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"Fear and loathing in Leafs Nation"
Bath, UK, YT • United Kingdom • 28 Years Old • Male
If leaked reports are to be believed the NHLPA is preparing to file a grievance pertaining to the NHL’s rejection of the unprecedented 17 year, $102 million contract filed last week by the New Jersey Devils for Russian forward Ilya Kovalchuk. The report suggests that even if the Devils and Kovalchuk can agree on a restructured deal, the NHLPA may still decide to file a grievance in a preventative effort for future contracts.

The latter part is particularly significant for those who have been viewing the leagues rejection of the initial contract as an act of political posturing in the face of the PA’s on-going power struggle and an attempt at drawing a line in the sand.

While few thought the NHLPA would not grieve the rejection, the decision is likely to fly in the face of the majority of the union’s membership due to the cumulative effect Kovalchuk’s bloated contract will have on the escrow fund used to prop shortfalls in league revenue. It is widely assumed Bettman et al were hoping the escrow issue would drive a wedge amongst the union’s power brokers.

To explain the escrow angle in as plain a terms as possible; when clubs signs players to long, front loaded contracts, the escrow rises because the dollar value of the contract is more than the cap hit, therefore the club is cutting into its revenues by over spending on the revenue controlled cap and subsequently into the already farcical league wide average. While this has a comparatively minimal impact on the recipients of large contracts such as the one Kovalchuk signed (what is $23,000 to Ovechkin who will earn $9 million next year) the same percentage cut (albeit lower dollar value) from lower paid players who constitute the majority of NHLPA members is more significant.

However the reported decision to support Kovalchuk was a no-brainer on the part of the union. In a state of flux, the NHLPA has to show it is supporting the individual interests of its members on a case-by-case basis no-matter the individuals star power. The escrow issue has been largely overblown by the media and a handful of players at this point in the evolution of long, front-loaded contracts. Were they to grieve despite a contract restructure, albeit a hypothetical scenario at this point in time; that could be construed as a message to the league office that the NHLPA is not above fighting obviously flawed contracts per the language of the CBA.

If anything its proof de-facto NHLPA executive director in waiting Donald Fehr is stepping up to the plate (nice pun, eh?) with reports the former MLBPA leader has been actively involved in union dialogue following the leagues rejection. All this just two weeks since Fehr, who oversaw the seven month long MLB labor stoppage that cancelled the 1994-95 World Series, was named a prime candidate in the unions ongoing search to replace Paul Kelly.

While the leagues decision to reject the Kovalchuk contract was largely greeted by most fans and commentators, the approval was tempered by the leagues tardiness in addressing the trend of contracts. To wit, the NHL has left it several contracts too late in terms of both term and front-loading to react at this juncture in the CBA leaving the Devils organization and its fans to cry foul whilst setting precedents any labor attorney or arbiter will go to town on.

In short; approval meted with obligatory and obvious criticism.

If this mess now descends into arbitration as is the most likely outcome following a filed union grievance, the league is depending on the semantic grey areas of the CBA pertaining to good faith and cap circumvention to pull them through while ignoring the steady stream of physical contracts that have come to pass since the New York Islanders inked Rick DiPietro to a 15 year $67.5 million contract in 2006. A contract consummated just months after the current CBA was ratified.

And that was just for starters. The recent signings of Marian Hossa, Roberto Luongo and Chris Pronger have ratcheted up the dubiousness factor to the power of 11 with all three contracts taking those players north of 40 and provided the very league that approved these contracts with even less recourse for disapproval now, let alone a snowballs chance of winning anything but the most minor of victories.

Indeed, either through a volunteered restructuring or through an arbiters mandate, few feel the contract will be anything more than shortened by two years. At that point the cap hit for the Devils rises 750K per year, small price to effectively kick more dirt in a leagues face that would have been wise to take its bumps and swallow the original deal. After all even the most fervent opponent to Kovalchuk’s contract has to accept its legalities in the cruise ship sized loopholes that litter the CBA signed off by the NHL.

Crucially If the NHL lose this decision which is by far the most likely outcome on even the most piecemeal aspirations of the rejection, the impetus of the next CBA negotiations fall into the incumbent NHLPA administration. Long term, front loaded contracts could have been amended using the escrow as leverage by the league at minimum fuss, but now the players association may view this impending debacle as a situation to capitalize from, assuming they are victorious. Either pressing for lopsided “compromise,” or pushing the league over the barrel knowing that Bettman and the NHL cannot realistically sustain another labor stoppage despite the commissioner’s bravado, this whole situation smacks of poor judgement and poor timing for minimal acclaim on the leagues part.

And worse, the strong hand the PA are threatening means no agent or GM will think twice when the likes of Steve Stamkos, Drew Doughty, Zach Parise and Zdeno Chara enter free agency next summer a full year before the next CBA is negotiated.

Subsequently strap in for another summer watching the NHL dragging itself through court generating more bad blood and ill will while the average hockey fan just waits to see the free agency bottleneck unplugged. It’s been a mess so far and all signs point to it getting a whole lot worse.
Filed Under:   NHL   NHLPA   Bettman   Kovalchuk  
July 24, 2010 8:35 PM ET | Delete
July 24, 2010 9:07 PM ET | Delete
Interesting that Lou made this deal
July 25, 2010 8:03 PM ET | Delete
This is a direct result that the "markdown" portion of the contract is the same length as the total time of the Pronger and Hossa contracts. These are the two contracts that people point to as the precedent. However 7 years is a LONG contract and for that period of time the Devils are paying him less than $1M per season. Hell why not make is a 25 year contract. Add 8 more years and $550k per and drop his cap hit down another $1M per year. This contract should have been rejected!
July 26, 2010 11:30 AM ET | Delete
July 26, 2010 11:31 AM ET | Delete
Why would the PA go this route knowing the path will lead to the collapse of 3-5 teams
July 26, 2010 2:24 PM ET | Delete
great blog.
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