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NHL lets NJ Devils off hook for Ilya Kovalchuk contract punishment

greg wyshynski
NHL lets NJ Devils off hook for Ilya Kovalchuk contract punishment

So Lou Lamoriello appears to have outsmarted everyone. Again.

From the NHL, on the Ilya Kovalchuk cap circumvention penalty reduction first reported by Darren Dreger on Thursday:

NEW YORK (March 6, 2014) -- The National Hockey League announced today that it has decided to modify the disciplinary sanctions originally imposed on the New Jersey Devils’ franchise for its conduct in connection with the signing of former NHL Player Ilya Kovalchuk in July 2010, which conduct was determined by an Impartial Arbitrator to have constituted a circumvention of the NHL/NHLPA Collective Bargaining Agreement (the “CBA”) then in effect.

The sanctions originally imposed on the Club included a significant fine, the forfeiture of the Club’s third-round draft selection in 2011 (which was forfeited) and the forfeiture of a first-round draft selection which has been deferred by the Club until this year in accordance with the terms of the original penalty. As a result, as it relates to the portion of the discipline relating to the first-round draft pick, the Devils stand to forfeit it entirely in the upcoming 2014 NHL Draft.

The Devils recently applied to the League for reconsideration and relief from a portion of the original penalty, citing primarily changes in circumstances which, in the Club’s view, changed the appropriateness of the sanctions initially imposed.

After due and thorough consideration, the League has decided that a modification of the original circumvention penalty associated with the Kovalchuk contract is warranted and, accordingly, has amended the sanctions as follows:

The New Jersey Devils will now be entitled to the 30th selection overall in the 2014 NHL Draft (the last pick in the first round), regardless of the Devils’ final standing following the 2013/14 season. The Club will not be permitted to trade or transfer its right to the 30th overall selection in the 2014 NHL Draft. The Club’s fine has been partially reduced. The League intends to have no further comment on this matter.

Please recall in 2010 when the Devils and Kovalchuk agreed to a 17-year, $102 million contract that was rejected by the NHL on the grounds that it circumvented the salary cap. (What, doesn’t every contract have 97 percent of its value paid in the first 11 years of the deal?)

The contract’s spiking was validated by an independent arbitrator, so the NHL swung Mjölnir at the Devils and hit them with a $3 million fine, the loss of a third-round draft pick in 2011 and the sacrifice of a first-round pick in one of the next four Entry Drafts.

In true Lou Lamoriello fashion, he didn’t acquiesce. He used the No. 4 overall pick in 2011 on defenseman Adam Larsson after winning that spot in the lottery; he selected Stefan Matteau with the No. 29 pick in 2012, with the hockey world wondering why that low pick wouldn’t be the one to be sacrificed; and he traded the ninth overall pick in 2013 to Vancouver for Cory Schneider.

It looked like the Devils would have to give up their pick this season for Kovalchuk.

But the NHL decided to let them off the hook.

Which is preposterous, of course.

Yes, Ilya Kovalchuk “retired” from the NHL last summer with $77 million yet to be paid on his contract, which ran through 2025. But it doesn’t change the initial act by the Devils and Kovalchuk, which was a willful attempt to circumvent the salary cap and a violation of the Collective Bargaining Agreement.

Um … make that the previous Collective Bargaining Agreement.

While I think the NHL should have maintained its discipline to the Devils here, let’s not lose sight of the notion that the initial decision to discipline the team was just as preposterous.

It was a different world in 2010 when it came to the salary cap and long-term contracts. The Marian Hossa and Roberto Luongo deals did the same thing that Kovalchuk’s did, only less blatantly. But no other team suffered the same blowback as the Devils. It was selective hypocrisy.

The scale was balanced a bit in the last lockout and the new CBA via the cap recapture penalty, which retroactively punished teams that gave out these cheating deals. The Devils, for example, have a cap recapture penalty of $250,000 annually through 2025, a.k.a. dead cap space. Which is below minimum wage for the NHL, but hey, Kovalchuk just so happened to retire at a point in his deal where cap recapture wasn't an issue. Go figure!

If you’re looking for any kind of rationalization for this move by the NHL, it’s that the new CBA punishes the Devils for Kovalchuk, a player who’s no longer active in the NHL; and that the team still pays a $1.5 million fine, gives up a third-round pick and then is cemented into the last first-round pick no matter what their record is this season.

Maybe the NHL was doing the team’s new owners a solid, given that the team’s new owners actually took on the toxic debt of the franchise. Who knows.

The bottom lines: The Devils are getting out of a punishment they should have never received in the first place.

And Loophole Lou, once again, finds a way. (Like I suspect he did with the very, very conveniently timed "retirement" of Kovalchuk.) Guess we can stop snarking on that Matteau selection now…