The Puck Stops Here
Bettman Overstepping Bounds In Kovalchuk Affair
by PuckStopsHere on 09/03/10 at 01:23 AM ET
Comments (12)
As we watch the Ilya Kovalchuk affair we are seeing that Gary Bettman has tremendous power over the NHL. Multiple NHL players signed high money front-loaded contracts which had them playing well beyond the age where most players retire. Gary Bettman and the NHL accepted them. This became a problem in Gary Bettman’s eyes with the Ilya Kovalchuk contract. In this case Gary Bettman served as the district attorney in deciding which contracts to fight. He used his power to select an arbitrator in Richard Bloch, who was strongly likely to rubberstamp the NHL position. Essentially it made Bettman the judge and jury.
Bettman’s choosing of drawing a line with the New Jersey Devils and Ilya Kovalchuk and not on the previous contracts is a very questionable act.
Ilya Kovalchuk has a reworked 15 year $100 million contract that has been submitted to the NHL now. This is where Gary Bettman jumps even further in his power grab. He has threatened that the contract will be thrown out, unless the NHLPA accepts his version of re-writing the CBA. Larry Brooks of the New York Post reports that the Kovalchuk contract will be accepted and any of the existing contracts that are under investigation unless
1. That the cap hit on future multi-year contracts will not count any seasons that end with the player over 40 years of age. The cap hit would be calculated on the average of the salary up through age 40 only.
2. That the cap hit on future contracts longer than five years will be calculated under a formula granting additional weight to the five years with the highest salary.
If this is not accepted:
1. It will reject the Kovalchuk contract.
2. It will move to immediately devoid the Luongo contract.
3. It will move to immediately open proceedings for a formal investigation into the Hossa contract.
There is a lot of latitude taken by Bettman in choosing the consequences for non-acceptance of his way. Luongo’s 12 year $64 million contract runs until he is 43 years old. Although the NHL accepted it in September of last year, the Gary Bettman is threatening to void it today. The first year of the contract is this upcoming season. Marian Hossa has a 12 year $59.3 million that lasts until he is 42 years old. The problem is that he has already played the first year of the contract and was an important part of the Stanley Cup winning Chicago Blackhawks. Can you seriously consider voiding a contract after a player helped his team win the Stanley Cup while playing under it? Absent from this discussion for reasons that are unclear are Marc Savard’s seven year $28.05 million contract that lasts until about a month before his 41st birthday and Chris Pronger’s seven year $34.45 million contract that lasts until he is 42 years old. The selective way in which contracts are chosen to target is problematic.
Gary Bettman strikes me as a power hungry fantasy hockey commissioner in this situation. He has been inconsistent in the interpretation of a rule. Now that he chooses to stand for a rule interpretation, he is not allowing what had been allowed in the past. Further he is threatening to re-open the past in an attempt to have it conform to his new interpretation. He is still selective in which parts of the past he is re-opening and he appears willing to re-open significant situations that helped to decide the Stanley Cup.
It isn’t clear how much of a mandate Gary Bettman has for his position. Clearly several teams have signed players to front-loaded long-term deals where it is reasonably expected that the player in question may retire before it ends. These teams may have their contracts re-opened and will not like this. Other teams with financial muscle who might like to sign such contracts in the future may not like it either. Essentially, Gary Bettman’s support comes from the small markets who are struggling to survive. In many cases, these are the markets that came into existence under his rule.
It also isn’t clear why the NHLPA would want to accept Bettman’s terms. The player’s share of revenues does not change with or without Ilya Kovalchuk or any other player signed. The presence of these high money contracts merely increases the money paid to escrow by the other players. Except for the few players who have these contracts, the NHLPA members lose money with these contracts.
From a business stand-point, the NHL is not doing any favors to itself by rejecting another Ilya Kovalchuk contract. This would probably chase Kovalchuk off to the KHL. It’s not in any league’s best interest to send one of their most talented players to the competition. It only serves to legitimise the competition.
Gary Bettman is trying to force the NHL to conform to his wishes and he is willing to open up his own past decisions to re-write things. Running Ilya Kovalchuk out of the league and re-opening the Marian Hossa contract, despite the fact Hossa was a key member of the Stanley Cup champions while playing under this contract. It is not a situation that makes a league or its commissioner look competent. Worse, what happens with high profile players in Roberto Luongo and Marian Hossa potentially becoming free agents in time for training camp?
Filed in: | The Puck Stops Here | Permalink
Comments
I hope that Bettman does run Kovalchuk out of the league, and I hope that he makes a lot of useless noise about the Luongo and Hossa deals, and let’s throw in Savard and Pronger for good measure. The more owners he pisses off and embarasses, the more likely it is that they wise up and get rid of him.
Posted by baldhedjer on 09/03/10 at 01:58 AM ET
Bettman earned a “lifetime contract” for delivering a hard salary cap directly linked to a fixed percentage of league-wide revenues. The Board of Governors can’t “investigate” it, regrettably…and probably won’t, but Bettman’s certainly testing their patience.
Posted by George Malik from South Lyon, MI on 09/03/10 at 06:27 AM ET
George, I’m surprised you didn’t mention it in your comment since you’ve mentioned it a few other times in your Snapshots posts (such as this one http://blog.mlive.com/snapshots/2010/08/nhl_deputy_commissioner_bill_d_4.html).
But the whole escrow argument is really a deflection. LTIR and situations like Huet have a far larger impact on escrow than a “lifetime contract”.
Posted by Nathan from the scoresheet! on 09/03/10 at 10:54 AM ET
The difference is that LTIR is a good system, so it’s ok that it has an impact on escrow while retirement contracts like Hossa’s are not good-faith deals.
If escrow is really going to be that much of a problem, the players should be calling for the 54-57% share of each individual team’s HRR (plus the league’s HRRs that aren’t tied to an individual team) rather than the 54-57% of the gross of the entire league. They should also lower the salary floor to let the low-earning teams actually try to spend in that 57% range instead of forcing them to pay upwards of 65% and then promising them kickbacks in the form of revenue sharing.
In the short run, that won’t change what the players’ share figure comes out to be, but it will have an effect on the way teams spend.
Posted by J.J. from Kansas on 09/03/10 at 11:04 AM ET
Point of clarification, and please correct me if I’m wrong, but aren’t the players’ salaries paid by insurance while they’re on LTIR?
If that’s the case, then there’s no way it should (operative word SHOULD) have an effect on escrow because it’s not the teams paying the salary while they’re hurt.
I would say in that situation, that insurance premiums for salary coverages when a player is hurt should be considered part of the players’ share when calculating salaries though.
Please correct me though if I’m working on a flawed assumption about the way injured payers are paid, I haven’t been able to find a source one way or another that fully explains it.
Posted by J.J. from Kansas on 09/03/10 at 11:23 AM ET
Oh I agree LTIR is a good thing. I wish I could find all of George’s old posts about this. Perhaps in his new KK blog he could do a breakdown for us? 
From a player perspective, LTIR is as good a reason as any to pay into escrow. At least that’s how I’d feel. I think the biggest problem for escrow is burying players in the minors. It basically punishes the players for mistakes made by ownership and GMs. Like Huet even said, if he could’ve renegotiated his deal under the CBA to stay in the NHL, he’d rather do that then get his money and essentially get temporarily blacklisted from the league because of his salary.
As for the insurance thing, I don’t know. I’d think not… NHL contracts are guaranteed, so doesn’t that mean the owners have to pony up regardless? Are the owners allowed to take insurance out on their own players? I really don’t know, I’m just as curious as you now…
I’m just throwing ideas out here, but it would make sense to me if insurance would pay for an injury unrelated to hockey. But since contracts are guaranteed and the risks of playing in the NHL are known… then again, we all have workman’s comp. and things like that.
Posted by Nathan from the scoresheet! on 09/03/10 at 11:43 AM ET
I think the biggest problem for escrow is burying players in the minors. It basically punishes the players for mistakes made by ownership and GMs. Like Huet even said, if he could’ve renegotiated his deal under the CBA to stay in the NHL, he’d rather do that then get his money and essentially get temporarily blacklisted from the league because of his salary.
Absolutely agreed on the idea that burying players in the minors/Europe as a means to manage the salary cap is at best a grotesque massaging of the system and at worst, a complete bastardization. The minor leagues are there for player development and for conditioning stints for established guys, not for salary overflow. I mean, if the league wants to talk about the spirit of this and the spirit of that, we should be talking that the spirit of the AHL isn’t about paying a guy $3 million for some crap like “teaching the youngsters” when we all know that’s not what’s happening.
However, I’m glad that Huet and the Hawks can’t renegotiate their contracts I know it might mean that he’d still have an NHL job, but allowing contracts to be renegotiated gives both sides, the players and the teams, means and motive to try to bully one another whenever they’re the slightest bit unhappy with a current valid contract. Under current rules, teams could threaten to bury a guy who’s underperforming and not likely to be picked up off waivers to take a salary cut or play the remainder of his career in the AHL. Players could threaten a work slowdown (intentionally sucking, so as to not constitute an actual strike, which the CBA expressly forbidgs), if they don’t start getting paid what they think they’re worth. I think ending guaranteed contracts would lead to some serious acrimony down the line.
Yeah, the insurance thing is going to bug me. I’ll keep looking and update if I get an answer, but in the meantime, if anybody has the answer to that question, I’d really love to know and would thank you heartily.
Posted by J.J. from Kansas on 09/03/10 at 12:27 PM ET
Yeah, I see your point. I think the cash should still be guaranteed. I think it’s more about how can you put checks on the renegotiation process to make the process only amenable to both the team and the player when both it behooves both parties. Might not be possible.
Posted by Nathan from the scoresheet! on 09/03/10 at 01:08 PM ET
JJ
I think injury insurance on contracts is entirely outside the CBA. A team can get it or not get it and it doesn’t affect the CBA-related bottomlines in anyway. Insurance is not recorded as a player cost and any insurance payouts are not a drop in player costs. The decision to insure or not insure a contract and whether or not the insurance pays a claim or not is not a factor in the CBA financial calculations.
Posted by PuckStopsHere on 09/03/10 at 03:02 PM ET
In that case, then it truly is a case where players on LTIR are partially paying the salaries of their own replacements, like George Malik said.
I’m not sure I’d force teams to carry insurance on players’ salaries if they don’t want to either, since either way, a player on LTIC is paid his salary until he’s either voluntarily or medically retired (and the CBA does have a complete set of rules regarding the criteria that must be met to force this condition which does adequately protect both teams and players, IMO).
Guess the best solution remains the simplest, the players accept that the salaries of their injured brethren and of thsoe brought in to replace them will all come out of the set players’ share and that’s that; status quo for this issue remains. Meanwhile, the NHLPA should take a more active role in exploring means to eliminate their need to pay escrow in the first place. Hopefully by using methods that don’t involve needlessly rolling back the salary cap or players’ salaries directly.
Posted by J.J. from Kansas on 09/03/10 at 04:07 PM ET
Add a Comment
Please limit embedded image or media size to 575 pixels wide.
Add your own avatar by joining Kukla's Korner, or logging in and uploading one in your member control panel.
Captchas bug you? Join KK or log in and you won't have to bother.
Most Recent Blog Posts
About The Puck Stops Here
The Puck Stops Here was founded during the 2004/05 lockout as a place to rant about hockey. The original site contains over 1000 posts, some of which were also published on FoxSports.com.
Who am I? A diehard hockey fan.
Why am I blogging? I want to.
Why are you reading it? ???
Email: y2kfhl@hotmail.com
Mark it down, there is absolutely no way the NHL takes any action other than “opening an official investigation” into the Hossa contract. The talk that would have to lead to whether to strip Chicago of the Stanley Cup would be a gigantic historic black mark on this already shady portion of NHL history.
The Hossa talk is all saber-rattling.
The Luongo talk on the other hand…
Posted by J.J. from Kansas on 09/03/10 at 01:52 AM ET