September 3, 2010
NHL, NHLPA approve Kovalchuk's deal
By CHRIS STEVENSON, QMI Agency
It took a long time - until about 3 a.m. Saturday morning - but the NHL and the NHL Players Association finally signed off on a deal to govern new long-term contracts.
As reported by QMI Agency Friday, the second contract submitted between the New Jersey Devils and forward Ilya Kovalchuk now has been approved and the NHL will no longer wield the threat of investigating and potentially voiding deals signed by Chicago’s Marian Hossa, Vancouver’s Roberto Luongo, Boston’s Marc Savard or Philadelphia’s Chris Pronger.
The supplement to the collective bargaining agreement will apply to new contracts, though with just two years left on the existing CBA, one agent doubts the new regulations will even be applied.
There are two key changes for new contracts five years and longer:
*Any deal that takes a player past his 41st birthday will be evaluated two different ways for the purpose of calculating a player’s salary cap hit (annual average value, or “AAV”). “The compensation for all seasons that do not include or succeed the player’s 41st birthday will be totaled and divided by the number of those seasons to determine the annual average value (AAV) charged against the team’s Cap for those seasons. In all subsequent seasons, the team’s Cap charge will be the actual compensation paid to the player in that season (or seasons, as appropriate),” said the NHLPA in a statement.
*Also, according to the statement, “in any long-term contract that averages more than $5.75 million for the three highest-compensation seasons, the following rule shall apply: Solely to determine its value for purposes of the Salary Cap, a player’s compensation for any season in which he is age 36, 37, 38, 39 and/or 40 shall be valued at a minimum of $1 million.”
Kovalchuk’s new deal is to pay him $100 million over 15 years. The first deal between Kovalchuk and the Devils - $102 million for 17 years - had been rejected by the league for circumventing the CBA. The PA took the decision to arbitration and lost. After extending the deadline to approve the second contract from Wednesday at 5 p.m., the two sides finally reached a compromise early Saturday morning.
Using his contract as an example, the Devils are saving about $500,000 in cap space a season compared to his deal under the new rules. His cap hit as it stands now will be a Devil-like $6,666,667 a season.
His deal has been grandfathered in, so the new rules don’t apply. He will be paid $93 million up until the season in which he turns 41 (2023-24) which would have made his cap hit $7.15 million under the new rules, according to NHL.com.
He is due to make $3 million and $4 million in the final two years of his deal, so, if the new structure applied, those figures would now become his cap hit in each season if he had played those seasons.
The second clause would apply to a contract like Savard’s, in which he will make $525,000 a season in the final two years when he will be 38- and 39-years-old. Under the new rules, his cap hit for those seasons would be $1 million bumping his cap hit over the term of the contract from $4 million to $4.14 million, according to NHL.com.
The league wanted the new regulations to prevent clubs from lowering a player’s cap hit by adding years onto the end of the deal - years in which the player likely wouldn’t play - with a greatly reduced annual salary, dropping his AAV.
The players association got Kovalchuk’s deal approved and the league to stop sniffing around those other contracts, so that works for them.
Concessions and victories on both sides.
The upshoot is we probably won’t see any contracts taking a player past his 40th birthday for the last couple of years of this CBA.
“Amendment to CBA on long term deals will only impact system for 1 contract cycle and probably won’t impact any contracts,” tweeted agent Allan Walsh (@walsha).
“To call today’s events a huge win for either side is absurd. It’s a fair and reasonable result impacting 5 out of 6000 contracts since ‘04.”