Devils…the team, the city, and the fans.

To lose Kovalchuk in all of this, the Devils would face the hardest blow of all from the most embarrassing blindside hit to the face by the NHL.

Conspiracies and Emotions

Rumors are abounding that the Devils management knew that the contract would be rejected prior to Tuesday’s press conference [according to].  It is a fact that Kovalchuk’s camp was unaware that it would happen.  They found out just about the same time as the rest of us did on Tuesday night.

I was still text messaging with Kovalchuk’s agent after 7:00 p.m. last night.  Everyone was still happy and on cloud nine over the signing.  That is… Kovalchuk’s camp and his teammates that attended the ceremony were still happy and on cloud nine.

Just a few short hours later, that elation of celebration quickly crashed into a brick wall when they found out that Kovalchuk’s contract had been rejected by the NHL.  Ironically, that’s how it’s been since July 1 for the team.  Every time his teammates talked about Kovalchuk possibly re-signing, they went from excitement and then switched to a somber reply of ’but who knows?’  It is not coincidence that those emotions have been repeated throughout this whole saga.

The Devils are big believers in being positive thinkers.  When you think positive, good things follow.  They live and breathe this mantra, so they should understand how the excitement to somber emotions could keep on snowballing into what we have today.

If it is true that management was aware prior to the press conference that Kovalchuk’s contract would be rejected, that in itself is justification enough for Kovalchuk’s camp to walk away from the Devils completely.  It would have been considered dishonest.  But based on earlier reports from Tom Gulitti on Twitter, it sounded like the owners were unaware, but Lou Lamoriello may have known all along based on the comments he had made earlier at the press conference.

Yet, Mr. Lamoriello was quick to point out at the press conference that the contract was legal.  By saying that, it raised a lot of yellow flags for the media.  It was almost as if he was warning the media that something was about to happen.

Either way, the Devils’ stance is that the contract is legal and abides by the CBA.

The interesting thing to note is that Lamoriello is not a supporter of contracts like the one Kovalchuk was offered.  He is against it.  He prefers shorter contracts with a lesser dollar amount attached.  This contract is what the owners wanted, not what Lamoriello wanted.  He would prefer to have Kovalchuk settle for what is truly the Devils’ way if he wanted to remain with the team.

The owners wanted wins and someone that could help push the team out of the curse of the first round exit.  They would do anything to make it happen with Kovalchuk.  He was the key.

The NHL is not necessarily going against Lamoriello.  They are actually agreeing with what he truly thinks about the contract.  Even though the Devils official stance is that it is legal, this is the type of contract that both Lamoriello and the NHL are against.

They Want Him

One of the most important things to note is that Kovalchuk has a team that wants him.  Patrik Elias, Jamie Langenbrunner, Zach Parise, Martin Brodeur and Pierre-Luc Letourneau-Leblond all showed up to the press conference.  It is unusual to have players so excited to ink the hottest UFA in the history of the NHL.  They have been on edge just as much as the rest of the hockey realm has been throughout the first 19 days.  They wanted Kovalchuk to be a part of their team, just as much as he wanted to be there.

What’s happened to Kovalchuk is unfortunate, but many saw it coming before free agency even began.  This rejection isn’t just a slap to the Devils and Kovalchuk, but it’s also a slap to his teammates, the fans, and the hockey world.  No one is happy about the NHL’s decision.

The only good thing that has come out of this embarrassment so far is that the NHL is at the forefront in the news.  Better yet, Kovalchuk has become a household name overnight.  [Move over Wayne Gretzky.]

Making the most sought after UFA in the history of the NHL a household name overnight could be the most positive thing going for Kovalchuk (and possibly the Devils) in this whole mess.  It makes for a great publicity stunt if you really want to sell Kovalchuk and the Devils.

Even though this snafu has started off his lifetime career with the Devils, it will all get worked out somehow in the end.  Until then…the saga still has more chapters to be written.



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