NHL Contract Investigations Are Paving the Way for Second Shutdown

Matt Hutter@mahutter12Analyst IAugust 16, 2010

LOS ANGELES, CA - JUNE 25: Gary Bettman of teh NHL works on the draft floor during the 2010 NHL Entry Draft at Staples Center on June 25, 2010 in Los Angeles, California.  (Photo by Bruce Bennett/Getty Images)
Bruce Bennett/Getty Images

On August 9, NHL history was made as an independent arbitrator ruled that a 17-year, $102 million contract, that was significantly (some would say ridiculously) front-loaded, circumvented the league's salary cap.

Thus, the contract was void and the player, an unrestricted free-agent.

For the sake of time, and assuming you have not just arrived from Mars, I'm guessing you know who I'm talking about here.

The general consensus among fans (well, most outside of New Jersey) was that this was the right decision and that the NHL's initial decision to reject the deal, was in fact, justified.

Consider for a moment what might be at stake had the arbitrator ruled against the NHL.

Allowing such an obvious side-step to the salary cap to stand could have served to only embolden other teams to sign similar deals under the current CBA which expires in September 2011.

If a 17-year deal is kosher, why not 20, 22 or 25?

After all, the CBA specifies only a cap on salary, not contract length.

Sure, that loophole has already been widened to the extent that Fat Albert could walk through it without turning sideways, but an arbitrator upholding a 17-year contract is essentially sanctioning similar contracts to be filed in the future.

A ruling such as this would have caused absolute chaos between a league desperately trying to enforce parity among 30 NHL teams and owners intent on paying top-dollar for free-agent talent, regardless of the consequences.

Hmm, sounds familiar doesn't it?

Had the Kovalchuk contract been allowed to stand, I'm fairly certain that the league would have realized two things: the current CBA is too porous to effectively enforce a salary cap, and, the only way to remedy the situation is to take a hard-line stance when negotiating the next CBA, up to and including, another lockout.

In short, the NHL would be headed towards disaster—again.

But this didn't happen.

No, the league was given a gift when this decision was made; inasmuch as it sent a subtle, yet crystal clear message to all NHL team owners that, should they try to file similar contracts in the future, the outcome would likely be the same, so don't even try it.

This particular contract rejection could have served as a landmark line in the sand separating fair and legal contracts, from obvious and shameful salary cap work-arounds.

I say "could" because, in typical fashion, the NHL decided to overplay its hand in a foolish attempt to retroactively remedy an oversight in the collective bargaining agreement.

Just 24 hours after the Kovalchuk contract was officially invalidated, the NHL set about "investigating" other long-term deals it had previously approved.

Employing a "if one is good, more must be better" strategy, the NHL is now looking into the legality of invalidating several other long-term player contracts, Robert Luongo's, Marc Savard's and Marian Hossa's among them.

Now, it was clear to everyone but the comatose at the time that these contracts were obvious (and heretofore, successful) attempts to step-around the salary cap as they allowed the team to pay the player the salary he demanded by artificially lowering his cap hit.

By extending the contract beyond a decade in length and significantly reducing the player's salary in the later years of the deal, what was once a king's ransom of an annual salary, was now a more modest, less audacious figure as far as the league was concerned.

Not a bad bit of accounting magic.

Though the league looked cross-eyed at some of these at the time, they eventually allowed such deals to stand.

Now, the league apparently sees an opportunity to not only ride the wave of righteousness provided by the Kovalchuk contract rejection, but, exploit the fact that the NHL Player's Association is currently a weak, leaderless entity.

Make no mistake, if the NHLPA had a strong leader at the helm, opposed to an interim figurehead (Mike Ouellet) keeping the seat warm, the grievance filed on behalf of Kovalchuk that sent the contract to the arbitrator's desk in the first place would have been accompanied by loud and raucous cries of "foul" emanating from the NHLPA's office on a daily basis.

And, had the arbitrator ruled the same way, and rejected the contract, the Executive Director, whomever that might have been, would have almost assuredly held a press-conference immediately after decrying the league as acting in bad faith as they were essentially attempting to re-write the CBA outside of formal negotiations.

But none of this happened.

The NHLPA essentially responded to the ruling with a "we tried" shoulder shrug and went about doing, well, whatever it is it's doing now.

The NHL is unusually powerful right now and, by utilizing the clarity that only 20/20 hindsight can provide, they're are attempting to use that power to earn a few mulligans on contracts they previously approved.

That's a dangerous game to play when you've got a CBA set to expire in a little over a year.

Let's say that Roberto Luongo's or Marian Hossa's contract is rendered void.

Is it possible that, whomever the NHLPA's new Executive Director is, that he won't make challenging the actions of the league his first priority once he assumes the position?

Of course he would. 

In fact, his willingness to do so may be the very thing that would get him the job in the first place.

If the players (and by extension, owners) feel they're getting hosed by the league when it comes to contracts and salaries, what else is the NHLPA there for than to fight hard to make sure this doesn't happen?

Should the NHL pursue their investigation of long-term contracts, they're setting the stage for an immediate cold war with the NHLPA as soon as their new Executive Director takes power.

This is a cold war that could turn hot very quickly when it comes time to negotiate a new CBA.

If the NHLPA feels the league has acted unfairly or abusively with regard to player contracts, they might very well elect to strike until a more "player friendly" CBA is negotiated.

At that point, the league would have passed the point of no return and would likely dig their heels in even harder demanding not only term-limits on player contracts, but a reduced salary cap overall.

In true pissing contest fashion (pardon the term, but could you really call it anything else?), the league might impose a lockout, superseding and rendering void a player's strike.

The result?

Well, like the USSR before it, the NHL might simply cease to exist as this is a scenario beyond remedy that can only lead to destruction.

The NHL won an important battle in regards to the Kovalchuk ruling, but by flexing their muscle and investigating other, previously approved contracts, they might very well be setting the stage for a second work stoppage in less than 10 years.

In which case, all of this would have been for nothing as the contracts with which they've taken issue won't be worth the paper they're printed on.


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