Thank the Hockey Gods It’s Over; My Thoughts on Kovalchuk and the CBA

It’s finally happened! Pigs are flying! Hell has frozen over!

Ilya Kovalchuk’s contract with the New Jersey Devils has FINALLY been approved by the NHL. (Did anyone really think that it wouldn’t be after he started dropping hints that the KHL was becoming an option?)

The final details for the contract is 15-years for $100 million as opposed to 17-years for $102 million. It’s now a cap hit of $6.67 million per year as opposed to $6 million per year and, well, yeah. If you’re thinking that the difference is pretty absurd, you’d probably be right.

When you compare the two deals, it looks like this.

Old Deal

2010-11: $6 million
2011-12: $6 million
2012-13: $11.5 million
2013-14: $11.5 million
2014-15: $11.5 million
2015-16: $11.5 million
2016-17: $11.5 million
2017-18: $10.5 million
2018-19: $8.5 million
2019-20: $6.5 million
2020-21: $3.5 million
2021-22: $750,000
2022-23: $550,000
2023-24: $550,000
2024-25: $550,000
2025-26: $550,000
2026-27: $550,000

New Deal

2010-11: $6 million
2011-12: $6 million
2012-13: $11 million
2013-14: $11.3 million
2014-15: $11.3 million
2015-16: $11.6 million
2016-17: $11.8 million
2017-18: $10 million
2018-19: $7 million
2019-20: $4 million
2020-21: $1 million
2021-22: $1 million
2022-23: $1 million
2023-24: $3 million
2024-25: $4 million

So, when you compare the two, there really isn’t that much difference other than a higher high salary ($11.8M in the 2016-17 season as opposed to $11.5M in the 2012-2017 season), a higher low salary ($1M as opposed to $550k) and two years at the tail end of the contract that really make you go, “Huh?”

So the league accepted this, grandfathering it in before the new CBA amendment (don’t worry, that discussion is coming) and the Devils now find themselves in a Chicago-style pickle – they need to shed salary before the season starts.

Without Kovalchuk’s contract, Cap Geek had the Devils sitting exactly $3,698,334 under the salary cap of $59.4 million. With the Kovie Kontrakt, the Devils cap number goes up to $63,108,333 or $3,708,333 over the salary cap.

Now, it’s important to realize that the Devils’ cap number prior to the Kovalchuk signing was also with just 20 roster players. 11 forwards, 7 defensemen and 2 goalies. A typical “full” roster is 23. So, basically they need to shed enough salary to both fit Kovalchuk under the cap and field a full roster.

Soooooooo…Who do you drop?

Jamie Langenbrunner, likely won’t be a casualty. In addition to being the team’s captain and a heart and soul type player, he only has one year left on his contract with a no-trade clause.

The player that most Devils fans would LOVE to see on the chopping block, Brian Rolston, likely won’t be either. Rolston’s stats have declined in a large way since he left Minnesota and, while his talent may not have, he’s certainly not the same player that scored 30-plus goals in 3 seasons with the Wild. On top of that, he has two seasons left on a $5.06M contract AND is over-37. Oh yeah. He’s got that pesky no-trade clause as well.

The candidates most likely to be traded are Dainius Zubrus, who is coming off of a solid playoff performance and a solid performance in a season filled with injuries (27 points in 51 games). He’s got some value, but the question would be would the team be willing to trade him? If I’m making the decision, I’m not so sure unless there’s no other way.

You’ve also got defensemen Colin White and Bryce Salvador. While White has a no-trade clause, both players make either $3 million or just under and there is no shortage of teams looking for defense. With young players like Matt Corrente and Tyler Eckford waiting in the wings, it may make sense for the Devils to make a move that involves one or both of these two d-men.

Finally, you’ve got the player that I’m sure no one in Newark really wants to admit could be on the block – Patrik Elias. Of every single player on their roster, Elias probably has the most value other than Travis Zajac and Zach Parise (and rest assured, they’re not going anywhere). At 34, he’s still got some tread left on the tires and he’s still a productive player. Again, there’s a no-trade clause much like the rest of their likely tradable players, but Elias is the player that would likely bring the most interest.

Either way, Lamoriello has a lot of thinking ahead of him to figure out how he’s going to shape his roster and he’s going to have to make some hard decisions in order to do so. Do you ask a player to wave his NTC? Do you part with your captain? Do you trade a recently signed player?

There are a lot of questions and the team is going to need answers very soon.

*****

Now, onto the CBA.

I’ll admit, this is probably one of the things I understand the least about the NHL. Here is the text from the press release:

NEW YORK/TORONTO (September 4, 2010) – The National Hockey League Players’ Association and National Hockey League today announced an agreement that will implement new rules governing the parameters of long-term contracts and how they are valued within the NHL Salary Cap System.

As part of the agreement, the NHL will register the contract between the New Jersey Devils and Ilya Kovalchuk that was filed with the League on August 27, 2010. The NHL also will terminate its circumvention investigations into the contracts signed in 2009 by Marian Hossa of the Chicago Blackhawks, Roberto Luongo of the Vancouver Canucks, Marc Savard of the Boston Bruins and Chris Pronger of the Philadelphia Flyers.

Under the terms of the agreement, the new rules will apply only to long-term contracts, defined as those with terms of five years or longer, and only to contracts executed after September 4, 2010. The new rules apply to contracts signed between now and the end of the CBA, as well as all contracts signed that begin in the 2012-13 season. The parties have agreed that the new rules do not automatically carry over into a new CBA.

For the purpose of Salary Cap calculations, any long-term contract that extends past a player’s 41^st birthday will be valued and accounted for in two ways: The compensation for all seasons that do not include or succeed the player’s 41^st 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).

Additionally, 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.

“We’re pleased to be able to establish clearly-defined rules for these types of contracts going forward and just as happy we can turn the page on uncertainties relating to several other existing contracts,” NHL Deputy Commissioner Bill Daly said. “From start to finish of this multi-week process we were able to work closely and cooperatively with representatives of the Players’ Association, who shared our belief that the creation of definitive rules and guidelines in this area would be beneficial to everyone – Clubs and players alike.”

“We are pleased to finalize an agreement which ends the League’s circumvention investigations and also establishes rules on long-term contracts that will provide players, their certified agents and general managers clarity for the negotiation of new contracts,” said Roland Lee, Director of Salary Cap/Marketplace & Associate Counsel for the NHLPA. “Turning the page on this process is something that will benefit all parties involved.”

So, basically it boils down to the fact that the cap hit will be divided into two parts. The Pre-41 and post-41 hits. In addition, the minimum salary for a player over 35 in these long-term contracts is $1 million, but only in the purposes of calculating the cap hit.

So, what this would do to these new “lifetime” contracts is small, but still interesting. Roberto Luongo’s cap hit would be raised from $5.33M to about $6.2M while Marian Hossa’s would be raised from $5.275M to $6.13M.

In the end, this is not necessarily going to stop these contracts altogether (which I believe would be in the best interest of the league), but this will help stop the circumvention to an extent.

General Managers are going to find ways to work the cap in their favor. As long as the cap hit is an average and not what the player is getting paid that particular season, GMs are still going to find ways to bring their cap hit down. But this could be at least a step in the right direction.

As Greg Wyshynski posted on Puck Daddy, it’s a little hard for me to accept that the NHL put up a fight over these type of contracts only to “grandfather” these contracts in, but I guess you take what you can get and it does, effectively, take these types of contracts away going forward.