NHL approves Kovalchuk deal after union agrees to change salary cap calculations
The NHL and the NHL Players' Assn., ending a contract saga that began July 1 and lingered into Labor Day weekend, reached agreement early Saturday morning Eastern time to change the rules governing long-term contracts and how they're valued within the structure of the league's salary cap.
In exchange for this concession by the union -- a change that will expire when the current collective bargaining agreement ends two years from now -- the NHL approved Ilya Kovalchuk's 15-year, $100-million contract with the New Jersey Devils. It also agreed to end its investigations of similarly front-loaded contracts signed by Vancouver's Roberto Luongo, Boston's Marc Savard, Philadelphia's Chris Pronger and Chicago's Marian Hossa.
From the NHL's press release:
Under the terms of the agreement, the new rules will apply only to long-term contracts, defined as those with terms of five years or longer, and only to contracts executed after September 4, 2010. The new rules apply to contracts signed between now and the end of the CBA, as well as all contracts signed that begin in the 2012-13 season. The parties have agreed that the new rules do not automatically carry over into a new CBA.
For the purpose of salary cap calculations, any long-term contract that extends past a player’s 41st birthday will be valued and accounted for in two ways: The compensation for all seasons that do not include or succeed the player’s 41st birthday will be totaled and divided by the number of those seasons to determine the annual average value (AAV) charged against the team’s cap for those seasons. In all subsequent seasons, the team’s cap charge will be the actual compensation paid to the player in that season (or seasons, as appropriate).
Additionally, in any long-term contract that averages more than $5.75 million for the three highest-compensation seasons, the following rule shall apply:
Solely to determine its value for purposes of the Salary Cap, a player’s compensation for any season in which he is age 36, 37, 38, 39 and/or 40 shall be valued at a minimum of $1 million.
"We're pleased to be able to establish clearly defined rules for these types of contracts going forward and just as happy we can turn the page on uncertainties relating to several other existing contracts,” NHL Deputy Commissioner Bill Daly said. "From start to finish of this multi-week process we were able to work closely and cooperatively with representatives of the Players' Association, who shared our belief that the creation of definitive rules and guidelines in this area would be beneficial to everyone -- clubs and players alike."
"We are pleased to finalize an agreement which ends the League's circumvention investigations and also establishes rules on long-term contracts that will provide players, their certified agents and general managers clarity for the negotiation of new contracts," said Roland Lee, Director of Salary Cap/Marketplace & Associate Counsel for the NHLPA. "Turning the page on this process is something that will benefit all parties involved."
The NHL rejected Kovalchuk's first agreement with the Devils, which called for him to be paid $102 million over 17 years -- until he was 44. The drop in salary in the later years was very steep, and the NHL's rejection -- later upheld by an arbitrator -- was based on its contention that the salary structure circumvented the salary cap.
The Devils submitted another contract with Kovalchuk to the NHL last Friday. The NHL can take five days to review any contract and did so -- and then requested a two-day extension, which the NHLPA accepted. Several deadlines were broken Friday as lawyers for the league and the union discussed details of the revamped CBA terms.
The new terms aren't likely to affect many players, but the dynamics between the league and the NHLPA, which is still operating without an executive director, offer hints about what their differences might be in negotiating a new labor deal after the current agreement expires in September 2012.
Photo: Ilya Kovalchuk. Credit: Getty Images