No, Lou.
by Quisp on Jul 20, 2010 3:16 PM PDT
in Kovalchuk
69 comments
[UPDATE: THIS WAS WRITTEN AND POSTED THREE HOURS BEFORE THE LEAGUE VOIDED THE KOVALCHUK CONTRACT. AND THERE IS NO TRUTH TO THE RUMOR THAT THIS BLOG HAS A NEWLY REGISTERED MEMBER GOING BY GBETT2012]
Fire & Ice
While saying the Devils did nothing illegal in signing Ilya Kovalchuk to a 17-year, $102 million contract, general manager Lou Lamoriello admitted that such a deal was bad for the NHL and should be eliminated in the next CBA.I asked Lamoriello what he would think if someone brought up Kovalchuk’s contract in the next round of CBA negotiations (in two years) and pointed to it as a flaw. "I might agree," he said. "But there is nothing that we have done wrong. This is within the rules. This is in the CBA. [...] But I would agree we shouldn’t have these. [...] Lamoriello said he "absolutely" rolled his eyes when the Islanders signed Rick DiPietro to a 15-year contract in 2006 and when Washington signed Alex Ovechkin to a 13-year contract in 2008. He also said he "absolutely" rolled his eyes when Kovalchuk’s contract was completed.
ARTICLE 26
NO CIRCUMVENTION[...]
26.1 General. The activities described or referred to in, or expressly prohibited by, Sections 26.2 through 26.7, and 26.15, whether completed or attempted, directly or indirectly, shall be deemed Circumventions under this Agreement[...].
26.3 Circumventions.
(a) No Club or Club Actor, directly or indirectly, may: (i) enter into any agreements [...] including without limitation, any SPC [...] or (ii) take or fail to take any action whatsoever, if either (i) or (ii) is intended to or has the effect of defeating or Circumventing the provisions of this Agreement or the intention of the parties as reflected by the provisions of this Agreement, including without limitation, provisions with respect to the financial and other reporting obligations of the Clubs and the League, Team Payroll Range, Player Compensation Cost Redistribution System, the Entry Level System and/or Free Agency.
"is intended to" -- requires a demonstration of intent.
"has the effect of" -- does NOT require a demonstration of intent. The league simply has to rule that these contracts have the effect of circumventing the CBA with regard to the upper limit. (The league might also rule that these contracts have the effect of circumventing the Player Compensation Cost Redistribution System, but I'll get to that in a minute.)
"the intention of the parties as reflected by the provisions of this Agreement" -- requires/allows the League and the NHLPA (who wrote this thing) to infer from the CBA itself the intent of the League and the NHLPA. Presumably, they know what they intended. This would allow, for example, the league to rule that the intent of [itself circa 2005] was to prohibit Mega-term/front-loaded contracts. Think of this as the "but we obviously meant--" clause.
26.13 Enforcement by the System Arbitrator. [...](b) The System Arbitrator may find a Circumvention has occurred based on direct or circumstantial evidence, including without limitation, evidence that an SPC or any provision of an SPC cannot reasonably be explained in the absence of conduct prohibited by this Article 26.
The Player further agrees, (a) to report to his Club's Training Camp at the time and place fixed by the Club, in good physical condition, (b) to keep himself in good physical condition at all times during the season, [...] The Club may from time to time during the continuance of this SPC establish reasonable rules governing the conduct and conditioning of the Player, and such reasonable rules shall form part of this SPC and the Agreement as fully as if herein written. [...] Should the Player be disabled or unable to perform his duties under this SPC he shall submit himself for medical examination and treatment by a physician selected by the Club. [...]
ARTICLE 49
PLAYER COMPENSATION COST REDISTRIBUTION SYSTEM
Preamble. [...] The Player Compensation Cost Redistribution System acknowledges the reality that the Upper Limit of the Payroll Range prevents certain high-revenue Clubs from spending as much of their revenues toward Player Compensation [...] as they might otherwise be capable of spending. [...] The Player Compensation Cost Redistribution System described herein, therefore, is designed to cause certain high-revenue Clubs to contribute even more of their revenues toward the payment of Player Compensation -- albeit indirectly -- by redistributing a certain portion of the revenues of such Clubs to the lower-grossing, small market Clubs so that such lower-grossing, small market Clubs may be able to, and elect to, spend more on Player Compensation. The Player Compensation Cost Redistribution System is intended to enhance the ability of all Clubs to be financially competitive with one another, and, at the very least, to allow all eligible Clubs to be able to spend to at least twenty-five (25) percent of the Team Payroll Range [...]
This just occurred to me this afternoon. So let me walk through it slowly:
- The PLAYER COMPENSATION COST REDISTRIBUTION SYSTEM is the system that governs revenue sharing and escrow.
- Revenue sharing forces the "high-revenue" clubs to give portions of their revenue to the "low-revenue" clubs.
- Escrow withholds a percentage of every players' paycheck until the final revenues for that year are calculated. At which point, if revenues were below expectations, the players have to give back some of their salary; if revenues were above expectations, the players get a little extra.
- A contract that artificially lowers an SPC's cap hit allows the club to deduct millions more from their revenues than they would be able to otherwise, because the cap hit is millions lower than the actual salary in that year.
- Of course, by being able to charge more salary against their revenues, they have less "income to declare."
- Let's say the difference between a player's cap hit and salary are $5MM. That's $5MM that the club gets to deduct from its declared revenue, and that gets passed along to the over-all calculation of league-wide revenue.
- And the lower the league-wide revenue, the more salary every player in the league has to give back.
- But that's not all: lower league revenue also means less redistribution for the poorer clubs. Which means less money for the poorer clubs to pay players. Which means they continue to be poor, and to suck.
- Now, let's read this provision again. You tell me if you think the effect of these mega-term/front-loaded deals isn't a circumvention of the intent of this passage:
The Player Compensation Cost Redistribution System described herein, therefore, is designed to cause certain high-revenue Clubs to contribute even more of their revenues toward the payment of Player Compensation -- albeit indirectly -- by redistributing a certain portion of the revenues of such Clubs to the lower-grossing, small market Clubs so that such lower-grossing, small market Clubs may be able to, and elect to, spend more on Player Compensation. The Player Compensation Cost Redistribution System is intended to enhance the ability of all Clubs to be financially competitive with one another.
QED, Lou. But you knew this already.
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Quisp,
Okay, so we all know that this is an obvious case of CBA circumvention. Same as was the case with Hossa’s contract last year. What I want to know is this; why do YOU think Bettman will let this slide (because we all assume that will happen)?
http://www.prosportsblogging.com
by Great Ice-Pectations on Jul 20, 2010 3:23 PM PDT reply actions
because it's politically expedient to do so, for whatever reason
I figure Bettman is not happy with Lamoriello. But that doesn’t mean he’ll punish him. At least not now, and not in such an obvious way. Maybe he’ll use it as leverage later. There’s a limit to what we can know from the outside.
Wait till this year.
It’s frustrating because, like we’ve discussed earlier, the rules don’t state they need evidence, etc. It’s pretty much at their discretion when they choose to enforce these rules. That should make it easier for them to tout the big stick in order to keep these contracts under control. However, all it ends up doing is it makes it easier for the NHL to ignore it. It’s just very obvious the CBA needs to make stronger rules with more specific language.
http://www.prosportsblogging.com
by Great Ice-Pectations on Jul 20, 2010 4:30 PM PDT up reply actions
My guess is pure fecklessness
Basically, just being unwilling to do the hard work of enforcing discipline properly and fairly and, y’know, actually administrate.
Kind of like Colin Campbell.
Lou hardly sounds proud of what he did
I think he understands that he kind of landed himself a booby prize, or may have won a battle only to lose the war, or presented NJ with a poisoned chalice, or whatever metaphor you want to use.
Yeah, for all I heard about how it was Leiweke in charge of DL, pulling the strings etc. it seems like Lou was at the beck and call of the NJ higher ups.
http://www.prosportsblogging.com
by Great Ice-Pectations on Jul 20, 2010 4:31 PM PDT up reply actions
I heard some kinda rumor or suggestion
while this whole saga was playing out saying basically Lous is already 67 and it is highly unlikely he is still working 10 years from now when this contract could become more of a problem. So he could just say screw it I want Kovy and I’ll be gone before I have to deal with how bad of a decision it is to give him a 17 year contract. Other people can deal with that.
Makes sense too. I believe you. I haven’t really read a lot of Lou’s quotes or even Kovy’s quotes about the deal. Lost a bit of interest once it wasn’t the Kings. Just saying that was some sort of rumor I had heard before that could be totally false.
It kinda makes sense though, even if ownership demanded getting Kovy, Lou giving him such a long deal to make the cap hit lower still makes sense since it is easier to keep Parise and other players and he still probably won’t be around towards the end of Kovy’s deal.
Maybe they will create a Supreme Court for the NHL, and they’ll finally rule to overturn years of precedent. Some teams will cheer, and others will cry “Activist court!”
With our luck, the first contract nixed will probably be Drew’s. :)
Seriously, though, nice work showing that the league had grounds to act years ago if they’d really wanted to. But they don’t really grasp deterrents.
In Dinglebarn We Trust
Maybe they will create a Supreme Court for the NHL, and they’ll finally rule to overturn years of precedent.
If there’s any justice, it will be made up of representative judges from the SBNation sites.
Tick Tock, Tomas. Tick Tock.
A drinking team with a hockey problem.
by nhlcheapshot on Jul 20, 2010 7:42 PM PDT up reply actions
my take on the whole borscht salad...
jersey ownership was more desperate for him than ours…
and all of us here will debate that aspect of this deal forever…
jersey = brodeur…
jersey w/out brodeur = a soon-to-be-(insert NHL team here) fan…(not the die-hards)
jersey w/brodeur AND kovy = serious contenders, once again…
jersey w/kovy after brodeur’s retirement = safe w/a marquee player and one that you can attract other ufa’s to play with….
they saw the long-term franchise effect it will have…IK is gonna be the face of the franchise out there…
in l.a….
kings = a young team on the rise…
kings w/out kovy = a young team on the rise…
kings w/kovy = a serious cup contender…
some would be so wont to choose…:
kings w/out kovy = a soon-to-be-(insert NHL team here) fan…(not the die-hards)
aeg did not think…or perhaps…want kovy to be the face of the franchise at the expense of other candidates…brown, kopi, drew, etc…
i’m starting to think that dl went to the godfather, thinking he was going to be let into the family, only to be sent back to his paisanos empty-handed…
i think dl is wounded, in the sense that he was willing to go against his core values for IK and stray slightly off the proforma and plan he outlined…but…aeg…who had to be convinced from the onset of dl’s hiring that they were gonna win this ‘certain way’ that dl prophesied about, couldn’t jump on board…
the bottom line is…:
kovy will not be a king…
and at the end of the day, we are still…
"a young team on the rise…"
if you were a true king fan before, you should be now…
in this case, i think there’s absolutely nothing wrong with us breaking even when leaving vegas…
but…
it does make you wonder what could have been…i understand…
We Need a Definition of Revenue
Gross or Net? If it’s Net, for the purposes of Redistribution, you have a point. If it’s Gross, as with the Player Percentage of League Revenues, then … not so much.
Browsing the Relevant Article (49.4 (D)), Revenue
for this purpose seems to be Gross Preseason and Regular Season Net of Arena Costs (ie, only Arena Costs are subtracted out, not player costs, not travel costs, not Lou’s paycheck).
short answer: revenue is net...long answer:
50.1 Hockey Related Revenues, Club Affiliated Entity and League Affiliated Entity.
(a) “Hockey Related Revenues.” “Hockey Related Revenues” or “HRR” for each League Year means the operating revenues […] from all sources […] relating to or arising directly or indirectly out of the playing of NHL hockey games or NHL-related events in which current NHL Players participate or in which current NHL Players’ names and likenesses are used, by each such Club or the League, or attributable directly to the Club or the League from a Club Affiliated Entity or League Affiliated Entity, as expressly set forth herein, and is subject to any inclusions or exclusions as expressly set forth in the Article 50.
The parties have described Hockey Related Revenues with a nonexhaustive list of Hockey Related Revenues (net of Direct Costs as defined herein, where specified herein), in order to permit the inclusion of new revenue streams (net of Direct Costs where agreed upon between the parties herein, or, failing agreement, by ruling of the System Arbitrator), to be included automatically, without a new or separate negotiation, subject to the provisions below.
“Direct Costs” shall mean any costs, including fixed and variable costs, attributable to a revenue-generating activity. For example, the salary of an individual employed by a Club or Club Affiliated Entity whose duties contribute to revenue activities specified in this Article 50 may be apportioned among such revenue activities specified in this Article 50 as a Direct Cost to the extent such netting of Direct Costs is permitted […].
There are several pages of the CBA dedicated to instructing accountants how to check and double-check player salaries and bonuses to ensure that the amount paid is the amount included in the HRR to offset revenue.
Wait till this year.
Fox guarding the henhouse.
It’s not even about political expediency. It’s about no one getting hurt so why file a grievance? I think you vastly over state how low-revenue clubs would be affected by such a contract. At the very least, you have to consider how much more revenue Kovalchuk will bring to the club in ticket sales and merchandise.
Also, you put the cart before the horse a by referencing the arbitrator’s potential guidelines with respect to circumstantial evidence.
First, a team or the nhlpa has to initiate a grievance BEFORE Gary Bettman can even begin to look into the matter. Since it’s not in either party’s best interest, it won’t happen. But just to be clear everyone, Bettman can’t just start an investigation without a complaint. No complaint, no investigation.
Second, even if there is a grievance, there is an investigator who looks into the matter before anything. Only after the investigator’s finding can either party complain directly to an arbitrator. However, before the arbitrator even hears a thing, both sides have “joint discussions” to try to resolve the matter.
It is only after all of this, which as no particular time limit by the way, does a system arbitrator come into play. In other words, this is the nuclear option and used as a last, last, last resort.
To file a grievance over the circumnavigation of the “Player Compensation Cost Redistribution System” seems far fetched to me. It seems like a very complicated system and I’d bet that the owners of the teams that need that money are perfectly happy with the arrangement. They’ll get theirs or else, right? Maybe the length of contracts will be addressed in 2 years, but for now, the owners and players are clearly fine with looking the other way.
No harm, no foul.
I must say that I disagree with this sentiment. There is harm and there is foul when it comes to a contract that flies in the face of the intentions of the CBA. The point of a long term contract is to lock up a player long term, not to stretch out the cap hit. It’s a loophole, and whether or not they can exploit it without breaking the rules, it is exactly that, exploitation. And this isn’t just me being mad as a Kings fan, I said the same stuff about Hossa last year. The problem is there is no way the league can say with certainty that Kovalchuk doesn’t play until he is 44. But let’s be real, it’s very unlikely to happen and he certainly won’t be worth a $6mm cap hit when he is 44. And although this contract won’t single handedly expose the CBA as flawed, it gets worse and worse every time one of these lifetime, frontloaded, capbuster contracts comes out. It just feels like the only thing that would open anyone’s eyes would be signing a 34 year old to a 20 year contract for $29mm, with the first 2 seasons at $10mm each and the rest at $500k, a friendly cap hit of $1.45mm.
If you need more evidence as to why this contract affects every player, read Quisp’s article from yesterday:
The heart-warming tale of how Dustin Brown gave Ilya Kovalchuk $9,000 to play in New Jersey
http://www.prosportsblogging.com
by Great Ice-Pectations on Jul 20, 2010 5:31 PM PDT up reply actions
In all seriousness, I really don’t care one way or the other. It doesn’t affect my life in the least and I have no control over it anyway, so why fret? (see serenity prayer) My main point is that no one is complaining except the fans, right? Or am I mistaken? (maybe I am, but since no grievance has been filed by the nhl or nhlpa, I’ll say I’m not).
Now I’ll read that article…
I don’t think any grievance will be filed, but I doubt it’s because no team or player feels that this is a ludicrous contract. I’m sure there are reasons everyone wants to keep their mouth shut.
But it’s fishy when even Lou sounds like he wasn’t in favor of it, laughed at both DiPietro and Hossa.
I mean, it doesn’t really affect my life either, but as a hockey fan it will at some point if it seriously effs up the CBA and I can’t watch hockey because of a prolonged strike. Just my take is all.
http://www.prosportsblogging.com
by Great Ice-Pectations on Jul 20, 2010 5:39 PM PDT up reply actions
Harm & Foul?
I love it. Just when I was convinced it was a done deal, the rug gets pulled out. Can’t wait to see what happens next. Kovalchuk to the Kings?
it's not a team or the NHLPA, it's the LEAGUE or the NHLPA (the league is Bettman)
Wait till this year.
Your sure it’s not an owner or owners who must petition the commissioner? Bettman can do this on his own?
Yeah, 99.99999% sure.
There isn’t any language that I can think of which says that the owners or the clubs can trigger an investigation. But when you think about it, it makes sense. In the CBA, it’s the owners vs. the players. Thus, the league vs. the NHLPA.
I will get back to you with clarification, though. (as it is, I would take it to the bank.)
Wait till this year.
So I gotta ask you Quisp...
Any chance DL is referring to YOU on his 590 interview today? (about 1/3 of the way in, talking about a bell-curve structured deal…)
“we looked at the last 30 years…we actually had a pretty smart guy there… who ran what these players are capable of, later in their career.”
Ce n’est pas?
"we actually had a pretty smart guy there"
Makes him sound like a paid employee. You moonlighting, Quisp? Long lost twin brother, perhaps
If so, awesome. I said it a month ago and I’ll say it again: I can’t wait to see who ends up hiring you.
If it’s not him, I picture some guy getting a fat check by doing cut-and-paste.
But are you Bettman? Answer us! Who has ever seen the Commish and Quisp together in the same rooooom? Are you short? Do you cackle? Do you wear a little cape and avoid mirrors?
In Dinglebarn We Trust
Were you part of David Stern’s grand strategy to destroy the NHL just as it was on the verge of greatness (in the U.S….scan to bottom for the best conspiracy theory ever)?
Oh, oh! Have you ever seen the episode in the Adam West series, when the Commissioner holds the two phones together while “Batman” and Bruce speak? And that finally convinces him that they’re two different people?
We’re going to need better proof than that.
In Dinglebarn We Trust
WOW, looks like I may have to eat my words…TSN reports the NHL just rejected the contract.
If this is true…HAHAHA!
In Dinglebarn We Trust
Holy shi'ite!!!
Re-posted for the hell of it…
Lol! Bettman firing a shot across the bow?! Who knew the man had stones? Can’t wait to the the chaos/legal action that comes from this…As Kovi Turns
As Kovi Turns
Hee!
I dunno, man, can this be real? This Kovalchuk business has made me seriously doubt my sanity. And what source can be legitimately counted upon to provide “news.”
In Dinglebarn We Trust
Maybe I’ll just have eleven and a half shots now, but I won’t get drunk because all subsequent ones will be staggered over 17 years.
In Dinglebarn We Trust
by Niesy on Jul 20, 2010 7:09 PM PDT up reply actions 1 recs
Quisp, I don’t know who you are or where you’re from, and I haven’t read this blog much, but clearly you are possessed with the ability to write the future. Therefore I now tremble before your presence as your humble servant.
by Beantown Canuck on Jul 20, 2010 6:50 PM PDT reply actions
Haha. I prefer your moves this year. Particular the move where you have Drew Doughty be only 20 years old. I also like your move next year, where you have Drew Doughty be only 21 years old. I further like your similar moves for each of the 15 years after that.
by Beantown Canuck on Jul 20, 2010 6:53 PM PDT up reply actions
Shhhhhh...
…for me, as a Kings fan, saying that is like shouting “shutout!” with two minutes left to go in the 3rd! But I feel you, oh, do I feel you.
Oh, and hey, could you perhaps get Vigneaultto play Andrew Alberts against us this season? For old times sakes???
We’ll see if he’s on our team. We have 9 defencement signed to one-way contracts! Bieksa everyone expects to go, but one more is going to be gone too.
by Beantown Canuck on Jul 20, 2010 7:03 PM PDT up reply actions
balls...not pucks...
can’t believe it…
bettman defies one of his allies…
well…we shall see…
can you sense donald fehr is being sworn in as we speak…???
So I’m curious how the Kings’ offer — 80 mil, 15 years “bell curve shaped” per Lombardi, whatever that means — stands up to the “circumvention” criteria?
Even better yet-
The Smoking Man sez it was 80 mil for 13.
Hmm???
15 years goes up to the Hossa limit of age 42
I believe Lombardi just said that going over 40 was not kosher, although I don’t know what this was in response to.
If this deal is voided per an arbiter’s ruling, I don’t think any Kovalchuk deal will be for longer than 13 years.
Thirteen years at $6MM is $78MM, right? That’s about where I would expect it to land.
Wait till this year.
... "GBETT2012"
Oh man I just wetted myself.
Comicalicious!
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