Arbitrator Richard Bloch Upholds NHL's Rejection of Ilya Kovalchuk Contract

On July 20th, the NHL rejected the contract between Ilya Kovalchuk and the New Jersey Devils, which was worth $102 million over 17 years.  The contract would have ended when Kovalchuk is 44 years old.  The contract would have paid him $98.5 million over the first 11 years, and just $3.5 million over the last 6 years, making the cap hit $6 million.  The NHL cited circumvention as the reason why the contract was rejected.  The NHL Player's Association grieved the NHL's rejection and a hearing to determine whether or not the contract was valid took place in Boston last Wednesday and Thursday.  Arbitrator Richard Bloch's written decision was due to the NHLPA and the NHL by 5:00 PM (end of business) today.  A little after 5:00 PM, it was confirmed that Bloch had, in fact, upheld the NHL's decision to reject the Kovalchuk contract. 

While Bloch's official written decision hasn't been released to the public yet, certain informed people have gotten their hands on snippets of what Bloch stated in his decision.  I would like to offer some reaction to that after the jump.


Per Nick Kypreos via Twitter (@RealKyper):

Arbitrator Bloch says " this is a retirement contract" in his report. said deal "well beyond the typical retirement age for NHL players  

First of all, if this was a retirement contract, I would like to know what the Pronger, Hossa, and Luongo contracts are, among others such as Zetterberg's, Franzen's, and Lecavalier's (though those are admittedly not as extreme).  And as for the whole surpasses-the-typical-retirement-age thing: the average age of retirement for a skater in the NHL is 27.96 years.  The average age of retirement for a forward is 27.76 years (information found here).  By those standards, it is foolish to think that a player will continue to play after his 28th birthday.  Oh, what's that you say?  The average age of retirement for good players that have a future must be higher?  That's kind of my point.  Also, no matter which word you use, there are bound to be players that pass the "typical" or "average" age of retirement. 

Craig Custance also provided some excerpts from the Bloch decision, which can be found here.

"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 43 and, over the past 20 years only 6 of some 3400 players have played to 42. ..."

Ah, yes, that's right.  While I've been using actual brains and common sense for the past three weeks, I must have forgotten the fact that something that is rare is obviously also illegal.  Silly me.  Somebody should tell Mark Recchi that he's not allowed to play this season, because it's too unheard of.  It was also nice of Bloch to point out that only 6 players in the past 20 years have played until they're 42.  It must have slipped his mind that the contracts of Chris Pronger and Marian Hossa have them playing until they're 42.  If you want to go a step further, Roberto Luongo's contract takes him until he's 43.

"...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."

Before Chris Pronger's contract drops from a $4 million annual salary to a $525,000 average salary from Year 5 to Year 6,  he will have already made $33.4 million out of the total $34.45 million that the contract is worth.  That means he will have earned approximately 97% of the total amount of money that the contract is worth two years before it ends.  Marian Hossa earns $59.3 million in the first seven years of the contract.  Afterwards, it drops from a $4 million annual salary to a $1 million annual salary.  Hossa's contract is worth a total of $62.8 million.  He will earn 94% of the total amount that the contract is worth four years before it ends.  Other examples: Zetterberg will earn 97% of the total amount that the contract is worth with two years left; Franzen will earn 92% of the total amount with three years left; Lecavalier will earn 97% of the total amount with two years left; and Luongo will earn 94% of the total amount with three years left. 

My other favorite thing about that passage from above is the second part that I highlighted.  Teams like the Rangers who continually sign players for much more than they're worth use their minor league teams as a salary dump.  That's now considered circumvention? 

I know that the Kovalchuk contract is an obvious stretch over all of those other contracts, but they all have the same intentions, which is to pay the player what he wants but lower the cap hit of the contract in order to work around the salary cap.  Nowhere in the CBA does it state to what extent a team is allowed to circumvent up to.  And so the precedent set by similar contracts in the past is the only true "law" under the current CBA.  In my opinion, Richard Bloch was wrong for not following those precedents and the CBA and for instead basing his ruling on what he felt that the "spirit" of the CBA was, and also for what he felt the intentions of the contract were.  

Was the Ilya Kovalchuk contract ridiculous?  Of course it was!  But so are others like it.  Nobody can prove for how long Kovalchuk will be playing hockey in the NHL.  Mark Recchi is still a solid player and will be 43 years old this season.  To me, it is absolutely ridiculous to assume that a goalie, of all players, can play until he is 43.  But that's the precedent set by Roberto Luongo's contract.

Is it reasonable, as Bloch says, to question whether or not Kovalchuk would have played out the duration of the contract?  Of course it is.  But the question cannot be answered now, and Bloch's assumption of the answer to the question is not a proper reason for upholding the rejection of the contract.

To me, it's unacceptable that Richard Bloch ruled by what he (and the NHL, obviously) presumed to be the intent of the contract, and not by what the CBA says. 

It's alright though.  I've already invited Gary Bettman, Bill Daly, and Richard Bloch to attend a Blackhawks-Canucks game in 2021, where we will avidly cheer on Hossa's $750,000 salary and Luongo's $1 million salary.  Unless, of course, they've retired by then.  But that will only assumedly happen to Kovalchuk.