Kovalchuk’s contract rejection the first shot in a bigger game
The National Hockey League’s rejection of the proposed 17-year, $102 million contract between the New Jersey Devils and Ilya Kovalchuk goes far beyond the notion that Kovalchuk simply won’t be in the NHL when he is 44.
The NHL’s actions are a line in the sand for the much more tumultuous debate that will be raging between League officials and players when the two parties undertake negotiation on a new collective bargaining agreement. The current CBA, which the Kovalchuk deal so blatantly exploits, expires after the 2011-12. The NHL is extremely keen on forcing shut the loophole in the CBA which allows for front-loaded deals to occur and is putting its foot down on the issue by taking on one of the NHL’s premier stars and a model franchise.
The current CBA allows for teams’ salary caps to be affected by a player’s average salary rather than what the team pays him in that season. Teams have taken up signing players to very long-term deals in order to have a much lower salary cap hit while paying the players a high sum during prime playing years.
Regardless of what happens when an arbitrator reviews the contract and rejection, the NHL’s desperation and financial instability is starting to crack through. Under Commissioner Gary Bettman, the NHL has often struggled with popularity and profitability. The Phoenix Coyotes are currently without an owner. The Dallas Stars are currently up for sale. The Anaheim Ducks, Carolina Hurricanes, and Atlanta Thrashers are all in dire need of investment funds.
By rejecting the Kovalchuk deal and attempting to set precedent for the imminent CBA talks, the NHL is attempting to wrest financial control away from players and owners and back towards League administration. Unfortunately, based on precedent in other professional sports the NHL’s chance of winning looks slim.
The National Football League tried to invalidate several big-name contracts in the early 1990s because they utilized bonuses and low-paying deals in a manner that circumvented the salary cap in a similar manner. Much like the NHL, the NFL felt that these accounting tricks created deceptive and unfair payrolls figures and sued. Much like what will happen to the NHL, the NFL lost.
There is a very simple reason for why the NHL’s rejection of the Kovalchuk deal will be overturned and that is because the NHL was involved in crafting the CBA which the deal exploits. "If something is permitted by the collective bargaining agreement, then by definition it can never be circumvention," says attorney Jeffrey Kessler, who has represented the players unions of the NBA, NFL and NHL in numerous labour disputes. That means that there is nothing illegal about the deal.
Precedent is important and the NHL has previously reviewed plenty of long-term deals that were almost as audacious as Kovalchuk’s and never rejected any before, as they weren’t big news topics in a year that is close to CBA negotiations. This means that the deal will most likely go through in favour of Kovalchuk, though the league might be happy with the statement it has made.
Whether or not the NHL’s statement about what it wants in the next CBA will have any effect remains to be seen. Bettman wants a hard salary cap that is tough to manipulate in order to rein in spending and create relative parity amongst all NHL teams. That is why the NHL doesn’t even have a luxury tax like baseball or the NBA.
Owners and players want as much spending as possible, as players want more money and successful teams with good players often win more and therefore earn more. Regardless of the decision, implications for the NHL’s future are pretty serious. "If they win, it's a huge win, and if they lose, they'll just make contract length a bigger point in the next collective bargaining agreement," says veteran attorney Jim Quinn, who represented the NBA players during the 1998-99 owners' lockout. "I don't think we've heard the last argument on this issue."
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