LAMORIELLO AND GROSSMAN DO THEIR BEST IMPRESSION OF HOMER SIMPSON
Homer Simpson once said, “Boy, everyone is stupid except me.” Somewhere, somehow, I can’t help but think that Lamoriello and Grossman didn’t utter the same words before they submitted this contract to the NHL.
Here are the numbers, now confirmed by Nick Kypreos:
2010-11: $6 million
2011-12: $6 million
2012-13: $11 million
2013-14: $11.3 million
2014-15: $11.3 million
2015-16: $11.6 million
2016-17: $11.8 million
2017-18: $10 million
2018-19: $7 million
2019-2020: $4 million
2020-2021: $1 million
2021-2022: $1 million
2023-2024: $1 million
2024-2025: $3 million
2025-2026: $4 million
$15 years. $100 million. Takes Kovalchuk to age 42.
The first two years are still $6 million. Recall that at the end of the two years, the CBA expires. Thus, the contract either has an unspoken expectation that Vanderbeek may be selling the team and is trying to save money in the next couple of years before he does so, he believes that the new CBA may give him some relief on this contract going forward, that the economy will improve and revenue will go up or some other logical and perfectly reasonable explanation consistent with good business practices. The first two years are more a source of curiosity than anything else so let’s move forward.
We then have a progressively upward contract from ages 30-34. Age 35 is $10 million. Age 36 is $7 million. Age 37 is $4 million and here is where the similarities between the two contracts take hold:
- By age 37, Kovalchuk will have earned $90 million of his $100 million dollar contract (90%). In the rejected contract, he would have earned $95 million of his $102 million dollar contract (93%).
- In the rejected contract, after the $3.5 million dollar year (age 38), there were still 6 years left on the contract. On the proposed one, after the $4 million dollar year (age 37), there are 5 years left.
- In the rejected contract, the drop was from $3.7 million to $750,000.00 for one year and then to $550,000.00 for the final 5 years. The difference between $3.7 and $750,000.00 (the big drop) is $2.95 million. In the proposed contract, the difference is from $4 million to $1 million (this contract’s big drop), a nearly identical difference of $3 million (a $50,000.00 difference).
We then get to the section that so offends the CBA, I am shocked that the New Jersey Devils’ ownership and management were so careless and callous about its terms. They might as well have submitted it to the NHL with a picture of Kovalchuk’s middle finger as its cover sheet. The contract transitions from 3 years at $1 million per season to $3 million at age 41 and then $4 million at age 42. So, ages 37 and 42 pay Kovalchuk the same salary. This is unlike the rejected contract that stayed at the cap minimum for the final 6 seasons. The effect however is the same. What this tells us is this contract, like the rejected one, are actually two intended agreements in one. There is the “on ice” or “pre-retirement” portion that pays him 93% v. 90% of the total salary in the first and second contract, respectively, and the “retirement” portion that reduces New Jersey’s liability and cap hit through the elimination of the 7% v. 10% total salary.
Why the sudden jump from $1 million to $3 and then $4 million? The same reason there was a drop in the first contract from $3.5 million to $750,000.00 and then to $550,000.00. So Kovalchuk will retire. You see, solely for the final 5 year period, there is no difference in cap hit between $1 million for 3 years, followed by $3 million and then $4 million, on the one hand, v. a static $2 million dollars in each of those final 5 seasons. Each scenario comes out to a $2 million dollar ($10 million divided by 5) per season cap hit. However, there is a big difference for New Jersey. Kovalchuk is likely not going to play for $1 million dollars per season by the time he is 38 years old, just like he wasn’t going to play for $750,000.00 and then $550,000.00. Each provision transitions Kovalchuk into retirement (the second portion of the contract), as each contract intended, leaving the rest of the money on the table.
Recall when evaluating circumvention, we look at “intent” or “effect” of the contract’s terms. Absent a plausible explanation as to why Kovalchuk would be paid at age 37 the same as age 42 with a gap in between, this contract could only reasonably be seen as having the effect of Kovalchuk’s retirement (and therefore circumvention) when it removes 5 full years of payments ($10 million) from New Jersey’s payroll even though the Devils received the full benefit of a $3.3 million dollar reduction in their yearly cap hit. Huh, you ask? Break it down. If this was a 10 year, $100 million contract, the cap hit would be $10 million per season. Instead, the Devils artificially add 5 years (reducing the yearly cap hit from $10 million to, rounded off, $6.7 million) that Kovalchuk will not play.
So, what is the difference between the rejected contract and this one? Nothing. They are both circumvention poorly disguised.