It seems like everyday, every hour, there is a tweet or a post or an article about the Ilya Kovalchuk saga. Now, the NHL is set to approve the 15 year, $100 million deal for Kovalchuk, but with a few conditions. As per Larry Brooks, who broke this last night, the NHL has two conditions for approving the Kovalchuk deal, and allowing the Marian Hossa and Roberto Luongo deals to stand.
1. That the cap hit on future multiyear contracts will not count any season that ends with the player over 40 years of age. The cap hit would be based on the average salary of the seasons in the contract up to age 40.
2. That the cap hit on future contracts longer than five years would be calculated by granting additional weight — perhaps the average — to the five consecutive years with the largest average salary.
Should the union not accept these terms, or if a negotiated deal is not reached by the Friday 5pm deadline, the league will reject the Kovalchuk deal, and look to decommission the Hossa and Luongo deals. Should the union agree, the aforementioned contracts, and presumably the other questionable contracts, will be grandfathered into the new agreement.
These two conditions are fair conditions, as it is rare that a player is effective, or even playing, at the age of forty. Sure, there are exceptions, but they are just that: exceptions to the rule. To put numbers to this, if Marc Staal were to sign a 20 year deal for $100 million, a deal expiring when Staal would turn 42, the original cap hit would be $5 million. Under the new stipulation, the cap hit would be $100 million over 18 years ($5.55 million), as the two years after 40 no longer apply to the cap hit.
The second stipulation is a bit more complicated. If the contract is front or back loaded in any way, then the cap hit would fluctuate based on the length and weight of the contract. Based on Brooks’ statement, it appears that the five heaviest years will have a higher cap hit than the rest of the contract. Using the hypothetical Staal example above, if the contract has a first five years of an annual $8 million salary, then the cap hit would be $8 million for the first first years, and $5.55 million for the remainder of the deal.
What is confusing here is that the NHL is supposed to represent the 30 NHL teams, but in threatening to reject the Kovalchuk deal and de-register the Hossa and Luongo deals, the NHL is actually going to be angering a few teams. Surely the Devils, Canucks, and Blackhawks are not too thrilled to be going through this. Emphasis here is on the Blackhawks, considering the dismantling of a Stanley Cup roster that took place to get the team under the salary cap ceiling. If the Hossa contract were to be decommissioned, then why bother trading players like Dustin Byfuglien, Kris Versteeg, and Andrew Ladd?
Another interesting point is that the contracts of Marc Savard and Chris Pronger were not immediately threatened in this scenario:
The league has informed the union that it has accepted Chris Pronger’s year-old, front-loaded, seven-year, $34.45 million contract with Ed Snider’s Flyers under which the defenseman will earn $1.05 million over the final two years of the deal.
The status of Marc Savard’s year-old, seven-year, $28.05 million contract with Jeremy Jacobs’ Bruins under which the center will earn $2.55 million over the final three years, is unclear.
Starting with the Savard deal, stating the contract status is "uncertain" as opposed to "under threat of de-registration" is a big difference. It explicitly states in the article that Hossa and Luongo will have their contracts decommissioned. The term unclear can mean many things, but it is interesting that Savard’s contract isn’t included in the Hossa and Luongo discussion. As for Pronger, it can be assumed that since it is a 35+ deal, and Philadelphia will be on the hook for the cap hit should Pronger retire earliy, the deal was accepted. That is just baseless speculation though.
It will be interesting to see how this plays out. Should the union agree to these stipulations, it can be taken as a victory for the NHL. But in the end, is it really a victory for the league? The NHL essentially threw the Devils, Blackhawks, and Canucks under the bus for this loophole. Sure, they aren’t big players for influencing decisions, but it’s still 10% of the teams that were alienated. Also, what effect will this have on the negotiations after the 2011-2012 season? How will the new CBA be negotiated, considering the agreement on long term contracts? Is it still going to be a sticking point for the owners? If so, how does that affect their plans to have a rollback of salaries and lower salary cap ceiling? Now that Donald Fehr is acting head of the NHLPA, the union won’t exactly roll over and play dead for the owners. The NHL has seen two lockouts since 1995, and may very well be on pace for a third in 2012-2013. With hockey finally starting to pick up again, another lockout will all but cripple the league.