Kovalchuk Contract: DENIED

The contract I wrote about yesterday between Ilya Kovalchuk and the NJ Devils for $102 million over 17 years was rejected by the NHL. The NHL claims that the contract violated the Collective Bargaining Agreement between the NHL, its teams and its players, because it circumvents the league's salary cap. A salary cap is a yearly limit on the amount a team can pay its players.

The Kovalchuk contract states that he would be paid only $550,000 in the last five years of the contract. He would therefore be earning $98.5 million of the $102 million deal in the first 11 years of the deal. These numbers imply that Kovalchuk does not intend to actually play the last several years of his contract, because he would be unlikely to agree to such a low yearly payment so far into his career. This implication means that the contract was then structured to defer the $102 million payment over 17 years in order to minimize the impact on the salary cap. This would then allow the Devils to pay more to other players in the early and middle years of the 17 year deal.

The NHL Players Association ("NHLPA") will have about a week to decide whether to challenge the NHL's rejection of the contract. In determining whether to fight the NHL's decision, the NHLPA will analyze other long term deals that have previously been approved by the league. (There has been some long term deals for big money in the NHL, but none to the extent of Kovalchuk's proposed contract.) In the meantime, Kovalchuk can renegotiate with the Devils or any other interested teams.

Looks like the 17 years was always just a scam to get more money!