Ilya Kovalchuk Arbitration Will Have Impact on the Entire Hockey World

The next few days will have a major impact on the future of Ilya Kovalchuk, the New Jersey Devils franchise, and likely the National Hockey League as a whole.

Depending on how arbitrator Richard Bloch decides, the 17-year, $102 million contract signed by Ilya Kovalchuk this past July 19th will either have to be accepted by the NHL, or it will be rejected and Kovalchuk will become an unrestricted free agent, which could even steer him to Russia and the KHL. In addition, the arbitrator and the NHL could impose penalties on both the Devils as a team and the agent/player team of Jay Grossman/Ilya Kovalchuk.

The main issue that needs to be decided by the system arbitrator is whether or not the contract violates the terms of the Collective Bargaining Agreement (CBA) . The hotbed portion is specifically Section 26, which discusses circumvention of the salary cap. I do not believe Bloch is allowed to go by the spirit of the rule, or what he thinks a party may have intended. I believe he is forced to make his decision based on the document that was written.

If you look at the actual document, one clause stands out in Section 26.3(i) that states "Any act, conduct, or activity that is permitted by this Agreement shall not be a Circumvention". Therefore, you would think the NHL would have to prove to the system arbitrator Richard Bloch that there is language in the CBA that prevents Kovalchuk's contract from being legal.

Bloch cannot use the argument that $95 million is earned in the first 10 years of the deal, even though most people do not think Kovalchuk will come anywhere close to finishing the contract. If the contract follows the language of the CBA, then how can Bloch reject it?  While there is little downside to the NHL attempting to stand its ground and trying to disallow the deal, I do not see how the arbitrator will be able to take the position of rejecting this contract in the end.

When you have the minds of GM Lou Lamoriello and VP Steve Pellegrini at work here, you have two gentlemen who played a large role in putting together the Collective Bargaining Agreement (Pellegrini was in charge of monitoring the salary cap for the NHL at the time, and ironically he was recommended to the Devils to help Lamoriello monitor the salary cap). They know the document as well as anyone, so you have to think they structured the deal to comply with the terms of the CBA, regardless of what lines may have potentially been pushed or crossed. 

This also doesn't bring up the precedent that was established and approved by the NHL in prior contract signings with players like Marian Hossa, Chris Pronger, Marc Savard, Henrik Zetterberg, and Roberto Luongo, which I discussed in an earlier article .

The best argument one can expect the NHL to use is from Section 26.13(b) of the CBA, which reads, "The System Arbitrator may find a Circumvention has occurred based on direct or circumstantial evidence, including without limitation, evidence that a [Standard Player Contract] or any provision of an SPC cannot reasonably be explained in the absence of conduct prohibited by this Article 26."  It seems like a pretty vague argument to hold your hat on, but then again, in front of an arbitrator anything can happen.

You could make an argument about whether or not this contract is necessarily a good thing for the future of the NHL, but I don't believe that would be a basis for this arbitration to be decided on.  If the contract is approved, you may end up seeing a similar-type contract for players like Zach Parise, Steven Stamkos, Drew Doughty, or any other young superstars who will have their contracts up in the next two years.

Ultimately, it will become an issue to be collectively bargained in 2012, which could potentially become VERY ugly for both sides. Neither side can afford a labor stoppage after the crippling cancellation of the 2004-05 season. For a league that consistently likes to shoot itself in the foot, a lockout or strike of any significance could be a death blow to a sport so many people have a great passion for.  How much of that blame (if not all) would fall at the feet of commissioner Gary Bettman?

At this point it's really time to just sit back and wait for the ruling that Richard Bloch will put together most likely either Friday or Monday, and then we can see what kind of impact his decision has on Kovalchuk, the Devils, and the NHL.

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