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NHLPA files grievance in Kovalchuk matter

The NHLPA, as expected, has filed a grievance over the league's rejection of Ilya Kovalchuk's 17-year, $102 million contract with the Devils.

The union had until 5 p.m. today to file. Per the NHLPA's release:

"The NHLPA has filed a grievance disputing the NHL's rejection of the Standard Player Contract between the New Jersey Devils and Ilya Kovalchuk. Under the terms of the CBA, the NHLPA and Mr. Kovalchuk are entitled to an expedited resolution of this matter. The NHLPA will have no further comment until this matter has been resolved by an Arbitrator."

The Devils have maintained that they've done nothing wrong.

The next step will be for the NHLPA and NHL to choose an independent third party. Once this unique case is heard, the arbitrator must render a decision within 48 hours.

At issue now is how quickly the sides will agree on an arbitrator. The NHLPA, Kovalchuk and the Devils want one in place as soon as possible so, if necessary, the high-scoring wing can return to market and seek a new deal. The NHL, which has warned GMs about these front-loaded contracts, doesn't figure to feel the same pressure.

Deputy Commissioner Bill Daly, however, says the NHL will "work with the players' association to ensure an expeditious resolution."

"We have received formal notice that the NHLPA is grieving the league's rejection of Ilya Kovalchuk's contract with the New Jersey Devils," Daly said in the statement (via Fire & Ice). "Although there is no defined timetable at this point, we intend to work with the players' association to ensure an expeditious resolution of this dispute. The league looks forward to the opportunity to establish its position before the arbitrator. We will have no further public comment pending completion of the process."

If the arbitrator rules in favor of the league, Kovalchuk will become an unrestricted free agent immediately. If the league's decision is overturned, Kovalchuk remains a Devil and the Caps have one more thing to worry about next winter.

Here's another chance for you to weigh in:

  • Uphold the NHL's rejection because the deal was meant to circumvent the cap.
  • Side with Kovalchuk and the Devils because they followed the letter of the law.

By Tarik El-Bashir  |  July 26, 2010; 2:29 PM ET
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They went by the letter of the law and the contract should be allowed. It is ridiculous but this is no different than a few other contracts currently in existance.

Posted by: PhilR | July 26, 2010 2:44 PM | Report abuse

It is ridiculous but this is no different than a few other contracts currently in existance.

Posted by: PhilR | July 26, 2010 2:44 PM

i disagree. none of the other 'front' loaded contracts start with a salary ($6M) that would be considered below market value of the player and then almost double in the third year ($11.5M). the last 6 yrs of the contract is a farce.
i can't think of any other contracts that actually pay almost 40% more in real money as compared to the cap hit. the players 'productive' years of the contract end when the salary drops below $1M. does anyone think kovi will really play until he is 44?
is this within the 'letter' of the cba contract structure? - sure
does it attempt to circumvent the 'cap hit'? - no doubt in my mind

Posted by: Capt_Kirk_in_AZ | July 26, 2010 3:01 PM | Report abuse

it all depends on if the arbitor goes for letter of the law or accepts the NHL's stance that it circumvents the spirit of the CBA.

personally, I think it'll get pwned and Ilya will once again be a FA

Posted by: FrankM73 | July 26, 2010 3:15 PM | Report abuse

"If the league's decision is overturned, Kovalchuk remains a Devil and the Caps have one more thing to worry about next winter."

I don't get this comment. He's moving out of our division if the deal goes through. Sure, we still play the Devil's and they're a lot better than the Thrashers, but we won't face Kovi as much.

Posted by: Skullduggery65 | July 26, 2010 3:16 PM | Report abuse

That said, he's likely moving out of our division if he becomes a FA as well.

Posted by: Skullduggery65 | July 26, 2010 3:18 PM | Report abuse

I don't see how paying a guy below his expected salary in his first two years means anything. That's what he is going to be paid the next two years. I'm sure Kovy would've wanted more, but this doesn't circumvent the salary cap in any fashion.

It would be similar to a veteran accepting a one-year offer on team for the chance of winning versus accepting a larger deal on another team. However, is signing a deal lower than your value circumventing the cap?

Also, any deal that has the highest paid salaries in the first few years is designed to circumvent the cap.

If a player signs a 10 year contract worth $50M, and lets assume he will play all ten years.

That contract is worth more to the player if he makes $11M in each of the first 4 years and then $1M for the remaining 6 years, then if the player made $5M/yr for 10 years. This is because of inflation and the ability of the player to invest that money upon receiving it(and I'm sure there are other factors as well).

That is a way of saving cap room from the extra salary that would have to be given due to those factors to be worth the same value as the contract that pays $11M/yr in the first 4 years.

Would that contract be illegal then because that would only be done to circumvent the salary cap?

Posted by: sgm3 | July 26, 2010 3:19 PM | Report abuse

Wow, I stand corrected. Considering how weak the NHLPA currently is, I didn’t think they would take a stand on the issue. I don’t blame the NHLPA for grieving the issue; I just didn’t think they had the leadership on board to actually go through with it. It also means Kovalchuk, the Devils, and the rest of the league may be in for a protracted dispute. I don’t care what the NHL says, I believe this is the first shot in the CBA re-negotiation saga and the league will be in no hurry to settle this. Look for some posturing on the naming of an arbitrator and the timing of an arbitration date.

I believe the NHL is correct in that this contract was a deliberate attempt at circumventing the salary cap. At best, it is a loophole, meaning it was an unintended consequence of the CBA as written, thus not meant to be legal. However, if the league loses their case, watch for a slew of these types of signings before the next CBA is negotiated. This will push the NHL to make it an issue with the NHLPA. Is it enough to cause another work stoppage? I don’t know, but it will certainly be a bargaining chip for use by both sides, along with RFA salary arbitration and player salary escrow.

Posted by: braunt | July 26, 2010 3:26 PM | Report abuse

Nobody but me, anywhere I can tell, has raised the idea that the smoking gun might be Kings GM Lombardi. I believe that in the multiple negotiating sessions with Jay Grossman, agent for Kovy, that Grossman might have given Lombardi some kind of indication that the years at the end would never be played.

How does this hearing work? Can the league "subpoena" Lombardi? Can either side subpoena anyone? Do they take oaths? What I mean is, what if the league presents Lombardi as a witness? Can the NHLPA cross-examine? Can the league demand that Grossman "get on the stand" and then ask him point blank did he attempt to circumvent? What if someone then lies during the hearing?

Could this be a future episode of Perry Mason?

"The Case of the Siberian Sniper."

(As you can tell, I haven't watched TV in awhile.)

Posted by: tominsocal1 | July 26, 2010 3:27 PM | Report abuse

i would ask - would kovi have signed a two year $12M contract?
the answer is no without the $11.5M years added in.
nj added the throw away years, 6 of them for less than $1M, to keep the cap hit down.
i believe the first two years of the deal allowed the last 6 years of the contract to be cba compliant with the cba.

to try and answer your questions above - if you have a 10 year contract and will be playing 'all' 10 of those years - it makes no difference what you are paid each year.

if there is little to no chance at playing the 'declining' (reduced salary) years, where the player retires and the 'cap hit' is 'off the books' for those remaining years - i call that circumventing

gordie howe played until he was 52 - how long before someone uses that as a precedent for a length of a contract. if the rejection is overturned - this is where things are headed

Posted by: Capt_Kirk_in_AZ | July 26, 2010 3:32 PM | Report abuse

I don't know why this would be an issue at the next CBA. These contracts don't affect how much the players are paid in total. The players get a percent of the total revenue (called the players' share, or pool) and then they divvy it up based on their individual contracts. So, if the players' salaries are $1.35B, and Ovechkin has a $9M contract, he gets 9m/1.35b = .0066666 of the total. Now if players share is actually higher, $1.4B, Ovechkin would get $9333240, not $9000000.

The league isn't trying to cut down what the players get, just properly acct within the cap. It doesn't matter how much they all sign for - they only get, in total, a percentage of the revenue. The owners aren't trying to hold down payouts to players - under the CBA, it is not possible for them to do that.

Is that all correct that I wrote?

Posted by: tominsocal1 | July 26, 2010 3:36 PM | Report abuse

Here is what I think the NHL's case is. There is a part of the CBA that does say they can void a contract that goes against the spirt of the CBA so they have the legal right to do that they did. Here is how they can show this is different then the other contracts.

1. It is longer then any the other contract. Ovechkin and Dipietro were the only two within 4 years of the length and they were 22 (Ovechkin) and 24 (Dipietro) when they signed the deals not 27 and both of them were even amounts or backloaded.

2. No player has ever signed a mulit-year contract that took them to age 44.

3. None of the other contract have had so many years at or around the league min. Vets may sign late in their careers for less money but unless they were never a big player there has never been a players who once was of his calaber that has ever signed a contract for the league min.

4. He has the biggest difference of any player between his highest paid year and his Cap hit (Kovy=$5.5 million, Hossa=$2.625, Pronger=$2.68, Zetterberg=$1.67, and Franzen=$1.55). The only contract that was even close to Kovy's difference was the one for Luongo which was $4.67 but he only has one year at the highest $10 then the next highest is $6.7 million which is only a $1.4 million difference.

The league warned the teams that this were pushing things last year when they reviewed those contracts and the Kovy deal just went way beyond all of those other deals that were questionable.

Also all the NHL has to do is prove that the deal went around the spirt of the Cap which it clearly did, as did the other contracts. All the NHL has to do is give any good reason why this contract is different then the others and I think the massive amouunt between the highest paid year and the Cap hit and the 5 years at the league min.

Posted by: icehammer97 | July 26, 2010 3:39 PM | Report abuse

Is that all correct that I wrote?

Posted by: tominsocal1 | July 26, 2010 3:36 PM

i don't know - i'm not smart enough to figure out the 'pool' and 'share' stuff.

however i do understand keeping your team payroll under the max cap - and i think nj is trying to get around it.

Posted by: Capt_Kirk_in_AZ | July 26, 2010 3:40 PM | Report abuse


No, neither side has the power to subpoena.

While it is possible that there could be a smoking gun, the NHL would need some recorded evidence.

If it is only Lombardi's "testimony" that Kovy wanted a circumventing deal it would have much less evidenciary weight as Kovy/Grossman could just deny it and say it was Lombardi who made the offer of a circumventing contract and that Kovy did not want to enter into an illegal deal(he said, she said ordel).

If someone blatantly lied during the arbitration proceedings then it is possible that they could be sued.

Posted by: sgm3 | July 26, 2010 3:41 PM | Report abuse

sgm: If it's really an arbitration, and not like a trial, "testimony" from Lombardi could convince the arbitrator to rule against the NHLPA.

To add on to what icehammer said, there are plenty of examples of great players playing for min wage at the end (Chelios signed for $600K at age 46) but not for SIX STRAIGHT YEARS.

Let's all be honest - this is the most ridiculous contract perhaps in the history of sports and it's nothing but an abject attempt to circumvent the cap.

All the arbitrator needs is a shred of evidence and he can uphold the voiding of the contract.

Posted by: tominsocal1 | July 26, 2010 3:51 PM | Report abuse


A contract that pays $11M/yr in the first 4 years and then $1M/yr in the next 6 is worth more than a contract that pays $5M/yr over 10 years.

Because the earlier a person gets the money the quicker they can invest it. After the fourth year in my example, the player would have $44M(minus taxes etc.) to invest compared to only $20M(minus taxes etc.) in the second contract.

Therfore, without doing the math, a 10 year contract that pays $11M/yr for 4 years than $1M/yr for 6 years might be worth $52M or $53M if paid evenly over the entire 10 years. So that could save 0.2M to 0.3M in cap hit.

Therefore, technically, that would be circumventing the salary cap because the contract, worth the same value, was written in a certain fashion to lower the salary cap hit.

On the idea that Kovy wouldn't have signed a 2 year 12M contract. Probably, but it is just mere speculation. Others have. Either way, accepting lower money up front is not circumventing the cap. Kovy would much rather have the $11.5M in his 5th and 6th year be advanced immediately because it is worth more now and the cap hit would be the same.

I really think the Devils did this so that Kovy's contract causes no increase in escrow in the first two years(his cap hit is worth $6M also) so he would gather better support from other players since it will not have much effect on them.

That is the problem with the NHL relying on such vague language. There are so many ways to take it that leaves so much of it open to interpretation.

Posted by: sgm3 | July 26, 2010 3:52 PM | Report abuse

If I'm McPhee, I'm putting the final touches on a 35-year extension for Brooks Laich that will have a cap hit of about $1.25M.

Just in case.

Posted by: tominsocal1 | July 26, 2010 3:53 PM | Report abuse


True, an arbitrator has a lot of leeway on what how he can rule. And he can use any evidence, such as Lombardi's testimony to reach his conclusion. So he could base his ruling on many things.

However, if an arbitrator incorrectly applies the law a side can appeal an arbitrator's decsion to the courts. If an arbtitrator ruled in favor of the NHL based on a "shred" of evidence, my guess is that the NHLPA would appeal.


Also true about the deal, but then where is the line and how was Kovy and/or the Devils or any other agent, team or player to know where this line was? Was Hossa's deal the line? Is the line further than that?

All these questions again point to the problem the NHL has. It did not expressly prohibit the deal, so Kovy can point to Howe, Chelios, Rechi etc. and say he is going to play until 44 and he just wanted his money sooner in case of injury, buyout protection, to invest and purchase things, etc.

It is almost impossible, barring that smoking gun, to prove that Kovy won't finish that deal. Yes, it is highly unlikely, but others have played that long under similar type of salaries at that point, so it is possible.

I will always blame the idiotic NHL for being so unbelievably dumb to not cover this in the CBA. Someone messed up terribly there.

Posted by: sgm3 | July 26, 2010 4:03 PM | Report abuse

i understand now.
my problem with this contract is that nj is banking on kovi retiring before it expires and they are no longer held to the $6M cap hit. kovi would have no problem with retiring early if he felt he was still worth more than $550k because he already has his money.
nj is trying to 'free up' cap space by adding on these bogus years.
i don't think the other contracts with declining (retired) salaries should have been allowed either.

if nj were to be held accountable for the $6M cap hit for all 17 years - do you believe they would have offered the contract?

Posted by: Capt_Kirk_in_AZ | July 26, 2010 4:09 PM | Report abuse

Also, Lou Lamierello knows what he is doing and how to use the court system.

I didn't realize this, but when that whole Schoenfeld/Koharsky donut incident happend, Schonefeld was supposed to be suspended for game 4, and was suspended by the NHL about 7 hours before faceoff. The NHL did this without hearing from Schonfeld and without taking other necessary measures.

So Lou called a judge in NJ, who was a devils fan, and was forewarded to the judge who was working at the time. They then drove to the Judge's home and received a preliminary injunction to stop the suspension of Schonfeld. So Schonfeld was then able to coach in game 4.

Lou helped write the CBA, he knew this was going to be rejected but still went forward with it. While he doesn't like these sort of contract, I have to believe that Lou completely believes he will win based on the langugage of the CBA and the language of the contract.

Posted by: sgm3 | July 26, 2010 4:12 PM | Report abuse

Tarik, Lindsay, et al:
A CBA primer on this issue may be in order. There appears to be multiple applicable sections of the CBA. Section 11 discusses standard player contracts and their acceptance or rejection by the league (including those considered to be circumventions) and subsequent appeals. Such appeals go to an IMPARTIAL Arbitrator. However, Section 26 discusses the requirement for no circumventions, including salaries that may circumvent the contract. In this section, the league may investigate possible circumventions and present their case to a SYSTEM Arbitrator. Section 47 discusses the appointment of each type of arbitrator, while Section 17 discusses how arbitration hearings are to be conducted. Since it’s all written in contorted legalese, I’m not sure how it is all supposed to work. A little help, please?

Posted by: braunt | July 26, 2010 4:13 PM | Report abuse

I predict at the end of this controversy a movie will be made about the six bogus years tacked on with min salary at the end.

It will be called, "The Dirty Half-Dozen."

You heard it here first.


Posted by: tominsocal1 | July 26, 2010 4:15 PM | Report abuse


I have no doubt the Devils are not planning on paying the deal over 17 years.

But the problem is where do you draw the line. My example is a much less significant case of salary cap cirumvention, but it is still that. The Hossa and Pronger contracts are also salary cap circumvention but were seen to be fine.

With the vague langauge the NHL is using, it seems that the NHL was to arbitrarily draw the line 5 years after the contract was made.

Posted by: sgm3 | July 26, 2010 4:17 PM | Report abuse


One interesting side note if Lombardi "testifies" is how would he then be treated by player agents. There could be a sort of uprising of agents who would not trust Lombardi and would be less willing to deal with him.

That could be a deterent to Lombardi testifying. It might not, but it is worth considering.

Posted by: sgm3 | July 26, 2010 4:21 PM | Report abuse

sgm: Why should the honest agents care what Lombardi does?

Posted by: tominsocal1 | July 26, 2010 4:26 PM | Report abuse


I'm not saying they should. But in negotiations there may if often an unwritten rule that what goes on during negotiations will remain confidential. A breach of this confidentiality could make other agents less willing to open up which could make things more difficult.

Also, to your question of why should the honest agents care? Well, when you discover an honest agent then we can further investigate that question. ;)

Posted by: sgm3 | July 26, 2010 4:31 PM | Report abuse

The league isn't trying to cut down what the players get, just properly acct within the cap. It doesn't matter how much they all sign for - they only get, in total, a percentage of the revenue. The owners aren't trying to hold down payouts to players - under the CBA, it is not possible for them to do that.

Is that all correct that I wrote?
Posted by: tominsocal1

Based on your post, the players, at least the players on the bottom half of the salary scale, are the ones hurt by this type of circumvention. If that is so, why would the NHLPA grieve the issue? If the owners only care about total payout and not individual payouts, why would the NHL reject the contract?

As you inferred, the team salary cap does not equal actual salary paid by each team. The league, as opposed to individual owners, is looking out for the interests of the NHL in general, including the economic viability of weak teams in weak markets. Let’s say that this thing gets out of hand and many of these types of contracts are awarded. An individual team could meet its salary cap, say $60M, but have an actual payroll of let’s say $100M. Even if you take some back to meet the league hard percentage to the players, individual teams could still have inflated payrolls for a numbers of years that could push them over the financial ledge.

One question I have: If a player, who signs a contract before age 35, retires his cap hit goes away, but does his actual contract disappear? In other if Kovy retires after 10 years, do the Devils still have to pay him the remainder of his contract or are they done with it? If he’s not owed any money, then why would he retire unless he’s injured and could make an insurance claim? He could still be paid a substantial sum, even if he’s over-the-hill.

I don’t know, but just think the league wants to be straddled with these issues, theoretical or otherwise and will push for a change in the CBA to limit contract length. The NHLPA will use this desire as leverage to get something in return, perhaps hands-off RFA salary arbitration, and the problem goes away. Until the next time.

Posted by: braunt | July 26, 2010 4:47 PM | Report abuse

i agree that the wording in the cba is vague. the other contracts were already pushing the limits of what was acceptable to the league - and the league said as much. this deal is just making a farce out of the whole thing.

it would have been nice had the cba stated that a 'cap hit' could not fall below, say, 75% of the max individual $ amount of the deal.

using this logic...
kovi's max year at $11.5M * 75% = $8.625M cap hit - his circumvented (hehe) cap hit is $6M
hossa: max yr @ 7.9 * .75 = 5.925 hit (actual 5.233)
pronger: 7.6 = 5.7 (actual 4.92)
zetterberg: 7.75 = 5.8125 (actual 6.083)
frazen: 5.5 = 4.125 (actual 3.955)
luongo: 10 = 7.5 (actual 5.333)
only zetterberg's seems 'real' to me

other that don't 'cross' the line
ovi: 10 = 7.5 (9.538)
crosby/malkin: 9 = 6.75 (8.7)

surely there is a better way to have an some kind of 'either/or' in the cba to keep this from happening again

Posted by: Capt_Kirk_in_AZ | July 26, 2010 4:53 PM | Report abuse

If the league tried - and failed - to get term-limited contracts with the players' association, how does this constitute "six bogus years?" The league won't be able to definitely prove IK can't play into his forties - Howe and Chelios did, and he's at least as good an athlete as those two.

More to the point, I don't see this hurting the Caps too much, as NJD will remain a strong but flawed team. They have two of the best pure goal-scorers in the game - but they both play the same position. And they need someone to get them the puck; Zajac's good but he's not 1C, and he can't double-shift. Speaking of pucks, Brodeur lets in an increasing amount of them in recent years, especially come playoff time.

Posted by: Timbo_1 | July 26, 2010 4:55 PM | Report abuse


Yeah, there could have been so many ways the league could have gone.

Another example is a clause stating that no single year's salary can be more than twice the amount of the average salary(cap hit) of the contract AND no single year's salary can be less than 1/2 of the average salary(cap hit).


Kovy's contract would not hurt other player's and the escrow for the next two years because Kovy will be making exactly what his cap hit is for the next two years. ($6M) The years after that it would, but the CBA is up after two years and it is likely the escrow caluclations will change. To what, I have no idea.

Posted by: sgm3 | July 26, 2010 5:15 PM | Report abuse

Lombardi is not going to contradict Kovalchuk and Grossman. First, he's already made public statements that he believes the NJD contract complies with the CBA and second, if he contradicts this he'll really lose all credibility in dealing with future agents and UFAs.

Posted by: Thisistheyear | July 26, 2010 5:17 PM | Report abuse

once the NHL loses this and they will, any GM not trying to make the sames deals for their club would be a moron.

GMGM already blew it with Backs' contract, he better get it right with Semin's and possibly a few others.

you gotta use it till you lose it.

Posted by: joek443 | July 26, 2010 5:31 PM | Report abuse

When I first heard about this contract I thought was a joke given the cliff that hte salary reduction goes through. But, as a friend of mine pointed (he's admittedly a Devils fan), the maximum contract reduction is in the CBA. So, other than the fact that he isn't likely to be playing when he's 40-something, it is, as the first comment noted, within the letter of the rules. The league needs to prove that neither the Devils nor Kovy expects him to be playing in 17 years, which I'm not sure how they do it.

Posted by: oldtimehockey | July 26, 2010 5:33 PM | Report abuse

the $6M for the first two years (which is below his market value) of the contract, imo, shows that nj was using any means to get the 'backend' of this contract to fit within the rules of the cba. no other contract is structured this way to try and circumvent the salary cap. while i do think the hossa/luongo deals are trying to circumvent - i don't believe they can be used as a precedent because they are not structured the same way.

Posted by: Capt_Kirk_in_AZ | July 26, 2010 5:43 PM | Report abuse

I think deal can't be voided but also think it stinks: it clearly is meant to circumvent the cap (as was the Hossa deal).

Think of the players who sign the honest deals (like Backstrom) who took less so that their teams could remain competitive? If the cap is to be a joke, why should Nick have signed for $6 per?

Posted by: RedLitYogi | July 26, 2010 6:07 PM | Report abuse

@joek443 I would not say that GMGM blew it with the Backstrom contract because Backstrom is young enough it would have had to been a 25 year contract to get it so he would be retiring before the end of his contract which is the whole point. No way the NHL lets a 25 year contract pass and that one is so much more then even Kovy's that the NHLPA would not win an appeal either. Also in two years the CBA is up and the NHL could change how they come up with the cap hit and the teams that have these contracts might be up a creek without a paddle.

Here is the last thought on this because I am tired of going in circles. Last offseason the NHL came out and gave a warning to the teams about these long contracts but let the ones that were done go which set a limit of how front loaded a contract could be. NJ then took that limit the NHL had set by investigating the earlier contracts before finally letting them pass and they went well beyond that limit in several areas. They did it with the first two years being lower then the next several. They did it with the last 5 being longer then anyone else and for less then anyone else. They also did it to where the amount being paid at the prime of the contract was so much more then the cap hit it was doubble what any other player had. (Except Louongo who only had the top dollar for one season then went down to much closer to his cap hit).

What would be great is if the NHL made NJ take the Cap hit if Kovy was playing hockey in any league while the contract was running. Then they couldn't burry him in the AHL or in the KHL at the end of his deal but if he did actually retire or get hurt they would be covered. If the NHL could give them that option and NJ or Kovy said no then clearly they were just adding those years so he could go play in the KHL when he is 40.

Posted by: icehammer97 | July 26, 2010 7:02 PM | Report abuse

Here's a good article for the haters of our GM. Not that I have much hope that anything will get through their thick skulls:

The B's have just under $600,000 in cap space with a bare-bones roster heading into the arbitration hearing while still looking at an unsigned Tyler Seguin heading into the final full month of the offseason.

The rest of the article:

Posted by: ranndino | July 26, 2010 7:05 PM | Report abuse

This makes me sicker than all this Kovalchuk:

Verizon Center
Washington Wizards, Washington Capitals
Vendors with critical violations: 100%

Inspection report excerpt: Mice droppings, a critical violation in Washington, were found at at least 10 vendors.

What is being done about that?

Posted by: lornemyoung | July 26, 2010 7:47 PM | Report abuse

It just sucks that several teams have created a disticnt advantage over the Capitals by using this loophole.

If the arbitrator somehow rules in favor of NJ, the Devils will be able to add up to a Green or Semin caliber player above and beyond what they would have been able to had they given Kovalchuck a legit contract.

Even if they rule in favor of the NHL, expect NJ to modify the contract to where it is more similar to existing loophole contracts. So, instead of saving approx. $5 mil in cap space, they'll save approx. $3. That's still a huge advantage.

Posted by: tmac2yao | July 26, 2010 8:00 PM | Report abuse

Man, 100% critical violations...not only can we not get a 2nd line Center or a big grouchy Defenseman, but now we find out the darn hot dogs are bad too!

Posted by: kcbrichmond | July 26, 2010 8:18 PM | Report abuse

What to look forward to in 2010-11

41 Caps home game $1,300
4* Caps playoff home games $300
90 hot Italian Sausages $720

Not knowing that soft crunch was a mice dropping Priceless!

* Note: Despite the quadruple OT of game 7, it still counts as 1 game.

Posted by: Political_Stratgst | July 26, 2010 8:18 PM | Report abuse

Its really hard for the NHLPA to prove that Kovalchuk benefits by playing past age 39 for the minimum pay. They can only prove he would be rewarded playing the first 12 years.

Actually the NHL can counter that the rest of the NHLPA constituency loses if Kovalchuk plays those last 5 years. Him playing for half a million per season inadvertently will tie up $27 million in cap hit money that NO OTHER PLAYER in the NHL can pocket.

I really think the NHLPA is in a no win situation here.

They dont really want to see any more deals like this Kovalchuk one.

Posted by: yesisaiditfirst | July 26, 2010 10:19 PM | Report abuse

To anyone who thinks the NHLPA is a slam-dunk winner, try reading the CBA forward and backward and upside down and in English, Greek, Russian and Vulcan. You will find this in sect 26.3 on page 115:


"No club or actor...may (i) enter into any agreement...if (it) is intended to or HAS THE EFFECT OF (my italics) defeating or circumventing the provisions of this agreement..."

OK, read for yourself, I was finally able to copy and not just paraphrase:

No Club or Club Actor, directly or indirectly, may: (i) enter into any
agreements, promises, undertakings, representations, commitments, inducements,
assurances of intent, or understandings of any kind, whether express, implied, oral or
written, including without limitation, any SPC, Qualifying Offer, Offer Sheet or other
transaction, or (ii) take or fail to take any action whatsoever, if either (i) or (ii) is intended
to or has the effect of defeating or Circumventing the provisions of this Agreement or the
intention of the parties as reflected by the provisions of this Agreement, including
without limitation, provisions with respect to the financial and other reporting obligations
of the Clubs and the League, Team Payroll Range, Player Compensation Cost
Redistribution System, the Entry Level System and/or Free Agency.

Here's the deal - all the arguments so far put forth by those who say the contract will stand invariably say the league "can't prove there wasa conspiracy to circumvent." Guess what? Read it again - they don't have to prove intent. The league just needs to "show" that the effect of the contract is circumvention. All the league needs to is show how the CBA was designed with a salary cap to both manage revenue between owners and players AND maximize competitive balance, but that with the Kovalchuk contract, intentional or not, the NJ Devils beginning in year 3 of the Kovalchuk contract have a $5.5M salary advantage over the other clubs due to the difference between the salary and the cap hit.

The league can even argue, if Kovy plays to the end, that the contract will cause a negative competitive advantage for the Devils in the last six years, and that they would be circumventing in a different way (possibly paying only $550K but getting a hit of $6M and thereby allowing them to underrun the cap floor).

The way I read it, you don't need to prove motive, intent and action - you just need to produce the habeus corpus. I believe the NHL will hang their hat on this section, and say that the Devils might have been right in what they were doing, but inadvertently circumvented the cap and therefore the contract must be voided.

Posted by: tominsocal1 | July 26, 2010 11:30 PM | Report abuse

Does this try to circumvent the cap? Absolutely!

Can anyone prove it? Absolutely not!

Have fun in Newark, Kovalchuk. Nobody in their right mind would spend 17 years there.

Posted by: CF11555 | July 26, 2010 11:34 PM | Report abuse


Then the Kovy camp can just refer to all the front-loaded deals that have gone through in the past.

Posted by: CF11555 | July 26, 2010 11:37 PM | Report abuse

Now, let's take this provision out of the CBA and put in a place where all of us have a bit more experience:

Let's pretend fo a moment that the IRS had a law that said, regardless of specific tax law, that any person or Corporation who filed a return that through intent or effect had, as a result, that the person or Corporation wasn't paying enough taxes.

Talk about LOOPHOLE, it seems that the league has a loophole here that's light years wider than the loophole through which Lamoriello thought he could ram home this deal.

Any contract or agreement that has the effect...

OK, back to IRS, take your basic millionaire who uses the loophole to pay no tax, and the IRS then states the effect of this is a person not paying a fair they just order you to pay.

Actually this is a law and it's called the alternative minimum tax. The law though has not been updated since the 70s or whenever it was enacted and, as a consequence, so that all of us don't have to pay, Congress basically fixes it each year so most taxpayers avoid this rule.

Now, some countries, Greece is an example, have enacted a Value Added Tax (VAT), where instead of income tax you pay when you purchase goods and services. This then has the effect of taking all those who make money under the table and making them pay unless they just don't spend any money. The US could do this, but, different subject entirely, it would be incredibly unfair to those who have saved after tax money and those who have accumulated money tax-free such as home equity (if any of that still exists).

Back to the sub ject at hand, someone makes ten million, and pays no tax, through a loophole, and if the law said the IRS could impose a tax regardless due that person is using laws to have the effect of circumventing, intentional or not, you'd have a situation comparable to Section 26.3 of the CBA.

Read it again - section 26.3. What you find in law often are ambiguities. In this section, the ambiguities clearly side with the league as a "catch all" to corral in any contracts or arraignments that circumvent "in effect."

Anyway, that's how I read it. Most of you, if not all of you, are way smarter than I am, and, even if you aren't, you probably never drink, so doubtless your minds are sharper, so please accept the apologies of this feeble-minded individual if I have offended your sensibilities.

I am, yours,

ps - current over and unders:

Flash = 2.8
NHL vs Kovy = NHL
Weather tomorrow in DC = hotter than a mofo

Posted by: tominsocal1 | July 26, 2010 11:56 PM | Report abuse

the other front loaded contracts didn't begin with a salary so low that it allowed them to create the ridiculous backend salary/term that kept it within the rules of the cba.
the league investigated the other contracts and stated there could be issues with continuing along those lines. this contract is different and reeks of cap circumvention.

Posted by: Capt_Kirk_in_AZ | July 27, 2010 12:04 AM | Report abuse

Now, you have people like CF, who argue that just because the Hossa contract wasn't voided, that no contract can be voided.

This is like saying since Bob wasn't arrested for punching Sam, we can't arrest Ed for murdering Bill.

OK, a bit of an extreme example.

So, back to IRS. I once called and said I'd made a small mistake that would affect my tax bill by like five bucks. The woman told me, "If it's under ten dollars, they don't care."

So then, I could have argued, "If you allow ten dollar mistakes, you must also allow twenty dollar mistakes."

And, to the police, "If you allow five miles over, you must allow ten miles over."

And, with your mortgage, "If you allow 15 days late, you must allow one month late."

I urge you, CF, to try these tomorrow with the authorities.

Just remember - you get one phone call. Don't call me, though, as I won't answer due to being too busy laughing.

I predict the Kovy contract WILL NOT STAND exactly as written.

You heard it here first.


Posted by: tominsocal1 | July 27, 2010 12:21 AM | Report abuse

And this just in............

The NHL has requested Bill O'Reilly as arbitrator and the NHLPA wants "the spirit of Ted Kennedy" to preside over the case.

Good luck getting this resolved any time soon.

Memo to New Jersey Devils fans: Those of you who bought Kovy costumes in anticipation of this coming Halloween might want to exchange for Lady Gaga outfits currently on sale.

Posted by: tominsocal1 | July 27, 2010 12:30 AM | Report abuse

Finally, I will be speaking tomorrow, at noon, on the Capitol steps, expounding on the potential effects of the Flash arbitration hearing with regards to the Washington Capitals salary cap in 2010-2011.

I shall call it, "The Sermon on the Count."

Tickets are free, of course, just bring a drink for the speaker.

Thank you. Thank you very much.

Posted by: tominsocal1 | July 27, 2010 12:42 AM | Report abuse

You have to first establish what the line is.

With bills you can say they were due on the 15th. With speeding you can say the limit was 55.

Here you don't know the line. How can you prove that a consistent cap hit of $6 million for 17 straight years is unreasonable?

The arbitrator might feel pressure to side with the NHL, but the bottom line is the best way to address this is the next CBA.

Posted by: CF11555 | July 27, 2010 8:22 AM | Report abuse

Bottom line: a whole season lost because the owners needed a cap to keep them honest and from spending wildly; they got the cap now want to worm around it to their benefit. It's BS. you can't insist on a hard cap then try to delegitimize it.
These contracts make a mockery of the lockout and, by extension, the fans.

Posted by: oo7 | July 27, 2010 9:12 AM | Report abuse

i'm having trouble paying attention to the Kovygate

TEB, i'd like to know whether Neuvy and the 2 K/Carls are moving into Poti's or Knuble's basements, or a bachelor pad in Clarendon

Posted by: mcintire_will | July 27, 2010 9:14 AM | Report abuse


One interesting side note if Lombardi "testifies" is how would he then be treated by player agents. There could be a sort of uprising of agents who would not trust Lombardi and would be less willing to deal with him. That could be a deterent to Lombardi testifying. It might not, but it is worth considering.

Posted by: sgm3 | July 26, 2010 4:21 PM |

Really? Why? An agent who follows both the letter and spirit of the CBA in trying to get the best deal for his client should still be able to expect--and receive--confidentiality from Mr. Lombardi. IMHO, the only ones who would be "deterred" from dealing with him would be those who had something to hide, or whose proposed deals were other than above-board. An honest agent (I know, some think this is an oxymoron ha,ha) has nothing to fear from Lombardi's testimony.

oops...I see now that NostraThomas has already said that. But it doesn't make the point any less valid.

As many headaches as the salary cap has caused the Capitals (and doubtless other teams as well), I think the League is better off with the cap than without it. In fact, I think it's one of the few positive things that can be said to have happened on Bettman's watch.

Remember, the whole idea of the salary cap was to foster parity between bigger markets and smaller ones.

Do we really want to go back to the bad old days where it was either Pittsburgh, New Jersey, or an Original-Six team winning the Cup year-in and year-out, and almost no one else even gets a sniff? I surely do not.

The NHL should prevail in this dispute, because to allow more contracts like Kovy's renders the whole idea of the Salary cap without force, and before you know it all of the big-market clubs are stacking their rosters like the G-- D----- New York Yankees under Steinbrenner.

I'm not saying they (the NHL) will prevail...only that they should...

Das Rhino

Posted by: Rhino40 | July 27, 2010 9:26 AM | Report abuse


I'm sure tere is some comradery among player agents and that there is a way of negotiating. In that there are some things said that are supposed to be kept confidential on both sides(anything, from talking about a player's egregious off-field behavior to whatever possibly you could think of that could enter negotiations).

Even honest agents and honest GMs say things over negotiations they do not want to go public. Because a lot of stuff they do not want to go public are true statements.

Even if the sides do not reach an agreement, there is an agreed upon priniciple that both sides will keep what was discussed over negotiations confidential.

Once a person(agent or GM) does not keep these confidentialities they then become less trustworthy. A person is a lot less willing to trust another person who just breached an expcted confidentiality. A person is more likely to have animosity in negotiations when they involve another side they do not trust. In addition, a lot of information may go unsaid in negotiations out of fear it will be released.

Does this mean that all agents would uprise against Lombardi? No. But Lombardi would face possible repercussions and they have to be considered by him. (basically what are the positives/negatives to him "testifying")

Posted by: sgm3 | July 27, 2010 9:40 AM | Report abuse

Kinda ot and I don't know if somebody else said it yet but I just heard on Eitm that Pothier is going overseas to play. Anybody else hear anything?

Posted by: ludeman95 | July 27, 2010 9:57 AM | Report abuse

sgm: Will you be attending The Sermon on the Count at noon today on the Capitol steps?

I sure hope you don't throw rocks at me.

Posted by: tominsocal1 | July 27, 2010 10:01 AM | Report abuse


Since when is New Jersey a major market team? They are in the middle of the pack in terms of revenue. They are an average market team.

I do agree that the cap is good for the NHL and the competitive balance and that the NHL needs to correct its error in the CBA.

But I do find it a little amusing that it was the owner's who crafted this CBA, and it is the owner's who are handing out these long term contracts to get around the cap. Yet somehow it is the player's and agents fault by signing the contract that is offered to them by the team.

IMO, it is clearly the onwer's fault for drafting a faulty CBA and then furthering this by handing out these ludicrous contracts.

Even with the hole in the CBA the owner's had a very simple solution. Do NOT HAND OUT THESE CONTRACTS.

I find it laughable what the owner's and Bettman are doing, but it also scares me because it was these sort of actions that led to the lockout and it may very well lead to another.

Posted by: sgm3 | July 27, 2010 10:04 AM | Report abuse


Of course not, you are very knowledgeable on the cap and the ramifications of upcoming contracts on the cap.

I enjoy reading your insights on those topics.

Posted by: sgm3 | July 27, 2010 10:08 AM | Report abuse

Kinda ot and I don't know if somebody else said it yet but I just heard on Eitm that Pothier is going overseas to play. Anybody else hear anything?

Posted by: ludeman95 | July 27, 2010 10:08 AM | Report abuse


I'm not saying you're wrong. But consider this:

Let's say--for example--that you (as a player's Agent) say something confidential to me (as the GM of an NHL team) in the course of negotiating a normal contract (italics mine), and I disclose the details of those negotiations to the press. Have I breached confidentiality? Absolutely.

OTOH, let's say I am called to testify in an arbitration hearing regarding a contract you have negotiated with another team, and I give direct honest answers to direct questions. Have I breached confidentiality in this case? Perhaps not so much.

Remember, professional courtesy is not the same thing as omerta.

Posted by: Rhino40 | July 27, 2010 10:09 AM | Report abuse

I was in Vegas just before the Super Bowl and they had odds on EVERYTHING. I mean, which player would catch the first pass, make the first touchdown, how many points per quarter, etc.

Does anyone know Vegas odds on this?

Here's my guess:

1) The parties agree to amend the contract to something less egregious - 50% odds.

2) The hearing goes through and the league wins - 30% odds.

3) The hearing goes through and the contract stands - 20%.

C'mon up to the table, ladies and gents, and place your bets.

Posted by: tominsocal1 | July 27, 2010 10:23 AM | Report abuse


I'm not saying all agents would and maybe none would. I could see how some might look at it being fine, but I could also see some agents feeling betrayed by Lombardi's actions. That determination will be made person to person.

Posted by: sgm3 | July 27, 2010 10:33 AM | Report abuse

Does this try to circumvent the cap? Absolutely!

Can anyone prove it? Absolutely not!

Have fun in Newark, Kovalchuk. Nobody in their right mind would spend 17 years there.

Posted by: CF11555 | July 26, 2010 11:34 PM

@CF11555: LMAO! Good post!

Reminds me of how there are all these dire warning signs regarding the consequences of speeding on the NJ Turnpike. Silly, really: Speeding is impossible because there are too many g--d----- toll booths!

Posted by: Rhino40 | July 27, 2010 10:35 AM | Report abuse

It seems like almost everyone is avoiding arbitration.

Posted by: sgm3 | July 27, 2010 10:56 AM | Report abuse

"Listen, and understand. That Arbitrator is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are either signed or a UFA...

Posted by: Rhino40 | July 27, 2010 11:35 AM | Report abuse

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