Kovy’s Contract Rejection Puts Doubt In Luongo’s Contract Extension

Now that the NHL has started getting serious about cracking down on those long-term contracts designed to lower cap hits and an independent arbitrator has sided with them and their rejection of Ilya Kovalchuk’s 17-year/$102 million contract, aren’t we glad that the Canucks got Roberto Luongo’s 12-year/$64 million contract extension done last year?

Well, wait a minute.

I read Richard Bloch’s ruling on the Kovalchuk contract this evening and saw this dandy of a footnote on page 19:

It is true, as the Association observes, that the NHL has registered contracts with structures similar to the Kovalchuk SPC PA Exh. 8 reflects a list of 11 multi-year agreements, all of which involve players in their mid to late 30’s and early 40’s. Most of them reflect reasonably substantial “diveback” (salary reductions that extend over the “tails” of the Agreement). Of these, four such agreements, with players Chris Pronger, Marc Savard, Roberto Luongo, and Marian Hossa reflect provisions that are relatively more dramatic than the others. Each of these players will be 40 or over at the end of the contract term and each contract includes dramatic divebacks. Pronger’s annual salary, for example, drops from $4,000,000 to $525,000 at the point he is earning almost 97% of the total $34,450,000 salary. Roberto Luongo, with Vancouver, has a 12-year agreement that will end when he is 43. After averaging some $7,000,000 per year for the first 9 years of the Agreement, Luongo will receive an average of about 1.2 million during his last 3 years, amounting to some 5.7% of the total compensation during that time period. The apparent purpose of this evidence is to suggest that the League’s concern is late blooming and/or inconsistent. Several responses are in order: First, while the contracts have, in fact, been registered, their structure has not escaped League notice: those SPCs are being investigated currently with at least the possibility of a subsequent withdrawal of the registration.

Read that last sentence again.

We all knew a year ago that the NHL was already looking at Luongo’s contract (among others). But is it possible that the NHL is, in fact, now also thinking of going back and rejecting it? In Marian Hossa’s case, he’s already played one year of his contract so how does the league retroactively withdraw the registration? (And do they withdraw Chicago’s Stanley Cup win too?)

I find it hard to believe that the NHL would – or could – withdraw registration of Luongo’s (and others’) contracts more than a year after the fact. That said, I’m not a lawyer and I’d be lying if I told you I know the legalities of doing such a thing. At the same time, I do find Mr. Bloch’s comments interesting. I mean, imagine if Luongo was suddenly deemed a free agent.