Wednesday, August 11, 2010

What Counts as "Circumvention"?

According to the arbitration decision arbitrated by Richard I. Bloch, it was the position of the NHL that the last 6 years of the voided Kovalchuk deal constituted a circumvention of the salary cap, even though according to the letter of the CBA there was no single part of the contract that specifically contradicted the agreement. This is interesting, to me, as it might suggest the NHL was arguably more worried about the structure of the deal than it was with the length. What I mean is, they specifically mention the last 6 years, not just the 2 years that takes this deal beyond the Hossa contract. The arbitrator noted that all the factors (length, structure, NMC/NTC) combined to allow him to reject the deal, but in reading the document it seemed to me that the structure was his biggest problem with the deal. I could be mistaken on that, but that was my sense in reading the decision.

The NHL may be able to pick and choose what they pursue as far as circumvention goes, going forward. I'm not exactly sure what they will, or even should, do as far as somewhat similar contracts like those mentioned in footnote 23 of the brief, but it doesn't feel quite "right", to me, to allow the Savard deal after having pointed out that it wasn't only the last year or two of the Kovalchuk deal that bothered you, but the last six years.

I’m also interested in exactly how “competitive fairness” or “competitive balance” factors into circumvention - I don’t know how I feel about Bloch potentially opening that Pandora’s Box. Who is to judge which cap manipulating manoeuvres qualify as “circumvention”, and which ones don’t, if contracts that act in opposition to “competitive balance” and reduce a player’s cap hit are deemed to be circumvention? If a player and team agree to sign a contract for far less than market value in an effort to give the team more cap room, does this represent “circumvention”? Suppose it’s a certainty that the other 29 teams would have offered Sidney Crosby a max contract if he went RFA in the summer of 2008. Does that mean, based on the NHL’s rationale - with which the arbitrator apparently agreed, Crosby and the Penguins are both equally guilty of cap circumvention since they signed Crosby for less than his market worth in an effort to “artificially” create more cap room for the Penguins to fill out their roster?

Are teams guilty of circumventing the salary cap when they send a waiver-ineligible player on an ELC to the AHL 30 times in a season to avoid having their full salary count against the cap? Sure, that team might have followed the letter of the CBA by moving a player between the AHL and NHL 50+ times in a season, as they have that right under the current waiver system., but why did they do it? I think it’s reasonable to suggest they did so with the intention of reducing their cap hit, keeping them below an upper limit they would have otherwise exceeded. Is this not somewhat analogous to the NHL’s position with Kovalchuk? That they followed the letter of the law, but they did so while trying to game/circumvent the upper limit of the Salary Cap?

What other moves affecting "competitive balance" could be looked at as circumvention in this way? Does the Malakhov trade count as an "artificial" reduction meant to circumvent the Upper Limit?

1 comment:

Buddha Pest said...

Thanks for the link to the decision!