Something Really Bad (for New Jersey) Nobody is Talking About Yet
by Quisp on Jul 20, 2010 9:22 PM PDT
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PrintThe Kovalchuk Rejection, which is not a Robert Ludlum novel, is obviously big news tonight. If you haven't seen this blog's somewhat prescient posts on this topic, visit the Kovalchuk "section" of the site by clicking on the word "Kovalchuk" above.
Skimming around the Kovalchukosphere, I've noticed that many people are of the opinion that New Jersey will simply renegotiate the deal, shave a few years off (etc.) and sign him all over again. This may occur. But there are two things to be aware of:
1) Shaving the cheap years off the back-end of the deal drives up the cap hit, which is what Lamoriello doesn't want to do. Is he going to be willing to sign Kovalchuk at $7-8MM per year? Did you see his face at the press conference? I don't think so.
2) It's not just a simple matter of the contract "being sent back for revisions." Bettman has rejected the contract on the grounds that it circumvents the CBA. Circumvention is a serious charge, which carries with it significant penalties. And worse, if the arbitrator rules in favor of Bettman, the punishment is entirely up to Bettman. (UPDATE: but see below for the update in bold, which reveals the existence of a second arbiter -- maybe this is a Ludlum novel!)
Here's what the CBA has to say about penalties for circumvention.
In the event that the System Arbitrator finds that a Circumvention has been committed by a Club or a Club Actor, the Commissioner may impose any or all of the following penalties and/or remedies set forth below:
(i) Impose a fine of up to $5 million in the case of a Circumvention by a Club or Club Actor, but in no circumstances shall such fine be less than $1 million against any Club or Club Actor if such party is found to have violated Article 50 of this Agreement.
This is, indeed, an Article 50 violation.
If such a fine is assessed against a Club (except in the case of a financial reporting violation), that Club's Payroll Room shall also be reduced by such amount for the following League Year. [...]
Yes, that's right. If the arbiter (or second arbiter, see update below) rules in favor of Bettman, the Devils' cap ceiling must be reduced by no less than $1MM and no more than $5MM. Who decides exactly how much? Why, Bettman does!
(iii) Direct a Club to forfeit draft picks (the number, placement, and League Year of which shall be determined in the Commissioner's sole discretion);
(iv) Declare a forfeiture of any NHL Game(s) determined to have been affected by a Circumvention;
Sadly, this one (iv) doesn't apply.
(v) Direct a Club to disclose and report to the Independent Accountants all information required by this Agreement, including, without limitation, by the provisions of Article 50;[...]
(vii) Suspend any Club employee, Player, or Certified Agent involved in such a violation for a period of time determined in the sole discretion of the Commissioner, the System Arbitrator, or the NHLPA, respectively.
So, those of you who think New Jersey will simply renegotiate the contract, remember that instead of it being a $6MM cap hit, it will now be $7-8MM, and on top of that, there will be an additional $1MM-5MM cap penalty (either this upcoming season or in 2011-12; I will have to look that up, because this section of the CBA says "in the following league year." I believe that's 2010-11. Could be wrong about that though.)
In any case, it's bad for the Devils if they lose this arbitration. It's also bad for Lamoriello and/or Grossman, who could be suspended.
It will be interesting to see how the NHLPA handles this.
[UPDATE THAT'S KINDA IMPORTANT: many people have pointed out that Article 26 describes a separate process than Article 11, and that, essentially, the process we're in at present -- which will lead to an arbiter's ruling on the contract, or else the voiding of the contract before we get to arbitration -- simply rules whether the contract stands or not, while Article 26 gives us the process for (apparently "further") investigating the possible circumvention and ultimately leading to a (second) arbiter who is the one mentioned above (26.13c) who finds yes/no re the circumvention.
That the CBA is confusing and muddled should surprise no one.
I have two three problems with this interpretation (not to say it's wrong, I just can't reconcile it with this):
(1) the league has already decided it's a circumvention, so they don't have to further investigate if they think what they already said they think; (2) the "sit down and discuss" to see if something can be worked out between the parties aspect of Article 26 doesn't make sense to me in this context; what is there to work out? The contract is void and gone (in this hypothetical); the league has already decided it's a circumvention; the commissioner can't negotiate lesser penalties until after the second arbiter has ruled; and (3) the second arbiter is ruling on whether or not there has been a circumvention, when the first arbiter already ruled that the contract is void due to a circumvention, and that first arbiter's decision is binding. If the second arbiter rules that there is no circumvention, it's not like the voided rejected contract can magically be un-void, de-rejected, re-registered and approved. So again, how is that not a conflict with 11.6?]
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well then
i take back my comment back from the last post. But why do you(Quisp) think this came up with Kovy and not Hossa, Pronger etc…? Is Bettman really trying to get even more people to hate him? /sarcasm
my guess is it's because
(1) Lamoriello is/was Bettman’s ally, and Bettman feels double-crossed.
(2) the extra several years of no salary, taking IK to an even more advanced age than Hossa’s deal did for Hossa.
Wait till this year.
Plus, Lou didn’t exactly play it cool. He maintained its legality, but he still went eye-rolly. Eye-rolly! About his own team’s deal.
League decided to do something to save face, I guess…
In Dinglebarn We Trust
Thing is the contract does not violate any part of the cba. Arbitrator I think will rule as such.
by KingHellfire on Jul 23, 2010 4:40 PM PDT up reply actions
This was insane… so what if the NHLPA files a grievance and wins? Is the contract approved as submitted?
And basically… if they have to restructure the cap hit to where it’s $7.5M instead of $6M, because of the cap penalty, that’s really a $9M cap hit (because the ceiling decreases). But is that ONLY for the next season? Or is it for the length of the contract?
Denis Gauthier sucks at hockey... and life.
yes, if the arbitrator rules in favor of the NHLPA (assuming they "grieve") then the SPC stands
as to your other point, if the devils lose, and they want to re-negotiate, they will have a bigger cap hit ($7-8MM) and the penalty of between $1-5MM on top of that, which is for one season only, yes.
Wait till this year.
snip...snip...
sounds like cap circumcision…
oy…(!)
by (variable) on Jul 20, 2010 9:32 PM PDT reply actions 3 recs
Question
Quisp, could it be as simple as the Devils reducing the contract to 15 years at $102 million, spreading more money to the back end of the deal to make it look better, and then only having a cap hit of 6.8? Couldn’t they argue that Hossa playing until 42 is just as likely as Kovi playing until 42?
One thing that seems funny, given that Lou and Gary are (were?) ‘boys’, is why the NHL waited so long to ixnay the deal. I mean, why did they wait until after the press conference? paperwork must have been submitted prior, yeah? There is a LOT of egg on the Devils right now and they definitely seem to have been tossed under the buss, at least public relations-wise.
I'm pretty certain that Kovalchuk won't take that.
He wants the big payday. That type of deal would take away from that. Part of the allure of the voided deal was that 96 mil was paid out in the first 10 years. Without upping the money he will reject it. This is why it has been so difficult to deal with him up to now. He most clearly has some number in his head and, as we’ve all said before, either:
a) needs to be convinced it’s never going to happen
b) someWang is going to give it to him or
c) he goes to the KHL
by 88fingerslukee on Jul 20, 2010 10:01 PM PDT up reply actions
Oops
didn’t read your full comment. Never mind my diatribe.
by 88fingerslukee on Jul 20, 2010 10:02 PM PDT up reply actions
Actually
not so inaccurate. To add, the contract has Kovy playing to 44 and the deal is many years longer than Hossa’s. Those two combined probably nixed the deal.
Also, they probably didn’t see the full deal until after the press conference…OR…they are still buddies and Lou had some serious buyer’s remorse. wait a minute…
by 88fingerslukee on Jul 20, 2010 10:05 PM PDT up reply actions
Yes, but
Good point on the length of the deal, but I’m trying to look at it from a precedent standpoint.
1) DiPietro (Wang!) got 15 years, not far off Kovi’s 17 in the eyes of an arbitrator (I assume…ass out of me, I know).
2) Hossa’s deal, while investigated, was approved. Interestingly, it featured the same 1 million payment scheme late in the deal but reportedly (paragraph 8) was not far off in the league’s eyes.
I don’t know, I’m just confused by the whole thing…
Yeah
i’m gonna have to plead the Betth here. That is, “Whatever I say, goes.”
Dude just makes up limits. He’s basically drawn the line between Hossa and Kovalchuk. Not entirely sure why EXCEPT if you buy the “Lou had remorse and begged Bettman to void it” theory.
Basically, i have no answers for you. We’re all confused.
by 88fingerslukee on Jul 20, 2010 10:49 PM PDT up reply actions
investigation is still open and there's no time limit and in terms of the investigation it doesn't matter if it waqs originally approved
they can de-register it if they see fit to.
Wait till this year.
Oh, no worries.
I didn’t think yours was a diatribe at all. I don’t completely buy the notion that he is out only for the money, but I do think it is number 1, 1a, and 1z. Love the “someWang” line!
My Hero!
Quisp,
You are the best! When I need to understand something about the CBA, I just come to your blog. You’ve already done all the work, so I don’t have to plod my way through that horrendous document.
As sick as everyone claims they are of the Kovalchuk saga, we’re all really addicted to the drama. This has been the most unbelievable free agency situation since…well, ever. Since this whole thing is rather unprecedented, it will be really interesting to see how the league/NHLPA/New Jersey handle this. Frankly, I’m shocked the NHL did this. It’s the right move, but a surprise nonetheless.
Whatever happens, this will set a precedent for anyone else who wants to take advantage of this loophole in the CBA. Yes, I know it’s expiring in a couple of years, but still…
Anyway, great job, Quisp!
Bad News for Kovy?
Now that the Kings best and final offer of $80 mil/15 yrs has been confirmed by Hammond (and I’d guess it was $75 mil first 10 yrs), doesn’t that leave NJ plenty of room to lower their deal if it is ultimately rejected?
I expect some mild slaps on the wrist, but that's all.
Interesting fact brought up over at PPP: the older players in the league today (over 37) are all making $1 million or more. So the trigger for this smackdown was almost certainly the last five years at the league minimum.
If the Devils doubled the salary of Kovy’s last five years, and kept everything else the same, it would probably pass muster. Then it would be a 17-year, $104.75 million deal; average cap hit would be $6.16MM; and Kovy’s last 5 years would look almost exactly like Hossa’s last 4 years. That contract would be hard for the league to reject.
As for the extra penalties, Lamoriello will get suspended indefinitely – until such time as he calls Bettman and says he’s coming back.
you're forgetting the mandatory $1-5MM fine and CAP PENALTY for the Article 50 circumvention
Wait till this year.
Depends on how the primary paragraph is read.
I think that the phrase “the Commissioner may impose any or all of the following penalties and/or remedies” can be interpreted to say that the fine in (i) is just as optional as the forfeiture of draft picks in (iii), or any of the other potential punishments.
By that interpretation, suspending Lou for two weeks in August would fulfill the requirement for punishment, without doing any real harm to him or the Devils.
I would love to see Lamoriello get smacked down. I’ve yet to forgive the bastard for stealing Scott Stevens in the summer of 1991. I’m just pessimistic about Bettman’s ability to take a stand and follow through, when his target is the very personification of the old-boys club.
by BleedBlue42 on Jul 20, 2010 11:48 PM PDT up reply actions
That's true
I read it to say that the fine is discretionary, but that if one is in fact imposed, it will be no less than $1 mil and no more than $5 mil. So it’s up to Bettman whether or not to levy the fine.
But it was a major surprise to me (and I think to a lot of other observers) that Bettman suddenly grew a pair of stones and invalidated the contract in the first place. The world is now topsy-turvy; who knows what will happen next?
As Quisp said above quoted from the CBA
but in no circumstances shall such fine be less than $1 million against any Club or Club Actor if such party is found to have violated Article 50 of this Agreement.
which means that the minimum punishment if they have the contract rejected is a $1 million dollar fine and cap hit penalty. I don’t really see any way of interpreting that to make it so there is no penalty
That's within paragraph (i)...
… which could be skipped entirely if the phrase “any or all of the following penalties” gives Bettman leeway to skip (i) altogether.
I hope I’m wrong, and that (i) is mandatory. We’ll just have to wait and see.
by BleedBlue42 on Jul 21, 2010 12:01 AM PDT up reply actions
I get what you’re saying because it does kinda seem like maybe it could be interpreted to be nothing if the comissioner wants it to be that way.
However, it basically says if the party is found to have circumvented Article 50(which Quisp says it is) then a minimum fine of $1 million is required.
article 50 is the cap
this is a circumvention of the cap. it’s an article 50 violation.
I see the slight of hand bleedblue is going for. but the “in no circumstances” clause makes no sense if taken to mean, “although the commish can rule there’s no fine at all.”
for what purpose would the cba want to limit fines to 0, or 1,000,000 to 5,000,000. They’ve got a problem with six figures? It makes no sense.
Wait till this year.
no
because you’re missing the part where it says, BUT UNDER NO CIRCUMSTANCES will a fine of less than one million be assessed if it’s a violation of Article 50.
Wait till this year.
Quisp, they could easily claim that because the contract had not been approved by the NHL, it was only a theoretical circumvention and therefore no penalties should be assessed.
I imagine this will be the case right after bettman has Lou remove the knife from his back.
On the Mike Weber bandwagon.
Tyler Ennis: Freed from Portland!
there is no such thing as a theoretical circumvention
because an attempt to circumvent is also a circumvention
also, the contract was not “not approved.” It was rejected. Which trigger the article 11 procedures governing rejected spcs.
Wait till this year.
No penalty is required, sadly. It just isn't mandatory.
The key wording, actually word, is, “In the event that the System Arbitrator finds that a Circumvention has been committed by a Club or a Club Actor, the Commissioner MAY impose…” The text chooses “may” instead of "shall. When interpreting legislature, ultimately the intent of the rule is examined, taking priority over and giving clarity to various possible interpretations. If the text were meant to say it was mandatory, it would have said “shall”, and tha fact that “shall” was not used is telling.
Secondly, the reality of this “option” can be seen to be reinforced later, where it says, “If such a fine is assessed against a Club (except in the case of a financial reporting violation), that Club’s Payroll Room shall also be reduced by such amount for the following League Year.” The “if” leaves wiggle room, because again, if the text were dealing with a mandatory fine and/or other penalty, the text would have been worded as a continued sentence instead of a full new sentence., i.e., "(i) Impose a fine of up to $5 million in the case of a Circumvention by a Club or Club Actor, but in no circumstances shall such fine be less than $1 million against any Club or Club Actor if such party is found to have violated Article 50 of this Agreement, AND (except in the case of a financial reporting violation), that Club’s Payroll Room shall also be reduced by such amount for the following League Year. […] So they could have extended the sentence using “, and” instead of starting a new sentence with “if”.
Effectively, it is much like a game-time penalty for head hitting; they make the penalty rule, but then create their own deterrent to calling it by making the minimum punishment too severe. Just as referees are reluctant to call something because it could have a huge impact on the game, Bettman would now be forced to impose both fine and cap-hit, if he wishes to impose a fine at all.
End Corporate Personhood.
three things
(1) I agree 100% with your grammatical interpretation of what the rule says.
(2) I don’t think that’s the intent of the rule, as I have argued above.
(3) It doesn’t matter, because (if your reading is correct) the discretion is Bettman’s. Given how grievous the accusation of circumvention of article 50 is, the idea that he would decide to interpret the rule that way in order to decide not to punish the team in question, seems extremely unlikely to me (though not impossible, insert smiley face).
Bettman is putting his foot down. He can’t later say just kidding you kids watch yourselves.
I mean, he could. But that’s one thing I would bet against. The league is using the strongest possible language. To waffle now would be…oh…heck.
:)
Wait till this year.
It's the "oh heck" that strikes me most...
Because that is exactly where I end up, too. Bettman could have the best of all worlds, by rejecting the contract and then just finding some meaningless token punishment, like the suspension of Lamiorello for two weeks next summer. I can hear the phone call now:
“Lou, it’s Bettman.”
“Hey Bettsy, what’s up?”
“I asked you not to call me Bettsy. Please, man, if that ever got out I could never shake it. But I was calling about this penalty for the Kovi deal. I know everybody has been waiting for my neuron to fire, and I’ve been thinking. What two weeks were you planning on for vacation next summer?”
End Corporate Personhood.
There is also something else to consider, in that Kovy’s league minimum years are still 12 years away. I’ve got a feeling the league minimum salary in the NHL will be higher than $550,000 12 years from now. In 2000 the league minimum salary was $150,000. I’m not saying it will increase three-fold as it has over the last decade, but is it unreasonable to suspect it will increase to $750,000 over the next decade?
I am a hockey fan first, and a Caps fan second.
by iwearstripes on Jul 20, 2010 11:32 PM PDT up reply actions
The new progression is 50,000 every 2 years (it may jump at each CBA renegotiation), so it wouldn’t be unreasonable to expect that it would be 850,000 at the time he’d be getting it paid to him.
On the Mike Weber bandwagon.
Tyler Ennis: Freed from Portland!
As a Caps fan, I have no horse in this race obviously, but that fact alone screams Article 50 violation to me. If you’re going to tack a few years on the end of a contract to reduce the cap hit, at least pick a number that could plausibly be above the league minimum salary for those years.
If they had paid him $1.5M per year over the last 5 years, I could understand an argument to allow the contract to stand (I wouldn’t agree with it, and I disagree with the Hossa contract for the same reason, but I could understand the argument). $550,000 is pretty much daring the NHL to reject the contract.
I am a hockey fan first, and a Caps fan second.
by iwearstripes on Jul 21, 2010 7:17 AM PDT up reply actions
I agree
It’s almost as if Lou put in the 550k provision in just to get it rejected.
by Clever Kings Handle on Jul 21, 2010 9:32 AM PDT via mobile up reply actions
Am i being too cynical
repost from Rich’s site:
thank you, you understand, but let me expand. If Kovi is scheduled to get 11.5M then that number goes into the big pot to divide into the total revenue received from the clubs. So in essence, by taking a piece of the pie, one that is twice the cap hit, it pulls money away from all of the other players. There is no way the union can back this contract without saying "screw you" to the other 600 players. Even if the union does back the contract, do you think that Kovi might have a bull’s-eye on his back for the next 9 years, especially in that conference? He will likely be beat to crap and done in 3 years.
Grossman is in big trouble. He got poor Lou to overpay his other clients with the promise of delivering Kovi for a 10 for 10 contract with a minimal cap hit. Grossman was not playing the Kings for more money, but for more years. That way it looks like the same length any team would give. If the contract changes, someone is going to be pretty upset. Ahh, the best laid plans of mice and men.
yes
the nhlpa has a decision to make.
if they support this contract, it will be used against them by the “lower 2/3s” of their constituents.
if they don’t support the contract, they run a (much lower, I think) risk of upsetting the top 1/3, but more specifically, they run the risk of Kovalchuk saying f/u and going to the KHL.
Wait till this year.
F, Kovadonnachuk!
He started this mess. HE wanted Ovechkin money. The only problem is he DOESN’T play like Ovechkin. He should get 65MM/10 years, AT MOST! This guy is NHLPA’s nightmare and he would do them the favor by GOING to the KHL>:-I
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