In a rare reversal of the NHL’s disciplinary process, the league has amended the sanctions levied against the New Jersey Devils for cap circumvention in the Ilya Kovalchuk free-agent signing.
Back in the summer of 2010, the Devils signed Kovalchuk to a 17-year, $102 million contract that was heavily front-loaded, with most of the compensation coming in the early years of the deal and only token payments towards the end, designed to lower the annual salary-cap charge.
The Devils were not the first team to use the technique of frontloading a contract to modify a players’ salary-cap charge, but they were the one that crossed the line as far as the NHL was concerned.
As a result, the NHL rejected the contract and after a lengthy battle over the wording of the collective bargaining agreement, the matter ended up before an independent arbitrator, where the league’s position was upheld.
The Devils came back with a slightly amended version of the contract that passed muster, but the league fined the team $3 million, and also required them to forfeit a No. 3 draft choice in 2011 plus a future first-round draft choice within a four-year span (2011-14). The Devils deferred that penalty three times, presumably in the hopes that they could eventually win an appeal. That pick was to come due this June during the 2014 entry draft.
In the meantime, Kovalchuk played just three years on the amended 15-year contract before leaving New Jersey last summer to play for St. Petersburg of Russia’s Kontinental Hockey League.
According to the NHL, the Devils applied to the league for “reconsideration and relief” from a portion of the original penalty, citing “changes in circumstances which, in the club’s view, changed the appropriateness of the sanctions initially imposed.”
Ultimately, the league “after due and thorough consideration” agreed to modify the penalty by reducing the team’s fine (reportedly by half) and also restoring the Devils 2014 first-round pick. However, New Jersey will be placed last in the first-round draft order this season (30th overall), regardless of their final standing this season.
Under terms of the ruling, the Devils will not be permitted to trade the pick either.
It is not clear how much general manager Lou Lamoriello’s considerable influence and persuasiveness had on the amended verdict, since the NHL stated it would have no comment on the matter. Presumably, Lamoriello was able to make a convincing case, based in part on the fact that other teams had set the precedent for the type of contract that he’d negotiated with Kovalchuk and that their only crime was pushing the envelope too far in the NHL’s eyes. In either case, it seems like a reasonable compromise – the NHL’s version of an early-release program for a crime that a lot of other teams had previously gotten away with.