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Is the NHL encouraging 'bogus contracts'?

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08:57 AM ET 07.20 | The Devils and Ilya Kovalchuk found their way through quite an oversight in the CBA. The New Jersey Devils are the latest team to capitalize on a loophole negotiated into the current collective bargaining agreement five years ago, you know, the one where the league's owners locked the players -- and the fans -- out. To circumvent the salary cap, teams are able to drastically reduce the salaries late in contracts to lower the cap figure dramatically. The loophole? If the player happens to retire, he doesn't get his money AND the team isn't penalized, so the assumption is players are taking significant pay decreases during years they have no intention of playing anyway to help their team get a cap-friendly figure. In other words, bogus contracts.

Minneapolis Star Tribune

Ilya Kovalchuk, Getty Images Ilya Kovalchuk, Getty Images
July 20, 2010  09:00 AM ET

its a joke

July 20, 2010  09:17 AM ET

Encouraging? No. I don't think they're smart enough for that. Making it possible by having overlooked the possibility? Absolutely!

July 20, 2010  09:21 AM ET
QUOTE(#2):

Encouraging? No. I don't think they're smart enough for that. Making it possible by having overlooked the possibility? Absolutely!

Excellent point. I doubt anyone involved was clever enough to plan that! They're only even money to remember to freeze the rink.

July 20, 2010  09:23 AM ET

Lou even hired a top "capoligist" to do up this contract.

July 20, 2010  09:24 AM ET

devils made a big mistake,he hurts you on the ice and has no leadership

July 20, 2010  09:37 AM ET
QUOTE(#4):

Lou even hired a top "capoligist" to do up this contract.

You forgot the "r."

July 20, 2010  09:48 AM ET

What did they expect? How many people go 55 when the speed limit is 70? OK aside from Argos nobody! If you want to win, you're going to take the rules to the limit.

July 20, 2010  10:05 AM ET

YESSS!!!! More Kovalchuck!!!!

July 20, 2010  10:12 AM ET
QUOTE(#7):

What did they expect? How many people go 55 when the speed limit is 70? OK aside from Argos nobody! If you want to win, you're going to take the rules to the limit.

C'mon. You're exaggerating. I always go 55. Even when the speed limit is 25. But, you're right about taking the rules to the limit so you can get everything that's allowed until somebody screams stop. It's the smart thing to do.

July 20, 2010  11:01 AM ET

Bogus? You mean he's not going to play until he's 44?
(Gasp of disbelief)

July 20, 2010  11:20 AM ET

Interesting loophole !! Watch all the lemmings now! It should be quite hilarious to watch the length of contracts in the next year.A serious problem will be if a guy like Kovie decides he does want to play at 44 yrs old.With no trades,and one way deals the Teams could have 3 or 4 fossils each sitting on the bench just because they won't admit its over.Even at low $ tail ends of those deals the problem will be bigger way down the road.Perfect Storm a brewin...

July 20, 2010  11:39 AM ET

It's all going to blow up in somebody's face very soon.

The numbers are getting bigger and the term is getting longer everytime someone does this.

July 20, 2010  11:45 AM ET
QUOTE(#10):

Bogus? You mean he's not going to play until he's 44?(Gasp of disbelief)

When he retires the team just buys out the remaining years of the contract.
Say he retires at 40 the last 4 years get bought out and 2/3 the value gets applied over the next 8 years on the the cap.

That's my understanding anyway.

July 20, 2010  11:45 AM ET
QUOTE(#13):

When he retires the team just buys out the remaining years of the contract.Say he retires at 40 the last 4 years get bought out and 2/3 the value gets applied over the next 8 years on the the cap.That's my understanding anyway.

And by the way it I believe it was the Red Wings that found the loophole orginally.

July 20, 2010  11:52 AM ET

So my understanding is that the NHL has a week to examine the contract. Can they legally reject the contract? Everyone and their dog knows what is going on and I think everyone agrees that GMs found a loophole to an agreement that they had a part in creating. But this could blow up in their face very soon. Can the NHL legally stop the madness before it really takes off?

If not I say Taylor Hall's "next" contract is $50 mill over 20 years- front loaded. But with the Oilers luck- he will probably play that long anyway and we will have to pay him out the entire amount!

July 20, 2010  12:12 PM ET

It may be a loophole, but at the same time, if a player gets injured, or turnes into Yashin, then the team is stuck with the salary. Just ask the Islanders about long-term contracts.

July 20, 2010  12:17 PM ET
QUOTE(#13):

When he retires the team just buys out the remaining years of the contract.Say he retires at 40 the last 4 years get bought out and 2/3 the value gets applied over the next 8 years on the the cap.That's my understanding anyway.

I thought if they buy him out, they pay his full remaining salary, but over double the period. That is why the deals are front loaded, because in the last couple years, the deal is at the league minimum.

So say he has 4-years, $600,000 per year left on his deal when he retires. Over the next 8-years, they will have a $300,000 cap hit for the buyout.

July 20, 2010  12:18 PM ET

Yeah... It's pretty obvious when you look at Kovy's contract. The last bunch of years his contract drops from like $11.5 million to I believe minimum wage. On top of that he has a no-movement clause for the first 7 years which mysteriously turns into a no-trade clause in the final 10 years.

So he makes $95 of the $101 million in the first 10 seasons, after which he gets $6 million spread over 7 seasons and can be loaned out to the KHL or sent to the minors.

July 20, 2010  12:37 PM ET

No need to buy him out. The contract was signed prior to age 35, so a player can retire, and there is no cap hit for the team. Also, the cap hit is the SAME for the length of the contract. His salary paid may decrease, but not the cap hit. Salary/cap hit are not the same thing.

 
July 20, 2010  12:37 PM ET
QUOTE(#1):

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