Where's the Kovalchuk "back-up" deal?

A week ago, before the Bloch ruling came down, the more or less conventional wisdom was that the Devils and Kovalchuk would have a back-up deal in place and ready to go in case the hearing didn't go their way. A week later, that deal hasn't happened. Why not?

I hesitate to say it, but there is simply no reason for that deal not to have been signed instantaneously if in fact the two sides were in agreement on a deal they think Bettman would approve. (Okay, it's possible everyone is in a holding pattern waiting for clarificaion on possible penalties, but the fact that none have been announced suggests that ship has sailed and penalties are no longer an issue.) Lamoriello and Grossman are allowed to pre-approve any deal with the league (i.e. ask Bettman if he thinks this deal will get approved by Bettman, and he should know). So what could possibly be holding this deal up?

The main variables:

  • Bettman's willingness to ok a deal that takes Kovalchuk to age 43, 42, 41, 40. Again, agent and GM know (because they can ask) what Bettman will allow. We can't know. But they know. 
  • Kovalchuk's willingness to compromise on his $10MM/yr for ten years demand.
  • The Devils' willingness to compromise on cap hit. Will they go as high as $7MM? $7.5MM? $8MM?

I'm going to make some assumptions. First, I think Bettman's range of tolerance is somewhere in the 40-42 range. That's a big range though, given how much one year can mean in terms of raising or lowering the cap hit. Second, I think the Devils may be willing to go as high as $7MM, but they have a line they won't cross somewhere before $8MM, and maybe below $7.5MM.

I have no idea, though, what Kovalchuk is willing to compromise. He might well be sticking with his original demand. After all, if he had been willing to budge from it a month ago he would have signed with the Devils or Kings soon after 7/1 and we wouldn't even be having this conversation. So I think there's at least a decent chance that he is the stick in the mud here.

  • Let's say Lou won’t go above $7.5MM cap hit and Kovalchuk won’t go lower than $9.5MM over eight years, plus whatever tail is necessary to bring the hit down. If Lou is willing to go that high AND IK is willing to go that low, then it’s easy to make a deal. 97.5MM//13yrs – $9.5MM for eight years, $5.5, 4, 4, 4, 4.

    However, if Lou’s ceiling is lower and IK’s floor is higher, it gets problematic pretty quickly.

  • Let’s say, for example, that as a starting point they simply lop two years off and raise the tail salary so it’s Hossified.

    2010 6
    2011 6
    2012 11.5
    2013 11.5
    2014 11.5
    2015 11.5
    2016 11.5
    2017 10.5
    2018 8.5
    2019 6.5
    2020 3.5
    2021 1
    2022 1
    2023 1
    2024 1

    Same first 11 years as the rejected deal, but the tail is four years not six and $1MM not 750K and 500K. That’s about as far as I think they could push it. That deal might squeak by, and clearly they can ask the league before the fact if they will approve it.

    If so, It’s a $6.83MM cap hit, which is still reasonable, and IK still gets his money. The same money, actually, since it’s the same deal up till he’s 38, then he gets paid more than in the other deal for four years. The total is $102.5MM.

    If the league will "pre-approve" such a term, it essentially tells us that the Hossa investigation is closed.

    So, if the league is willing to go to 42, and Lou is willing to go up to $6.8MM cap hit, they can make a deal. The thing is, if those two conditions were met, why haven’t they announced a deal yet? It’s a no-brainer for IK, a better deal in every way than the rejected one. Since this scenario requires no sacrifice from IK, it's reasonable to assume that there's no deal because either Bettman won't approve a deal to 42, or Lamoriello won't go up to a $6.8MM cap hit. Or both.

Let's have some chart fun. Three charts, each one represents a different length of contract Bettman will allow in Kovalchuk's case, 15 year, 14 year or 13 year (taking him to 42, 41 or 40, respectively). The columns in each chart represent the minimum $$ Kovalchuk is willing to accept; the rows in each chart represent the maximum cap hit Lamoriello is willing to accept. No/red means no deal is possible; yes/green means a deal is possible.

Picture_12_medium

If Bettman is willing to allow a contract that takes Kovalchuk to 42, the chances of a deal are high. Even with no movement from IK, if LL is willing to go up to $7MM cap hit, we have a deal.

Picture_13_medium

However, if Bettman is less friendly, and will only allow a deal up to age 41, it gets stickier. LL has to come up to $6.5MM at least, and that would require a huge sacrifice on IK's part. With no movement from IK, LL has to go up to $7.25MM, and that's right around where I think his limit is. So, with a 14 year term limit, the likelihood of a deal are not good (but not yet horrible, see below), unless Kovalchuk is willing to compromise. Which he hasn't been willing to do, to date.

Picture_14_medium

If Bettman won't allow anythiing that takes Kovalchuk over 40 (i.e. 13 year term), Kovalchuk is all but required to take less to get a deal done. Even IK taking $90MM total means LL has to be willing to go up to $7MM cap hit, which is by no means something we can count on. This scenario requires real compromise on the part of both IK and LL. Kovalchuk has to come down at least to $95MM, and Lamoriello has to come up to at least $7MM cap hit. Less sacrifice by one means prohibitively more sacrifice by the other. My guess is that, if Bettman won't allow above 13 years, this deal is unlikely to happen.

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