The NHL’s effort to disallow front-loaded, long- terms deals that are permitted by the collective bargaining agreement through arbitration is an attempt to legislate from the bench.
Commissioner Gary Bettman and the league are using this circumvention case against Ilya Kovalchuk and the Devils to try and gain the right to inflict arbitrary term-limits on contracts through the finding of an arbitrator after failing to gain that power through the 2004-05 collective bargaining process that created the current CBA.
“They absolutely tried to get the right to limit contract length,” one of the NHLPA’s prime negotiators into and throughout the lockout told Slap Shots. “It was another cap they wanted to impose, but we were able to win that one.”
The NHL couldn’t add a fourth cap on top of the league, team and individual dollar-amount caps it gained through the lockout, so it’s going to the bench to get one now. Presumably, the league’s position is that a 12-year contract, such as the one that kicks in this year for 31-year-old Roberto Luongo, is acceptable, but a 17-year deal, such as the one that would begin this year for 27-year-old Ilya Kovalchuk, is fraudulent.
Though this is the first circumvention charge filed since the lockout, this is not the first time the league has brought larger collective bargaining issues into an arbitration hearing. This case bears striking similarity to the 2003 case in which the NHL claimed signing bonuses to Joe Sakic, Rob Blake and Pierre Turgeon constituted illegal lockout protection and therefore, circumvention.
Signing bonuses were legal under the old CBA just as long-term, front-loaded contracts are legal under this CBA. Indeed, the league routinely registered contracts containing signing bonuses without protest, just as the league routinely has registered long-term, front-loaded contracts.
Suddenly, though, the NHL had problems with the Sakic, Blake and Turgeon contracts. The testimony given by Bill Daly, then the league’s senior VP and now its deputy commissioner, under questioning from arbitrator Joan Parker, is instructive and on point as it relates to the Kovalchuk issue.
Parker asked Daly what standard the league applied to determine whether a signing bonus would be considered illegal.
“The standard is . . . we have an internal discussion about it, that there’s an intent on behalf of the contracting parties to guarantee a part of the contract. And the standard we have been applying is a significant part of the contract for a potential [2004-05] work stoppage,” Daly said.
“It’s a materiality test. . . . There are a number of different [contract/signing bonus] structures we’ve seen. When it’s generally reasonable we have registered contracts in that scenario. When it’s clear on its face that the parties were expressly attempting to essentially guarantee part of the contract during a work stoppage, at least in our mind, we have rejected the contracts.”
Ah. So when it was in the league’s mind to reject a contract, they did it seven years ago, just as they rejected Kovalchuk’s contract two weeks ago because it presumably was in the league’s mind that 17 years at $102 million with $99.25 million front-loaded into the first 12 years is circumvention. Yet, Vancouver’s 12-year, $64 million deal with Luongo, in which $60.382 million is front-loaded into the first nine years, is legal.
Or, as arbitrator Parker wrote in June 2003: “The difficulty Daly had in articulating the standard by which the League challenged the Blake, Sakic and Turgeon [contracts] is troublesome, particularly because several provisions of the Collective Bargaining Agreement suggest that Clubs and players have substantial flexibility to negotiate compensation packages as they wish.”
The same applies today, even within the restrictive hard-cap CBA. The Kovalchuk contract with the Devils conforms to every standard contained within the agreement. No rule is violated.
No rule is violated in this contract any more than the Bruins’ seven-year agreement with Marc Savard, that kicks in this year, violates the CBA. Savard, 33, is in for a cap hit of $4.01 million on a deal in which he’s due to earn $14 million over the first two years, $11.5 the following two years, $1.5M the fifth year and the league minimum $525,000 each of the final two years of the deal.
Both deals are structured so that the largest drop in annual compensation — $3 million in Kovalchuk’s contract from the 10th to 11th season, $3.5 million in Savard’s contract from the fourth to fifth season — complies with the “50-percent” rule relating to the average of the first two seasons.
Apparently, the first one coming from Jeremy Jacobs’ team was fine in the minds of the NHL, but this one from Lou Lamoriello’s and Jeff Vanderbeek’s team is not.
Joan Parker ruled for the NHLPA and against the NHL in the case of Sakic, et al, rebuking the league for attempting to gain collective bargaining goals through arbitration.
Seven years later, the league has reapplied its beautiful-mind litmus test to front-loaded contracts, trying to win something now it could not win last time in collective bargaining.
The standard is simple. If Bettman doesn’t like it, the league tries to stop it. Only the arbitrator has the power to stop Bettman.