Ilya Kovalchuk’s contract with the Devils, the cornerstone of the franchise’s future, was permanently annulled by arbitration ruling today. The Devils now will be hard-pressed to reassemble a deal that will satisfy the star winger, the NHL, and the salary cap combined.
“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,” Devils president/GM Lou Lamoriello said in a statement.
One seemingly insignificant matter — a change from a no-movement clause to a no-trade one after Year 11 — had significant impact in arbitrator Richard Bloch’s ruling that the contract constituted circumvention of the salary cap provisions in the collective bargaining agreement.
Bloch noted that the no-trade switch provided the Devils a waiver route to get out of the final years of their $6 million cap hit, and combined with the larger issue of the massive front-loading of the contract, violated Article 11.6 (A)(i) of the CBA, which lists circumvention as a valid reason for voiding a contract.
“The league has sustained its burden,” of proving circumvention, Bloch’s verdict read. “Accordingly, the grievance protesting that action will be denied.”
Bloch pointedly suggested that the Devils and Kovalchuk did not intend to circumvent the CBA, but held that the contract “had the effect of defeating” its provisions.
“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,” Lamoriello said to begin the statement.
The league won its point that it is difficult to believe that Kovalchuk will play until age 44, when the contract would have expired. In the first 11 seasons of the contract, Kovalchuk was to make $98.5 million, and $3.5 million total over the final six.
“We want to thank Arbitrator Bloch for his prompt resolution of a complex issue,” NHL deputy commissioner Bill Daly said in a statement. “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.”
With Kovalchuk again a free agent, the Kings and Islanders can rejoin the pursuit of the two-time 52-goal scorer, who at age 27 is arguably the NHL’s best-ever free agent.
The Devils actually were not a contending party to this case, but it was all about them, anyway. The Players Association and Kovalchuk were the plaintiffs against the league’s July 20 rejection of the deal signed a day earlier. The union argued the case against the NHL on Wednesday and Thursday before the arbitrator in Boston.
Kovalchuk was traded to the Devils on Feb. 4 in a major deal after he rejected Atlanta’s bids of $101 million over 12 years and $70 million over seven years. After coming to the Devils with Anssi Salmela and a swap of second-round picks for Johnny Oduya, Niclas Bergfors, prospect Patrice Cormier and a first-rounder, Kovalchuk scored 27 points in 27 games to close the season and led the team with six points in its five playoff games.
His now-voided contract specified the first two years at $6 million, then five years at $11.5 million, then salaries of $10.5 million, $8.5 million, $6.5 million and $3.5 million. The final six years were the issue, when salary fell to $750,000 and five years at $550,000.
Those final six years were key to bringing his cap hit down to $6 million per year, whereas if only the first 11 years counted, the Devils’ cap hit would be some $8.9 million, which would be even more difficult to handle.
The Devils could be liable for a $1-5 million fine and cap-space loss, and Kovalchuk for a fine of $250,000-$1 million.
This ruling can be expected to be used as a precedent for the league to void other front-loaded deals, including ones that have already been accepted and registered.
The Devils are now back to having some $2.8 million left in salary cap room with 20 players accounted for on a possible roster of 30. They were going to have to drop some important players in order to accommodate Kovalchuk under the cap.