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Tuesday, September 7, 2010
The impact of the Kovalchuk pact

By Mike Hume

As promised, with the ink drying on Ilya Kovalchuk’s new $100 million mega-deal, the blog is back to examine some of the implications of the never-ending fiasco. We start overseas.

Did the KHL just get KO’d?

This was easily the Kontinental Hockey League’s best shot to land a legitimate, world-class star in his prime. Indeed, it felt like a perfect storm was surging forward to keep Kovalchuk in the Motherland. As constant delays kept bogging down his deal in the NHL, one wealthy KHL club told the winger he could name his terms. Instead, Kovalchuk told Yahoo!’s Dmitry Chesnokov that he didn’t really consider playing in the KHL. Ouch.

In the end of this Odyssey, Kovalchuk took less money and endured a 49-day wait while his contract was raked over the coals and caught in the crossfire of a battle between the NHL and its players’ association. If a king’s ransom and sheer convenience doesn’t tip the balance in the KHL’s favor, what will? KHL president Alexander Medvedev pulled out all the stops to recruit Kovalchuk and still struck out.

While we’ve been focusing on the changes to the collective bargaining agreement, the KHL’s loss has been a little overlooked. To me, this was a referendum on the Russian league’s ability to attract top talent. It failed. And now you have to wonder how -- or if it will ever -- attract legitimate top-shelf stars.

One answer is to keep home-grown talent at home. But several of its top younger hockey players, such as Islanders’ draft pick Kirill Kabanov, are on the record saying they prefer the NHL over the KHL. If the Russian league keeps striking out in free agency, will it work harder to keep its kids at home? And can the KHL afford to toughen up as it desperately recruits NHL players for the 2014 Sochi Olympics?

The CBA changes: Long-term deals aren’t dead

Back in North America, there were two main changes to the CBA as a result of Kovalchuk’s deal with the Devils, both of them specifically addressing what is permissible in long-term contracts:
"The compensation for all seasons that do not include or succeed the player's 41st birthday will be totaled and divided by the number of those seasons to determine the annual average value. In all subsequent seasons, the team's cap charge will be the actual compensation paid to the player in either that season or seasons.

"For any long-term contract that averages more than $5.75 million for the three highest-compensation seasons, the salary cap value for any season in which the player is age 36, 37, 38, 39 and/or 40 shall be a minimum of $1 million."

Given that so few players have laced up their skates beyond the age of 40, the first change eliminates the salary cap circumvention of adding low-paying years to the end of the contract to reduce the average salary (which determines the cap hit). Even if teams wanted to load up those post-40 years and reduce the cap-hit on the south side of age 40, they’d still be on the hook for that cap money at the end of the contract. But we still could see some massive deals signed for 15 or more years.

Even abiding by the second change, teams could theoretically extend a career-length offer to a 21-year-old player reaching free agency for the first time -- as long as teams were prepared to pay the full-cap hit.

You could conceivably see a perceived superstar signing a 19-year contract worth $150 million, making the cap hit over a million bucks lower than the existing figure for Sidney Crosby, Alex Ovechkin and Evgeni Malkin.

But is that contract now worth it to a team? One injury and a team’s financial structure could be crippled along with its star. Those are the higher stakes following the amendment.

The NHL wasn’t trying to eliminate all long-term offers, merely to prevent teams from ducking the full-impact of salary cap hits. We could still see contracts both longer and richer than the deal signed by Kovalchuk, but teams will have to think long and hard before they put that deal on the table.

As the week continues, we’ll take a look at what the CBA changes mean for three key players in the New York area and how their contract talks will be affected.

In the meantime, here’s some morning reading.

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