Last night, the Devils organization and its fans received some shocking news – that the NHL had rejected the 17 year, $102 million contract of Ilya Kovalchuk. The rejection came after a press conference to announce the signing, and it seemed both sides were moving on. Someone dropped the ball, whether it was the league or the Devils, but the situation raises a huge question – why reject the Kovalchuk deal while allowing similar deals to pass?
The two reasons given by the NHL for rejecting the contract was the last six years, which they called “bogus,” and the belief both Kovalchuk and the Devils understand he won’t play out those final six years. Therefore, the NHL believes the last six years only serve to drive down the cap hit, meaning the contract attempts to circumvent the cap. For all we know, that may be true. Maybe Kovalchuk would decide to retire before the end of the deal, and the Devils would save some money.
Tom Gulitti of the Bergen Record published the official quote from Deputy Commissioner Bill Daly.
“The contract has been rejected by the league as a circumvention of the Collective Bargaining Agreement. Under the CBA, the contract rejection triggers a number of possible next steps that may be elected by any or each of the NHLPA, the player and/or the club. In the interim, the player is not entitled to play under the contract, nor is he entitled to any of the rights and benefits that are provided for thereunder. The league will have no further comment on this matter pending further developments.”
This isn’t the first time a player has received a long-term, front-loaded contract where the back end drives down the cap. These deals are becoming more and more common, and while the NHL may want to ban them in their next collective bargaining agreement, the league shouldn’t be setting that precedent now. Below are two modern-day long term deals, which the NHL passed, to show that Kovalchuk’s contract should not be exception to the rule. All contract information can be found on CapGeek.com.
Marian Hossa – 12 years, $62.8 million ($5.275 million cap hit per season)
After signing a one-year deal with Detroit in 2008-09, Hossa received a long-term deal from the Blackhawks in the summer of 2009. The right-winger inked a 12-year deal, and subsequently won his first Stanley Cup championship after losing two straight. An important thing to note is Hossa’s age when he signed the deal. The right-winger was 30, meaning the contract would expire when he turned 42. For the first seven years of his deal, Hossa makes $7.9 million. That number drops significantly in the eighth year, with Hossa only making $4 million. In the last four years of the deal, Hossa makes $4 million combined.
Clearly, the Blackhawks front-loaded the contract to “circumvent” the cap. There may not be as many millions as Kovalchuk, but the Blackhawks used the same strategy as the Devils. Hossa will be 42 when his contract expires, and those last four years of $1 million drive down the cap hit. Yet the deal was allowed to stand by the NHL. Theoretically, the last four years of Hossa’s deal can be “bogus” years, because he may not play at the age of 38. Hossa’s contract structure is similar to Kovalchuk’s new deal, but was allowed by the league.
Henrik Zetterberg – 12 years, $73 million ($6.08 million cap hit per season)
Zetterberg is another example of these long-term, front-loaded contracts. Zetterberg re-signed with Detroit after a four-year contract expired in 2008. Remember to look at the age of the player. Zetterberg makes over $7 million for the first nine years of the deal, amassing the bulk of the contract. But in the last three years, Zetterberg will only make $5.35 million. When Zetterberg signed his deal, he was 28 years old, meaning the deal would bring him to the age of 40. Once again, one can argue that the last few years of the deal are “bogus,” and that Detroit used those last three years to circumvent the cap. Once again, the structure of the deal is similar to Kovalchuk’s deal, but the NHL had no issue with this specific contract.
Continue after the jump for the rest of my analysis on why the NHL was wrong in rejecting Kovalchuk’s contract.