Quotes from Bloch
by Quisp on Aug 9, 2010 4:28 PM PDT
in CBA
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PrintEverything in quotes is direct from Bloch's ruling:
Source: Arbitrator Rules in Favor of NHL in Kovalchuk Case - Craig Custance - The Grinder - Sporting News
"In this case, the record strongly supports the claim this contract is "intended to, or has the effect" of defeating or circumventing the Salary Cap provisions of the CBA.
The overall structure of this SPC reflects not so much the hope that Mr. Kovalchuk will be playing in those advanced years, but rather the expectation that he will not.
:)
This is a long contract --17 years -- the longest in NHL history. That, in itself, poses no contractual problem, for the reasons discussed above. But Kovalchuk is 27 years old, and the agreement contemplates his playing until just short of his 44th birthday. That is not impossible, but it is, at the least, markedly rare. Currently, only one player in the League has played past 43and, over the past 20 years only 6 of some 3400 players have played to 42...."
...or as I said (link above) it's about 75 times less likely than a devastating asteroid strike in April, 2029.
The conclusion:
"...the System Arbitrator here concludes the SPC terms themselves demonstrate this agreement "has the effect of defeating" the provisions of the CBA, with particular reference to the Team Payroll Range language.
Otherwise known as Article 50, for those of you keeping score at home. [UPDATE: People are already somehow saying the ruling was "no circumvention." No. "Having the effect of defeating provisions of the CBA" is the definition of circumvention.]
For these reasons, the finding is that the League has sustained its burden of demonstrating its actions in rejecting the agreement were in accordance with the bargained authority under Section 11.6(a)(i). Accordingly, the grievance protesting that action will be denied."
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So,
The overall structure of this SPC reflects not so much the hope that Mr. Kovalchuk will be playing in those advanced years, but rather the expectation that he will not.
+
“…the System Arbitrator here concludes the SPC terms themselves demonstrate this agreement “has the effect of defeating” the provisions of the CBA, with particular reference to the Team Payroll Range language.
=
Circumvention?
Editor of The Copper & Blue, and leader of The Cult Of Hartikainen.
yes, he has ruled that it's a circumvention. The league rejected the contract because it was a circumvention and the arbitrator agreed that it's a circumvention.
Wait till this year.
Indeed. Thank you. I have been rather confused reading the tweets of media people, such as our good friend James Mirtle:
Let me rephrase that: Decision says there is no finding of bad faith or intent to circumvent cap by Devils/Kovalchuk.
I respect Mirtle a lot, but I don’t know where he is getting that.
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Rule #17: You may not impersonate representatives of Hockey Wilderness and handout NHL themed wrist bands.
Well, you can circumvent without intending to. Like speeding without being aware of the speed limit.
Good luck with that defense...
…ignorance of the law is not a defense. Article 26 also just has to have the effect of circumvention to be valid.
Absolutely
It’s not a valid defense, it’s about trying to reduce the level of humiliation that comes with the punishment. Saving face, etc.
It might not be much of a distinciton — but it could become very important…
It’s also unknown at this time if the league even wants to impose fines.
In Dinglebarn We Trust
Everyone is saying that there will be no fines,
but the same people were saying that the NHLPA had a slam-dunk case and would easily win.
The NHL just might wait to see the next contract submitted by NJ and Kovalchuk.
I agree, and that's not a trivial distinction. However, circumventing while not intending to is not some lesser kind of circumvention (although it could lead to lesser penalties)
if there are to be penalties at all.
Wait till this year.
Mirtle is correct. From the bottom of page 19, top of page 20:
Nothing in this Opinion should be read as suggesting that either the Club
or Mr. Kovalchuk operated in bad faith or on the basis of any assumption other
than that the SPC was fully compliant with the CBA. While intent is specifically
listed as a potentially relevant factor in a proceeding such as this, the System
Arbitrator here concludes the SPC terms themselves demonstrate this agreement
"has the effect of defeating" the provisions of the CBA, with particular reference
to the Team Payroll Range language.
Essentially, Bloch doesn’t believe they intended to circumvent the CBA, but they did so anyway because of the terms they incorporated.
Honor is no substitute for victory.
Just means that Bloch couldn't prove intent.
There is no smoking gun, but they fully intended to circumvent the CBA. Why else would you structure the contract that way? It wasn’t a mistake, like they broke the 50% rule by mistake. The contract was designed to circumvent the CBA.
At least the league was smart enough to include the “effect of circumventing” clause. Even they knew that it would be next to impossible to prove intent.
by Sydor25 on Aug 10, 2010 6:08 AM PDT up reply actions 1 recs
True but...
Bloch points out that they didn’t have any bad faith in what they were doing. Looking at the contract in its individual pieces, there is nothing that violates the CBA – not even the spirit of it – but when you put it all together, then, as a whole, it has the effect of circumventing the cap. It was a very creative contract that arguably could have been within the letter of the rules, but definitely not within the spirit.
But you have to agree that Lou and Grossman knew exactly what they were doing with the structure. They are not innocent here. It is just impossible to prove intent without an e-mail or text saying that Kovalchuk is going to retire before the end of the deal.
The NMC to NTC is the closet you have to a smoking gun. This protects the Devils from a player wanting to continue playing at a reduced capacity with a $6 million cap hit. It’s pretty easy to put him in the minors while his salary is under $600,000.
Oh, I totally agree that they knew what they were doing with the structure. It’s very creative contract. This contract was clearly intended to circumvent the salary cap in the literal sense while not “circumventing” the CBA in the technical sense (at least, in their interpretation of the CBA). Someone (probably people on both sides) sat down and said “how do we get Kovy close to his $10M in 10 years (what he was allegedly seeking), while keeping the cap hit reasonable?”
I don’t think the NMC to NTC is necessarily a smoking gun in and of itself, but it certainly is part of one. As I read Bloch’s Opinion, there were two things that, when taken together, became the smoking gun. On Kovy’s side, there was the $1/2M salary in the late years of the contract which a player of his stature would not likely play for, even late in his career. On the Devil’s side, there is the shift to a NTC from a NMC. I think that, taken individually, the salary tail actually might have slightly more weight. If I am the Devils, I would argue that the shift to NTC is there to allow me the flexibility to move a player who can no longer perform to expectations. It is not necessarily out of the question to have this kind of provision and it actually makes some sense. If Kovy is still making a “reasonable” salary at that point, the argument makes sense because the team is still on the hook for salary even if it no longer has the cap hit. In that situation, the player may suck it up and take the demotion to the minors or allow them to put him on waivers so he is picked up by another team, or even for the team to buy him out, because there is still reasonable compensation coming his way. But the reduced salary removed the incentive to continue playing if the team takes any of those actions. So combined, the two provisions bolster the argument that the contract is illusory in the later years.
He doesn't actually.
Saying “Nothing in this should be read as suggesting they acted in bad faith” isn’t the same thing as saying “They didn’t act in bad faith.”
Basically, not finding bad faith isn’t the same thing as finding there was no bad faith.
According to a tweet from James Mirtle of the Globe and Mail, they didn’t find there to be bad faith or an intent to circumvent. Goes back to what I said the other day… the contract can be a circumvention without the team and player circumventing.
Yes, that does go back to what we were talking about
But that doesn’t mean there won’t be penalties. “effect of circumventing” isn’t specifically defined as a lesser circumvention. (though it would obviously make a difference to the person deciding what penalties to assess…)
Wait till this year.
From the quotes that have been coming out (which are very limited, of course), it seems like this case seemed to hinge on the question of whether the NHL had the authority to reject this contract. If my reading of the CBA is correct, I read this case as being only a question of the league’s authority regarding contracts under Article 11 and would not necessarily mean the case was pursued as a circumvention under Article 26.
So, perhaps...
Bloch is saying that it’s ultimately up to the league to say what is Circumvention and what isn’t? And he’s just shrugging his shoulders and saying, “Well, if they say it is, that’s their right?”
Not exactly, but kind of...
I still contend that Articles 11 and 26 are separate creatures and that one does not necessarily lead to the other (although they can potentially be combined). The parties agreed that the NHL has certain leeway to reject a contract if it believes it has the effect of circumventing the cap. What seems to have been at issue here is the question of whether the NHL properly exercised that authority. But all I have seen are a few quotes here and there; I don’t know what the ruling itself says, so I can’t be sure.
I don't think that's the ruling at all.
The ruling is that the contract has the effect of circumventing the cap. I believe he said “has the effect of defeating provisions of the CBA.”
I don’t think the league’s authority is even an issue (or at least I don’t see how it’s an issue). They have the authority to reject, and the arbitrator has the authority to decide whether the league was right in its reasoning.
Wait till this year.
It was...
The question before the arbitrator was whether the league properly rejected the contract. He found that it did. Whether it had the authority was not the question but whether it properly exercised the authority it is given under the CBA, was.
In getting to that rationale, he looked at the language of 26.3 (among others) and found that this contract, taken as a whole, “has the effect of defeating” the provisions of the CBA, specifically, the “Team Payroll Range” (i.e. the cap).
BTW, I think you had posted a few days back about illusory contracts – i.e. promises you don’t intend to fulfill – that was part of what the arbitrator found here.
If so...
That would be the result of the way the case was argued FOR, by the NHLPA, NJ and the player IK. Since there is no appeal, this does not change the way the Arbitrator ruled, which was to say that there was a circumvention.
Article 26 would then apply, as per the Arbitrator’s ruling.
One cannot argue out of a traffic ticket by insisting no murder took place during the speeding…
can you clarify that distinction for me
because I don’t see the difference between deciding that the league had the authority to reject this contract because it was a circumvention and deciding that the contract is a circumvention. Not being glib. I just don’t see the wiggle room. (but I didn’t see the whole circumvention without a prime mover thing either — and i liked that one).
Wait till this year.
Not just the age...
Bloch also pointed out that “By year 11, the Player will have received $98,000,000 of his $102,000,000 contract, constituting some 97%…”
Found more:
More from the report regarding finances:
“…The dynamics of this SPC, with particular reference to its final six years, are such that there is scarce reason for either Player or Club to continue the relationship. The incentives are strongly to the contrary. By year 11, the Player will have received $98,000,000 of his $102,000,000 contract, constituting some 97% of the bargain. One may reasonably ask, as the League does, whether a player who had been averaging some $9,000,000 a year will be satisfied to continue the rigors of an NHL season for a salary that (1) will average slightly more than $550,000 a year, (2) will represent a 95% reduction against previous average earnings and (3) will undoubtedly constitute compensation well below the then-applicable major league minimum. The economic incentives are not limited to issues of the Player’s preferences, alone. During the final six years, the comprehensive “No Move” restriction will have been reduced to a “No Trade” clause. This additional flexibility will allow the Club to, for example, place the Player on waivers or send him to the minors. Here again, one may reasonably ask whether this Player would, at that point, accept such repositioning as an alternative to seeking continued employment outside the League or simply retiring."
Wow I didn't even think about that they could send him to the minors
That being even an option makes it even more of a slam dunk case.
Not afraid to nitpick
And starting on left wing, for your Albany Devils...
i'll show you my butt tattoo if you'll show me yours
Penalty
Is a cap-hit/draft-pick penalty possible? As a Flyers fan this would make me so very happy.
Briere, Betts and Pronger; Briere, Betts and Pronger; Briere, Betts and Pronger;
Our team is so much stronger
We've got Briere, Betts and Pronger...
by PursuitOfLappyness on Aug 10, 2010 2:18 AM PDT reply actions
What happens if the NJ offer gets closer to the Kings last offer?
The closer NJ has to get to the $80/13 offer from Lombardi, the more Kovalchuk might change his mind on where to sign. I can’t imagine Lou wants to get close to a $7 million cap hit, this limits how much he can offer on a 13 year contract.
Offering a 15 year contract would be very dangerous for NJ, especially when Bloch hinted that Hossa’s and Luongo’s contracts are also circumvention.
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