NHL Wins Big In Contract Dispute
Wednesday - August 25, 2010
It’s not often that the NHL can work from a position of strength. Typically, the league with upper-division dreams and second-tier support must remain happy to maintain any level of relevance and solvency.
For proof of the league’s challenges, look no further than the Stanley Cup champion Chicago Blackhawks, which parted ways with goalie Antti Niemi because his $2.75 million contract was deemed too costly.
But the NHL has to be feeling its oats after its rejection of Ilya Kovalchuk’s deal with the Devils was confirmed by an arbitrator. Richard Bloch agreed with the league that the 17-year, $102 million contract was designed to circumvent the salary cap.
Kovalchuk was set to receive just 3 percent of the total value of the contract in its final six years. Bloch said the contract violates the collective bargaining agreement by artificially lowering the team’s salary cap hit by signing the player to a contract that extends beyond the normal length of an NHL career. Kovalchuk would be 44 at the end of the deal and, according to Bloch, in the past 20 years only six players have played to the age of 42. That’s not much precedence for an exaggerated career - Chris Chelios being the obvious exception playing until the age of 48.
The smoking gun was the no-move clause that shifted to a no-trade clause in year 11 when Kovalchuk’s pay would have ducked under $1 million, providing him with ample reason to retire, or the team to waive him or reassign him to the minors.
Bolstered by the decision, the league is now investigating the contracts of Marian Hossa, Chris Pronger, Roberto Luongo and Marc Savard to determine if their deals also violate the CBA. Penalties could include de-registration, fines, reduction of the teams’payroll, forfeiture of draft picks and suspensions of team officials, players and agents.
The NHL has made it clear: It is out to end long-term, front-loaded contracts. Smart move. Such deals could destroy the long-term health of the league.
Had Bloch come to the opposite conclusion, teams would be free to sign a player until he reaches Gordie Howe status, thereby under-cutting the salary cap and allowing teams to spend themselves into financial ruin.
The NHL is a penny-pinching league - not out of desire, but of necessity. It tried to copy the NBA and move into cities far from its traditional bases of interest but that has only weakened its once small, but stable, financial position. Prudence is now the name of the game.
In the last two years Nashville, Phoenix and Buffalo have filed for bankruptcy. In 2003, Ottawa had the best record in the league and heaps of debt. In ‘98 it was the Penguins’turn to dance with the reorganization devil.
The league will continue its investigation into the aforementioned players, but any real action against them is slight. Hossa, Luongo, Pronger and Savard are all playing under the contracts being looked at, and any effort to institute tough penalties will result in legal fights in which neither side wants to become involved.
The decision remains a nice win for the NHL. It’s not likely to have too many more.
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