Ilya Kovalchuk Ruling: Historic or Not? and Now What?

And the jury says...?

Monday afternoon the NHL finally received a formal decision regarding the 17-year, $105M contract offer from the New Jersey Devils to Ilya Kovalchuk.

The arbitrator has ruled in favor of the NHL, voiding the contract. Kovalchuk is now an unrestricted free agent (again).

This ruling could have historic impact not only on the NHL, but across professional sports; the NHL voided the contract because it circumvented the Collective Bargaining Agreement. This ruling limits the abuse of loopholes. While the ruling voids Kovalchuk’s contract, it does not address deals given in previous years to players like Philadelphia’s Chris Pronger and Chicago’s Marian Hossa.

Widespread impact will undoubtedly be felt from this ruling, starting in the NHL. After the 2011-12 season, the NHL is eligible to renegotiate their current labor agreement. This could provide enough fuel to create a situation where the league has to deal with another work stoppage, which could cripple the game. The league has two years to figure it out, though.

Outside of the NHL, this decision could weigh on the negotiations between the NFL and their Players’ Association, which has just the 2010 season before a potential lockout. There are a lot of contractual issues at the center of the NFL’s labor dispute – from a rookie cap to limited/no guaranteed money for veterans – that could be impacted by this decision.

What comes now for the NHL is potential discipline to the Devils, Kovalchuk, and the player’s agent. As has been discussed before, to remain a certified agent with the NHL, one of the criteria is an oath that includes a statement that the agent has not tried to circumvent the CBA; this could ultimately cost Kovalchuk’s agent his job. Meanwhile, the Devils’ could be fined or subject to the loss of draft picks.

It remains likely that Kovalchuk will sign with the Devils, but the structure of the deal will be different. How it impacts professional sports remains to be seen.

NHL Deputy Commissioner Bill Daly released the following statement Monday afternoon:

“We want to thank Arbitrator Bloch for his prompt resolution of a complex issue. His ruling is consistent with the League’s view of the manner in which the Collective Bargaining Agreement should deal with contracts that circumvent the Salary Cap.”

I have maintained since the deal was originally announced that it was a fraud. For more on that idea, check here.

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