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Something Really Bad (for New Jersey) Nobody is Talking About Yet

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The 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?]