Thoughts On Kovalchuk

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Scott Lewis has done a fine job the last couple of days weighing in on the ludicrous 17-year contract that the New Jersey Devils offered to Ilya Kovalchuk, and because of that I hesitated to comment, but given that it’s summer, this is the biggest story around and I’ve got a few thoughts that aren’t being given wide play, I’m going to toss out a few things myself.

Length Doesn’t Matter, It’s How… Never Mind

The length of Ilya Kovalchuk’s contract is understandably getting significant play, but the fixation with the 17-year mark is, in my opinion, misplaced.  To pick on one outlet, TSN compares the deal to long-term deals signed by Rick DiPietro and Alexander Ovechkin, among others.

The reality is those contracts aren’t comparable; Rick DiPietro got paid $4.5 million in 2006-07, he’ll get paid $4.5 million in 2020-21, and he’ll be paid $4.5 million every year in between.  DiPietro’s contract really kicked off the really long-term pacts that have become a regular occurrence in the NHL (give the Islanders credit – they’re trend-setters) and had the NHL had an issue with long contracts that issue would have come out then and there.  Ovechkin actually gets a modest raise in 2014-15, from $9.0 million per season up to $10.0 million per year.

Length is a non-issue here.  Gary Bettman has previously commented that he doesn’t like these long-term deals, but the NHL has shown time and again that they will allow teams to balance the risk/reward ratio for themselves.

It’s All About Selling Realism

The problem with the contract is that while a quick glimpse shows nothing wrong – crazy years, check, big dollars, check, wake me when free agency ends – anyone looking at the breakdown of the deal (as I assume everyone has by now) has to be astonished by Kovalchuk’s willingness to play for a fourth-line rate of pay (or for fans of the New York Rangers, the hypothetical rate paid to players underneath the fourth-liners) for the last six years of his contract.

Others (everyone?) have pointed out that there are plenty of contracts out there that look a little fishy, and they’re right.  Scott linked to a Behind The Net piece earlier today which compared Kovalchuk’s deal graphically with some of these other deals, but the number and impact of the fake years tacked on to the end of Kovalchuk’s contract far exceeds those handed out earlier.  Let’s compare:

  • Ilya Kovalchuk (hypothetically, as in all of these cases) will spend the final five years of his deal earning just $550,000 – less than one-tenth of the average cap hit over the 17-year deal.  In the year preceding those five, he’ll earn just $750,000.
  • Marian Hossa will earn just $1.0 million per season over the final four years of his deal – a hair under one-fifth of the average cap hit of his deal.
  • Chris Pronger will earn just $525,000 over the final two seasons of his deal, just over one-tenth the average value of his contract.  This deal probably should have been overturned by the NHL, but in this particular case the Flyers may have outsmarted themselves – because Pronger will be over 35 when the deal goes into effect, if he retires for those final two seasons the Flyers don’t get out of the cap hit, and given how little money he’ll be making (after the age of 40) there may be precious little reason for him to stick around.
  • Like Pronger, Marc Savard will earn just $525,000 over the final two years of his deal, a number that represents a little over 13% the average value of his deal.

Other players have similarly suspicious years at the ends of their deals – Duncan Keith has one, Roberto Luongo has two, Vincent Lecavalier has one (maybe two, depending on how one counts), Henrik Zetterberg has two, Johan Franzen has two, Mattias Ohlund has one, and so on.  It’s common practice for long-term deals now, and I’d suggest any general manager (at least those who have to worry about the salary cap) who signs a player to one of these long-term deals should be tagging on a few years at a reduced rate at the end of the deal, to make the cap hit manageable.  Those that aren’t bending the spirit of the CBA a little bit are putting themselves at a disadvantage.

But while it’s conceivable that the players above might be willing to play for $1.0 million or so over the last year or two of their careers, only three deals see star NHLers scraping along near the league minimum over their final years.  The Savard deal probably should have been overturned, although the fact that he earns substantially less than the other players on the list makes that offence a little less egregious.

The Pronger deal had no business being approved by the league, but Paul Holmgren is going to look like a prize idiot if Pronger does retire and the Flyers are stuck with that cap hit for two seasons thanks to the over-35 rule.  It’s a case where I’d be all too happy to see the Flyers suffer at the hands of the same rules they were attempting to circumvent.

The Kovalchuk deal really isn’t in the same ballpark as those other players.  Six years of near minimum-wage pay is more than three times as long as any other team has ever tried to worm through the NHL head office.  It sees him take a 95% pay cut over a period of six years.

The Weasel Zone

In Dilbert and the Way of the Weasel, Scott Adams talks about the “gigantic gray area between good moral behaviour and outright felonious activities,” something he calls the “Weasel Zone.”  He explains:

In the Weasel zone everything is misleading, but not exactly a lie.  There’s a subtle difference.  When you lie, you hope to fool someone.  But when you’re being a weasel, everyone is aware that you’re a manipulative, scheming, misleading sociopath.

So while we all suspect that Marian Hossa might retire a year early, leaving the Blackhawks with a salary cap discount at no cost to the team, we don’t quite know it.  the Kovalchuk contract crosses the line from being suspicious to being nearly certain; it’s a place where the NHL simply must draw the line.

But It’s Not Really A Big Deal

In the end, I doubt it’s going to matter.  The NHLPA may file a grievance, and we may see some more dancing around, but the final result seems almost certain to me: Camp Kovalchuk and the Devils will rework the contract, keep a couple of ugly looking years tacked on to the end while nixing the rest, and the contract will move from a spot where it’s plainly in violation of the CBA to a spot where it may or may not be.  Kovalchuk may give up some money, and the Devils may give up some cap space, but I suspect that will be the extent of the ramifications.

That, and we will have gained the benefit of knowing where the NHL’s leniency ends.

Comments (10)

  1. Spot on on the Kovalchuk situation.

    Regarding Pronger, I used to think like you – ie: laughing a little bit a Holmgren for offering that silly contract because it was kinda certain that they would be stuck with a 4,9M cap hit for 2 years when he retired… but then I realized, some teams are actually very cash-strapped and looking to reach the floor.
    One of these teams will gladly take Pronger off the Flyers hands to have him retire with THEM instead of with the Flyers. That could theoretically be worth 4,9 million dollars to a broke owner… having a cap hit for a guy who’s retired and who you’re not paying. Worst thing is, some teams might actually GIVE assets to acquire such a player…

    And so, I suspect Holmgren will be able to squeeze out from under this contract when it’s not worth it anymore – meanwhile the Flyers have a 7M defenseman for 4,9M.

  2. Never thought of that James, but excellent point. It would be similar to Lamoriello giving up picks in order to get rid of Malakhov’s contract a few years back – except in reverse.

  3. They’ll still have to give up assets or take back a bad contract like they did with Walker when they dealt Gagne. They will pay for the mistake even if it’s not as costly as the whole cap hit would be. Then again they could just bury him in the minors and if he fails to report they could get out of the contract rather than have him retire. So yeah there are ways around the cap.

  4. Can someone explain why if Pronger retires with 2 yrs left, the salary hits the Flyers, but if Kovie retires with 5-6 yrs left, it doesn’t hit the Devils?

  5. Correct me if I’m wrong, but I thought that pronger’s deal wasn’t one of those 35 and over contracts because of when his birthdate was. I’m no CBA expert though.

  6. QT-

    Pronger was 34 when he signed his contract, which is why the Flyers thought they were ok. But because it was a contract extension (he still had 1 year on his then-current deal), the new 7 years contract came into effect after Pronger had turned 35 – making it a 35-and-over deal.

    KingPete-

    Contracts that come into effect after a player has turned 35 are different from other contracts, in that even if the player retires, the cap hit remains until the end of the contract. So the Flyers would still have Pronger’s cap hit even if he retired (unless he gets shipped off to another team of course).
    In Kovy’s case, and every other long-term deal out there, all these players were less than 35 when the contract started, so when they retire, their cap hit goes away.

  7. Jonathan,

    Great work as always. One point though on the Pronger contract:

    If after investigating, the NHL determined that it was an over-35 contract doesn’t that legitimize it? By that I mean because there would be a cap hit if he retired or not the fact that there was a “tail” at the end of the contract is irrelevant. The Flyers would be on the hook for the average cap hit if Pronger played, retired or developed back problems and was arrested in Arizona on a drunk driving charge.

  8. “If after investigating, the NHL determined that it was an over-35 contract doesn’t that legitimize it? ”

    I suspect that’s the argument they’ll be using.

    Wasn’t DiPietro’s deal signed prior to the new CBA? It’s really irrelevant to the “league authorization”, even though, as noted, it’s completely structurally different. It is a good litmus test to separate the clueless from those who at least have some inkling of what they’re talking about – if they cite that contract when talking about Kovy’s, they’re clueless and you can safely disregard their opinion.

  9. Todd:

    I’m sorry if I wasn’t clear, but I suspect the Flyers didn’t realize the implications of signing Pronger when they did (they signed him before he turned 35, but the contract takes effect after the turns 35) and thus the contract wasn’t legitimate. Otherwise, I can’t see them encouraging Pronger to retire by paying him such a pittance over the last two years. That said, as the NHL, I would have accepted the contract anyway because I think it’s clear there isn’t an cap-circumventing advantage involved there.

    Stephen:

    DiPietro’s contract was signed the year after the lockout.

  10. [...] as James Mirtle has detailed at length based on Bloch’s ruling.Our own Jonathan Willis previously outlined the factors that made Kovalchuk’s deal incomparable to tho….  Fundamentally, the “fake years” tacked on to the end of Kovy’s contract were [...]

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