by PuckStopsHere on 07/20/10 at 06:01 PM ET
Yesterday the highest profile free agent of the 2010 summer, Ilya Kovalchuk re-signed with the New Jersey Devils. He signed a 17 year pact worth $102 million. This gives him an annual salary cap hit of $6 million. This is a glorious example of legal contravention of the salary cap. Nobody seriously believes that Kovalchuk will still be playing in the NHL at age 44 when the deal ends. Nobody seriously believes that Kovalchuk will play for the 17 year term or have an annual average salary as low as $6 million.
That said there is nothing the NHL can do about the deal right now. There is significant precedent for these long term deals with declining pay in the sunset seasons to keep the annual salary cap hit down. There are more than a handful of players signed to these deals who are not expected to complete them.
As far as the New Jersey Devils are concerned, signing Ilya Kovalchuk for a $6 million salary cap hit is a good thing. The salary cap hit is reasonable for a player of his ability. The Devils are a team that could afford to exceed the salary cap if rules allowed it. Effectively now they are. They are using their financial muscle to sign a player for more money than his salary cap hit will report. They have the money to do this and it is in their best interest to use the advantage.
Likely when the CBA gets renegotiated, we shall see some rules changed to prevent future long-term deals like this one. We may even see some sort of change to these deals that are still on the books (after all player pay was reduced by 24% on existing deals in the last negotiations). That is no reason to fear such long term deals. The NHL doesn’t seem likely to do much about them.
The big boogeyman often touted in these long term deals is insurance. Teams cannot insure contracts against injury for the extreme length of these contracts. That is nothing significant to worry about. Insurance is a bet against the health of the player and it is a bet with bad odds. If the insurance companies didn’t win over the long term, they wouldn’t stay in business. Basically, the Devils cannot make a bet against Kovalchuk that is likely a money losing one. That is nothing to worry about.
Ilya Kovalchuk is a good player. He is one of the best players in the league who has never been a serious MVP candidate. That may change now that he is permanently out of Atlanta and into what should be a better situation. Even if Kovalchuk never does have that MVP candidate year, at $6 million a year that isn’t necessary for him to be a good signing. New Jersey made a good signing under the NHL rules. The length of the contract is ridiculous and that is the NHL rules have pushed these contracts.
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