Kovalchuk’s deal could affect upcoming labor contract
While the outcome of the arbitration hearing over Ilya Kovalchuk’s 17-year, $102 million contract with the New Jersey Devils remains cloudy, it’s clear this situation will have repercussions for the NHL in both the short and long term.
One question asked around the league is why Devils general manager Lou Lamoriello, an ally of league commissioner Gary Bettman who helped draft the current collective bargaining agreement (CBA), chose to sign Kovalchuk to the kind of long-term, heavily front-loaded contracts (which makes the average salary a more affordable salary cap hit) he claimed to dislike.
Various theories abound, some suggesting Lamoriello was forced into it by team ownership, others that it’s an example of the crafty Devils GM at his most Machiavellian, signing Kovalchuk to a contract he hopes will be ruled against by an arbiter so he can then sign the talented winger to a shorter, less expensive deal.
Perhaps the real answer is the simplest: Lamoriello wanted Kovalchuk as his franchise player and using that kind of contract was the only way to do it.
Whatever the reason, it finally forced Bettman’s hand.
In recent years, teams have pushed the boundaries in their exploitation of this obvious loophole in the CBA allowing them to sign superstars to more cap-friendly salaries.
The league’s rejection of Kovalchuk ‘s contract on the grounds of salary cap circumvention is considered by many as the first skirmish in what could lead to another potentially nasty round of labor talks between the league and the PA in two years time, when the current CBA expires.
It’s expected the league will fight to put an end to long-term, front-or-back loaded contracts in the next CBA. Bettman apparently hates these “cheat contracts” as do a number of general managers, led by the Toronto Maple Leafs outspoken Brian Burke, who has publicly criticized his peers who’ve signed players to those deals.
Not every general manager, however, agrees with Burke. Detroit Red Wings GM Ken Holland stated in a recent interview with Helene St. James of the Detroit Free Press those contracts fall within the rules of the current CBA.
That’s because there’s nothing written in it that imposes term limits upon contracts of players other than those on mandatory three-year entry level deals.
Holland admitted exploiting the loophole to retain Red Wings stars Henrik Zetterberg and Johan Franzen, although their contracts don’t last as long as Kovalchuk’s nor pay so little money in the final years of their respective deals.
"It's a creative way of bringing the cap number down,” Holland told the Free Press.” With Franzen and Zetterberg, their contracts end when they're around 39 or 40, and we've had lots of players who've played until then.
"It's a way to deal with his cap number. (Zetterberg) is at 6.083. At the end of his career, when he's not quite the $6 million player, it'll have evened out."
The loophole has the potential to become a wedge issue among general managers and team owners in the next round of labor talks, which could threaten the league’s hopes of presenting another successfully united front against the PA as it did in the last lockout.
Anxiety over the potential impact of the Kovalchuk contract upon future CBA talks was likely heightened by media speculation earlier in July suggesting the league might attempt to lower the salary cap down to $48 million in two years time.
No one from the league has publicly commented on this rumor but such a move could have a potentially devastating impact upon many of the league’s teams.
Currently six teams — Chicago, Philadelphia, Pittsburgh, San Jose, Vancouver and Calgary — have over $30 million committed to between 6-9 players for 2012-13, with most of those players on deals extending well beyond that season.
Another 15 clubs, including such notables as Washington, Detroit, Toronto, Boston, New Jersey, Toronto, Montreal and the New York Rangers, presently have payrolls in excess of $20 million committed to an average of six players per team.
The salary cap for next season is $59.4 million and it could rise to over $60 million for 2011-12, the final season of the current CBA.
Slashing the cap to as low as $48 million would force many of those aforementioned clubs to dump salary, which could end up costing them talented roster depth.
It’s hard to believe many owners and general managers would actually agree to such a draconian measure that could adversely affect their respective rosters.
To minimize that impact, the league could push for the PA to accept another significant salary rollback comparable to the 24 percent rollback at the start of the current agreement.
However, that isn’t likely to sit well with the players this time around, potentially setting the stage for another work stoppage in two years time.
The rumored lowering of the salary cap could just be an exploratory move by the league, testing the vulnerability of the currently leaderless PA whose membership is rumored apathetic toward labor issues and lacking the stomach for another labor battle with the league.
With the league and the PA preparing for a showdown over Kovalchuk’s contract, however, it’s no wonder it is being considered the opening shot in a future NHL labor war.