It is fitting that the longest contractual dispute between the league and the players association ended during the witching hour this morning. At approximately 3am, it was announced that the revamped contract the Devils were trying to sign Ilya Kovalchuk to would be approved. This new deal will still stretch a for a long time, 15 years, and the money will go down to $100 million. Not a severe change from the first, but good enough for the NHL to finally step back and allow this to happen. It is also fitting that Kovalchuk’s new cap hit will be $6.66 million.
The first contract Kovalchuk was signed to was an obvious circumvention of the salary cap, but one that was not “illegal” because of the many similar contracts out there. But nevertheless, the NHL decided to put their foot down and end the nonsense. The product of that decision was a delay in signing Kovalchuk that lasted more than a month.
Now that the circus is over, and Kovalchuk has a home for the remainder of his career, let us take a look at the two new changes to the CBA explained to us by NHL.com’s Dan Rosen:
The agreement includes two major regulations that go into effect immediately and will be a part of the Collective Bargaining Agreement until its expiration on Sept. 15, 2012. If there is no CBA at the start of the 2012-13 NHL season, the rules will be grandfathered until a new CBA is negotiated:
1. While players and clubs can continue to negotiate long-term contracts (five years or longer) that include contract years in a player’s 40s, for purposes of salary-cap calculation the contract will effectively be cut off in the year of the contract in which the player turns 41.
This basically means that if a 33-year-old player signs an eight-year contract, the amount owed to him in the first seven years of the contract will be averaged for the purposes of salary-cap computation. Then, in Year 8 of the contract, the salary he will make for that particular season will determine his salary-cap hit for that season.
So, if Kovalchuk’s contract applied to this rule, the average of what he’s owed in the first 13 years would be applied to the Devils salary cap from 2010-2023 and the cap hit would be $7.15 million because he is reportedly due to make $93 million across that span. Then, per the reported terms, the cap hit would change to $3 million in 2023-24 (as Kovalchuk turns 41 in April of that season) and $4 million in 2024-25.
2. In any long-term contract that averages more than $5.75 million for the three highest-compensation seasons, the cap charge will be a minimum of $1 million for every season in which the player is 36-39 years of age. That $1 million value will then be used to determine the salary cap hit for the entire contract. If the contract takes the player into his 40s, the previous rule goes into effect.
For example, Savard’s contract reportedly calls for him to make $525,000 per season in the final two years of his seven-year, $28 million deal. He will be 38 and 39 in those seasons. If his contract was subject to these new regulations, for purposes of calculating the salary cap the final two years on his deal will reflect as if he was making $1 million. That would make his reported $4 million cap hit go up to $4.14 million.
The club and player still can agree to a contract that pays a player less than $1 million when he is at those ages, but for salary-cap purposes the number applied to the team’s annual average salary will be $1 million.
My only response to this is, it’s about time. For the last few seasons, GM’s have tried to get around the salary cap structure in this league, but even though they looked like they should be considered illegal, there was no standard by which to gauge this. The Devils ultimately fell victim to just plain bad timing, as the NHL had seen enough of this and came down hard on them.
These two alterations to the CBA will make contracts more fair, as teams can no longer hand out massive contracts, extending until the player is way past age 40 and can simply retire. Like them or not, it is something that needed to be done and I am just thankful it is all over.
Meanwhile, the Devils now have a little bit less cap space to work with and will undoubtedly have to make a few moves. Bryce Salvador seems to be the likely victim, to be waived after training camp, but the Devils may need to make more moves. Perhaps Dainus Zubrus and Jamie Langenbrunner could be on the way out. We shall wait and see.
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