Devils Face Potentially Harsh Penalties In Grievance Case

With the NHLPA officially filing a grievance today against the NHL on behalf of Ilya Kovalchuk, the league and players’ union will now battle out whether the 17-year, $102 million dollar contract is legitimate. If the NHLPA wins, the Devils get their player. But if the arbitrator rules in favor of the NHL, the Devils could face harsh penalties.

Kovalchuk and the Devils can both face harsh penalties if the arbitrator rules in the NHL's favor. Photo Credit: Al Bello/Getty Images

After reading several reports about what exactly comes next, I wanted to outline the following steps. Big credit to Tom Gulitti of the Bergen Record for the information.

With the NHLPA filing their grievance, both sides will look to find a “systems” arbitrator. The neutral arbitrator will conduct a full hearing with witnesses, oral arguments and written briefs presented to the arbitrator. Both sides, however, can choose not to have the formal hearing.

The arbitrator can call anyone involved in the process as a witness. Kovalchuk, his agent Jay Grossman, Devils owner Jeff Vanderbeek and general manager Lou Lamoriello can all be called on for the case. The Los Angeles Kings, who Grossman and Kovalchuk negotiated with, can also be called in. The site of the hearing would be up to the NHLPA and NHL to decide. After the hearing, the arbitrator will have 48 hours to issue a ruling.

If the Arbitrator Rules In Favor of the Contract…

If the arbitrator rules that the NHL was wrong to reject the offer, the NHL will have to immediately approve and register the contract. It’s that simple.

If the Arbitrator Rules In Favor of the NHL…

If the arbitrator upholds the NHL’s rejection of the contract, then the deal would be dead and Kovalchuk would become an unrestricted free agent. Kovalchuk could then re-negotiate a deal with the Devils or sign with another team. But it’s not that simple.

The arbitrator also decides whether or not the Devils attempted to circumvent the cap. If the arbitrator believes the team attempted circumvention, commissioner Gary Bettman can then impose hefty fines against the club.

According to Article 26.13 of the collective bargaining agreement:

if the system arbitrator finds that a circumvention has been committed by the club, the commissioner has the power to impose of fine of up to $5 million in cases of circumvention of the salary cap. It also says “if such a fine is assessed against a club, that club’s payroll room shall also be reduced by such amount for the following league year.”

The Devils, who would have $3.5 million this season in cap space, would then have to shed salary to accommodate the fine. Bettman can also take draft picks of any position and any year away from the team.

Kovalchuk could also face penalties. Bettman can fine him between $250,000 and $1 million for circumvention, and the arbitrator can recommend suspension of Kovalchuk if it’s found that he tried to circumvent the cap.

I don’t think the NHL will take a hard-line stance, but the Devils, who are bystanders in the process, can potentially lose out on more than Kovalchuk if the arbitrator rules in favor of the NHL.

NHLPA Files Grievance Against NHL For Kovalchuk

As expected, the NHLPA filed a grievance against the NHL on the part of Ilya Kovalchuk, who had his 17-year, $102 million contract rejected by the NHL July 20.

The NHLPA announced the decision in a statement this afternoon.

“The NHLPA has filed a grievance disputing the NHL’s rejection of the Standard Player Contract between the New Jersey Devils and Ilya Kovalchuk,” NHLPA spokesperson Jonathan Weatherdon wrote in the statement. “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.”

Deputy Commissioner Bill Daly responded to the NHLPA’s statement.

“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.  “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.”

The next step will be for both the league and the player’s association to find a “systems” arbitrator to rule on the case. The arbitrator will have 48 hours to decide whether to uphold the NHL’s rejection or deny it.

Deadline Approaching For Kovalchuk Grievance

The Devils are waiting to hear if the NHLPA will file a grievance on behalf of Ilya Kovalchuk, who had his 17-year, $102 million contract rejected by the NHL on July 20 for salary cap circumvention.

All signs point to the NHLPA filing the grievance by today’s 5 p.m. deadline. The NHLPA’s lawyers have conducted a thorough study of the case – including interviewing all parties involved – in an effort to decide whether or not to file the grievance.

After the grievance is filed, the NHL and NHLPA must hire a “systems” arbitrator to decide on the case. The process could take weeks, but several beat reporters believe both sides will want to quickly resolve the dispute. The arbitrator has 48 hours to give their decision after being hired.

If the arbitrator upholds the NHL’s rejection of the contract, Kovalchuk will become an unrestricted free agent. He would be free to restructure his deal with the Devils or sign with another team. Reportedly, the Kings are still interested in the left-winger, and offered him a 15-year, $80 million deal before he signed with the Devils. SKA St. Petersburg of the Kontinental Hockey League also offered Kovalchuk a four-year, $40 million contract.

If the arbitrator rules that the deal falls in line with the collective bargaining agreement and the NHL was wrong to reject it, the league would have to immediately approve and register the contract.

Kovalchuk and the Devils could re-structure the deal before that point, but neither sides seem willing to explore that option.

Keep checking The Devils’ Den for any further news on the NHLPA’s decision.