Kovalchuk signed a contract Monday for 17 years, paying him $102 million.
A report states that the contract would pay out only $550,000 over the last five years of the contract, even though both sides don't believe Kovy will be playing out the entire length of the contract.
The reasoning for the low amount of money towards the end of the contract was so that the Devils would stay under the salary cap imposed by the League.
NHL Deputy Commissioner Bill Daly released a statement today regarding Kovalchuk's contract: "The contract has been rejected by the League as a circumvention of the Collective Bargaining Agreement. Under the CBA, the contract rejection triggers a number of possible next steps that may be elected by any or each of the NHLPA, the Player and/or the Club. In the interim, the player is not entitled to play under the contract, nor is he entitled to any of the rights and benefits that are provided for thereunder. The League will have no further comment on this matter pending further developments."
The contract would have broke down as such:
Kovalchuk was to earn $6 million each of the next two seasons.
$11.5 million for the following five seasons.
$10.5 million in the 2017-18 season.
$8.5 million for the 2018-19 season.
$6.5 million in 2019-20.
$3.5 million in 2020-21.
$750,000 the following season.
$550,000 for the final five years of the unprecedented deal.
The Devils would have absorbed an annual salary-cap hit of $6 million - the average amount per season. That number was brought down because of the extended years at low salary at the end.