Circumventing Circumvention Penalties: Brian Burke Warned Us, But They Let ‘Em Off the Hook

574
Photo: NHLI via Getty Images

Writing on the topic of salary negotiation between agents and clubs back in 1993, then-GM of the Hartford Whaler sand disciple of Lou Lamoriello, Brian Burke, had this to say in an article for the Marquette Law Review:

“A huge problem has developed in recent years with regard to player contract negotiations. With the onset of collectively bargained salary systems, there is an incentive for general managers to work with agents to circumvent the confines of those systems… In two sports you have a salary cap, and several instances of agents and general managers circumventing the salary cap have occurred. This is just the tip of the iceberg. There will be more of these cases, and there is going to be arbitration and litigation on just these issues. In my opinion, a general manager has no right to circumvent the collective bargaining agreement. Given a choice between losing within the rules and winning with some blurring of the lines, many general managers will not remain within the cap… If the general manager is allowed to be creative and circumvent the system, then the system is useless.”

While most people are likely unaware of the article, Burke’s position on cap-circumventing contracts comes as no surprise to Leafs fans who bore witness to Burke’s complete opposition to these contracts during his time at the helm of the Toronto Maple Leafs. While Burke’s scruples are admirable, he drew the ire of some Leafs fans for constraining the club and not leveraging its considerable financial resources to attract top talent by signing “retirement contracts.”

Fast-forward 17 years (coincidentally) to 2010 and Burke’s words couldn’t have proven more prophetic as his mentor and friend Lamoriello attempted to sign Ilya Kovalchuk to a 17-year, $102 million dollar contract, which the NHL subsequently rejected on July 20th, 2010 as a violation of Articles 11.6, 26 and 50 of the 2004-2005 Collective Bargaining Agreement (“CBA”). The contract would have paid Kovalchuk 97% of his salary by the end of the 11th year of the contract, and he would have been faced with the prospect of playing out another 6 years for only the remaining 3%.

The issue ultimately ended up in front of System Arbitrator Richard Bloch, who concluded that the contract violated the intent and spirit of the CBA and upheld the NHL’s rejection of it. As a result of the Bloch ruling, the New Jersey Devils were penalized a third round draft pick in 2011, a first round draft pick in one of 2011, 2012, 2013 or 2014 (at the Devils’ option) and $3 million.

Kovalchuk’s contract was by no means the only back-diving “retirement contract” of its kind, with others including Pronger’s, Luongo’s, Kiprusoff’s, Marian Hossa’s, and Marc Savard’s, but it was the most flagrant. After the Bloch ruling, the NHL quickly mobilized to amend article 50.5 to change the way that average salary was calculated in order to close the “retirement contract” loophole. With that, the NHL had finally taken a hard-line approach and seemed determined to fix a system that had become (to use Burke’s words) “useless.” Further revisions were made to Article 50 in the 2012-2013 CBA, with player contracts no longer able to exceed 7 years (8 if a player is resigned by his existing club) and with contracts no longer able to contain a single year salary figure that is less than 50% of the highest single year salary paid during that same contract. With that, the back-diving “retirement contract” is no more.

Fast forward nearly four more years, and on Thursday of last week the NHL quietly announced that it would be reducing the penalty levied against the New Jersey Devils.

In a surprisingly limited press release, the NHL simply stated that:

[quote_box_center]

“NEW YORK — The National Hockey League announced today that it has decided to modify the disciplinary sanctions originally imposed on the New Jersey Devils‘ franchise for its conduct in connection with the signing of former NHL Player Ilya Kovalchuk in July 2010, which conduct was determined by an Impartial Arbitrator to have constituted a circumvention of the NHL/NHLPA Collective Bargaining Agreement (the “CBA”) then in effect.

The sanctions originally imposed on the Club included a significant fine, the forfeiture of the Club’s third-round draft selection in 2011 (which was forfeited) and the forfeiture of a first-round draft selection which has been deferred by the Club until this year in accordance with the terms of the original penalty. As a result, as it relates to the portion of the discipline relating to the first-round draft pick, the Devils stand to forfeit it entirely in the upcoming 2014 NHL Draft. The Devils recently applied to the League for reconsideration and relief from a portion of the original penalty, citing primarily changes in circumstances which, in the Club’s view, changed the appropriateness of the sanctions initially imposed. After due and thorough consideration, the League has decided that a modification of the original circumvention penalty associated with the Kovalchuk contract is warranted and, accordingly, has amended the sanctions as follows:

The New Jersey Devils will now be entitled to the 30th selection overall in the 2014 NHL Draft (the last pick in the first round), regardless of the Devils’ final standing following the 2013/14 season.

The Club will not be permitted to trade or transfer its right to the 30th overall selection in the 2014 NHL Draft.

The Club’s fine has been partially reduced.

The League intends to have no further comment on this matter.”
[/quote_box_center]

In addition to the return of a first round draft pick, it has also been reported that the New Jersey Devils will be returned $1.5 million of the $3 million fine that was originally paid to the League.

As the NHL has indicated that it will have “no further comment on this matter,” it’s impossible to know exactly what prompted this move, which is sure to invite speculation. As an aside, for those of you who do not read the CBA for fun (as I do), I can tell you that after a fairly exhaustive search I can’t find any provision in it that would allow an NHL club to apply to the Commissioner’s office for “reconsideration and relief” from a penalty levied for a violation of Articles 26 and/or 50. That being the case, the relief seems to stem from an extraordinary use of the broad league oversight powers conferred upon the Commissioner’s office, and is seemingly beyond the measures expressly provided by the CBA.

Leaving aside the haziness of exactly how the “reconsideration and relief” was granted to the New Jersey Devils, the only justification provided by either the League or Devils is “changes in circumstances” since the penalty was handed out. Changes in circumstances, you say? Well, what we know for sure is that Ilya Kovalchuk no longer plays for the New Jersey Devils after retiring from the NHL last year (only 3 years into his 15 year contract), and that the penalty was levied against former Devils owner Jeffrey Vanderbeek (who was said to be instrumental in putting the contract together in an attempt to draw crowds to the Swamp, despite Lamoriello’s reluctance) and not new owners Joshua Harris and David Blizter.

The conspiracy theorist among us might think that the NHL used usual good soldier Lamoriello’s flagrant transgression as an opportunity to bring about much-needed change to the CBA with an eye toward eventually (and quietly) reducing the penalty levied against his team. The conspiracy theorist might also think that the penalty relief was part of a back-door deal between the League and the new owners back in August in order to incentivize them into purchasing a team that was in serious financial trouble by handing back $1.5 million just a few months later.

While that might make for a juicy story line, especially given Lamoriello’s position as a senior statesman and friend of the League, the simplest and more likely explanation is that the League simply recognized that the original penalty was an especially harsh one given the number of these contracts handed out at the time, and that no other team was penalized at all. On that basis, it doesn’t seem to be in the best interests of a League focused on parity and competitive balance for the Devils (who are arguably a re-building club) to go without yet another draft pick.

Regardless of why the relief was granted, it’s arguably a fair result, especially in light of the fact that Devils originally paid a stiff price to acquire Kovalchuk and ultimately received only 3 years of service before he suddenly and unexpectedly fled to the KHL. Furthermore, the Devils will only be entitled to an immovable 30th overall draft pick, despite currently holding the 11th overall pick if the draft were to occur today. And given Lamoriello’s willingness to (shrewdly) move first round picks to steal acquire top-shelf talent, it seems to me like the Devils are still – albeit much less stiffly – being penalized.

Still, it’s understandably frustrating for Leafs fans to see that, in the end, there was very little consequence to acquiring top-end talent by circumventing the CBA, and absolutely no advantage for doing the “right thing” and being unwilling to sign “retirement contracts.” We’re left to wonder what might have been.

SHARE
Previous articleGame Review: Game #65, Leafs 4 vs. Flyers 3 (OT)
Next articleRandy Carlyle - ANA Game Day
Elliot is a litigator, media and sports lawyer working downtown Toronto at Bersenas Jacobsen Chouest Thomson Blackburn LLP. He completed his articles at the Toronto office of a national full-service firm before leaving to pursue a media, sports and litigation practice. Elliot currently teaches a negotiation course entitled “Lawyer as Negotiator” at Osgoode Hall Law School, where he graduated in the top 6% of his class, and was a recipient of the McMillan LLP Scholarship. He has written extensively on negotiation, mediation and alternative dispute resolution, and his paper on collective bargaining in the National Hockey League was published in Volume 19 of the Sports Lawyers Journal. Elliot currently represents national level amateur athletes involved in sports related disputes through the Sports Dispute Resolution Centre of Canada. Elliot can be reached at [email protected] Follow him on twitter
  • Komas Taberle

    The  errrr devil is in the details!

  • Tommy Cat

    “The League intends to have no further comment on this matter.” –  That is the NHL is too cowardly to explain themselves or that the explanation is that its doing this because its an America team in trouble so we’ll do whatever we can to prop them up.

  • MaxwellHowe

    Perhaps re-instating the pick was the League’s plan all along.  And perhaps Lamoriello knew it all along.  Why give them 4 years to foreit the pick as opposed to just taking the next one?  Why did Lou decide not to forego the pick in 2012 when he had the 29th overall?  i have no issue with the resultant penalty, the Devils did pay a price, but the manner in which it was imposed and then altered by a secret ad hoc hearing is completely bush league.

  • Tommy Cat

    MaxwellHowe  Yeah, using that 29th pick was telling for sure.

  • Snots

    Kovalchuk returning to NHL (not that he is) would put a whole farce on this

  • 4evrblue

    Snots I wouldn’t be so quick to say he isn’t. He has said something about winning the Stanley Cup still being something he wants to do. The question is does he come back a free agent or a Devil?

  • MaxwellHowe

    4evrblue Snots well its hard to imagine the Devils being in a position to win the Stanley Cup in the next 5 years.

  • Burtonboy

    Great article Elliot. Much food for thought in this . Wonder if this will be discussed in Boca Raton this week or at the next BOG.

  • Cameron19

    It is a fair point that no one else was punished, however, they are all being punished now by the early retirement rules. The Canucks, Rangers and Blackhawks in particular will all have some big cap hits to pay for nothing for a few years once their cap circumventing deals expire I would argue those penalties will be more harsh than dropping your pick from 10th overall to 30th overall, and 1.5M dollars. All the other teams would likely take that in a heartbeat to avoid 3-4 years of dead cap space. 

    Also, I heard that Lamiorello admitted on some radio program that the new owners negotiated the return of the pick/money. So it is not likely to be just the benevolence of the NHL deciding what is best for competition. If that were true, we might occasionally see Chara penalized for breaking his stick over people’s faces….or the Leafs might get an objectively officiated game or two. :)

  • Cameron19

    CanuckUKinToronto  I don’t think anyone is panicking about Colborne. It’s not really fair to paint people who questioned the trade that way. Questioning the management of that particular asset is a worthwhile endeavor, especially since we turned around paid more for a clone of Colborne. Kind of like how we wasted two compliance buyouts so we could add David Clarkson….*sigh* Asset management…

  • peterbleafs

    Cameron19 CanuckUKinTorontoShouldnt take a position on Clarkson value until the playoffs are done.  Then we can evaluate him.  I am hoping that he can kick it up another notch in the playoffs and thats when we really appreciate him.  Colborne we had no choice so no big deal.  And he hasnt lit it up out there anyways…AND we have 4 centers all better than him already so he wasnt going to play.

  • dlb eh

    Sad news for Matt Stajan and his wife this morning.

  • MaxwellHowe

    dlb eh Horrendous.  The Fleams should give him leave for the rest of the season.  The state of the Flames makes this an easy decision for Burke.

  • Cameron19

    peterbleafs Cameron19 CanuckUKinToronto  Well, we did have a choice – we could have managed our cap better, or waived Trevor Smith. We were basically the only team in the NHL that so badly mismanaged the cap, that we had to open the season with a 3-man short roster.

    He would have had lots of playing time here once the injuries happened. He hasn’t lit it up, but he’s developed nicely. Now has 7 points in his last 8 games. 

    It’s not a big deal, but it is annoying that people continually toss this aside as a non-factor, meanwhile we had to expend a prospect and a 2nd round pick to correct this error. And as much as people try so hard to convince themselves that Holland is better, all his previous coaches had the exact same criticisms of him as Colborne faced.

  • Mind Bomb

    Morning Folks !

  • MaxwellHowe

    Cameron19 peterbleafs CanuckUKinToronto And didn’t the Leafs trade Colbourne to keep a roster spot for Ashton, who mgt. has since planted on the Marlies or in the press box or, when he is in the line-up, ont the bench?  if the deicsion to trade Colborne was in any way to teach a lesson about how roster spots must be earned, Clarkson has since blown that lesson away

  • Cameron19

    MaxwellHowe Cameron19 peterbleafs CanuckUKinToronto  They kept a few guys who only played a couple games before being sent down. But apparently that camp was too significant to use any kind of foresight. It just irks me that the people who are here propping up Holland and mitigating the Colborne situation will be the first one’s to do it all over again when we mismanage Holland this year, when he is waiver exempt. 

    Just watch Carlyle decide he didn’t have a great camp and try to put him through waivers. *sigh*….

  • peterbleafs

    MaxwellHowe Cameron19peterbleafsCanuckUKinTorontoWell I wanted Colborne but really no one would have thought Bolland would miss most of the season.  And no way Colborne should be playing on a 4th line.  And I rather like Holland much better.

  • peterbleafs

    MaxwellHowe Cameron19peterbleafsCanuckUKinTorontoWell I wanted Colborne but really no one would have thought Bolland would miss most of the season.  And no way Colborne should be playing on a 4th line.  And I rather like Holland much better.

  • Cameron19

    peterbleafs MaxwellHowe Cameron19 CanuckUKinToronto  Colborne should have been kept as the extra forward.  It’s what every other NHL team did with their similarly suited players. But I digress. He’s playing great right now and Holland hasn’t done anything for us since December, but I suspect Holland will continue to develop as long as we’re more patient with him than we were with Joe.

  • Cameron19

    peterbleafs MaxwellHowe Cameron19 CanuckUKinToronto  Colborne should have been kept as the extra forward.  It’s what every other NHL team did with their similarly suited players. But I digress. He’s playing great right now and Holland hasn’t done anything for us since December, but I suspect Holland will continue to develop as long as we’re more patient with him than we were with Joe.

  • Cameron19

    Mind Bomb  Morning.

  • Cameron19

    Mind Bomb  Morning.

  • twitting_sg

    dlb eh  i just had to look it up. devastating. they should give him the rest of season off.

  • MaxwellHowe

    peterbleafs  I like the way Holland plays as well, and he may turn out to be better than Colborne, but the simple fact is the Leafs did not have depth at centre and traded a promising kid for peanuts. Weeks later Nonis would be signing a meatbag named Smithson because 3 centres were out.

  • Mind Bomb

    Cameron19 Mind BombSup Cam, March break is a lot better when you have it off 😉

  • Burtonboy

    Mind Bomb Cameron19  G’Day mates

  • peterbleafs

    CanuckUKinToronto Cameron19peterbleafsMaxwellHoweOne thing about Burke is I believe he has additional motivational aspects to his game than Nonis does.  RC is just a jerk, but Burke builds loyalty.  So Colborne may be turning it up because Burke is there to coax him because Burke wanted him in the first place.

  • Cameron19

    CanuckUKinToronto Cameron19 peterbleafs MaxwellHowe  No, but we can be pretty sure they felt the cap forced their hand, because they managed it so poorly. I think trying to create that kind of narrative is probably barking up the wrong tree though. There was never a word said against Colborne, except that he was a good, hard-working kid. He played through most of a season with a debilitating wrist injury to help his team.  It’s true I don’t know what happened behind the scenes, but he certainly doesn’t strike you as being problematic. 

    I think Nonis felt he had to live up to his word of letting the coach pick the team. Unfortunately the coach picked a bunch of people who ended up not even playing anyways, because as we’ve seen all year, the coach constantly makes ridiculous line-up decisions. Given that we know this about Carlyle, I think it’s pretty strange that people so vehemently defend this one. I mean, he’s been wrong all year, but apparently he was right about Colborne.

  • MaxwellHowe

    I think the Leafs can take this game tonight.  Anaheim ain’t all that.  Lost to the Habs the other night.  Leafs beat them already this season.  I hope Phanuef is recovered somewhat.  Bernier will have to be at his best, as opposed to just good, as he has been since the break ended. 
    Reimer in tomorrow nite, maybe he’s inspired to play an incredible game.
    To borrow a quote from the very aptly named tune “Hotel California”:
    They gathered for the feast
    They stab it with their steely knives,
    But they just can’t kill the beast

    Uh, the beast is the Leafs.

  • Burtonboy

    Interesting comment on TSN just now regarding the Leafs schedule out west . Normally you would play the back to back in LA then travel to San Jose . Not the Leafs . They play the Ducks ,travel to San Jose then back to LA to play the Kings . What bullshit

  • Mind Bomb

    Burtonboy Mind BombCameron19 Morning BB :)

  • Cameron19

    Burtonboy  Are we surprised? Anything to screw the Leafs. And normally you wouldn’t be the less rested team in all 3 games either, but lo and behold.

  • Great Dane

    Cameron19 BurtonboyNo matter how the Leafs do, they are the biggest cash cow in the NHL.

    We demand Tavares as compensation

  • Burtonboy

    CanuckUKinToronto Burtonboy  Late night travel by plane to San Jose is the kicker

  • Jon5200

    Good morning fellow die hard Leaf fans!!!!…….a few random thoughts……LOVED seeing the habs go 1-3 on their road trip out west…..i’ve always maintained that without Price, the habs are a bubble team, at best………i would be over the moon if the Leafs won the next 2 but i will be happy if they get 2 of 4pts, puts us past the habs and i think/hope they will lose to boston on wednesday……..concerning the Shea Weber as a Leaf saga…..i will go on record in saying Weber will be a Leaf at or before the draft…..why, because i’ve always maintain the ‘conditions’ are right….by that i mean that nashville is a community owned team who watches every dollar, their brass would be able to sell trading weber to the fans now that nashville will not be in the post season….also….the Leafs r finally in a position to offer assets as well as money and picks….also….weber is due a 13 million dollar bonus this June, a bonus nashville does not want to pay….that bonus takes ALOT of teams out of the running for weber…..imho, weber is a Leaf before the end of june:)))

  • Jon5200

    Good morning fellow die hard Leaf fans!!!!…….a few random thoughts……LOVED seeing the habs go 1-3 on their road trip out west…..i’ve always maintained that without Price, the habs are a bubble team, at best………i would be over the moon if the Leafs won the next 2 but i will be happy if they get 2 of 4pts, puts us past the habs and i think/hope they will lose to boston on wednesday……..concerning the Shea Weber as a Leaf saga…..i will go on record in saying Weber will be a Leaf at or before the draft…..why, because i’ve always maintain the ‘conditions’ are right….by that i mean that nashville is a community owned team who watches every dollar, their brass would be able to sell trading weber to the fans now that nashville will not be in the post season….also….the Leafs r finally in a position to offer assets as well as money and picks….also….weber is due a 13 million dollar bonus this June, a bonus nashville does not want to pay….that bonus takes ALOT of teams out of the running for weber…..imho, weber is a Leaf before the end of june:)))

  • Jon5200

    Burtonboy Not only that burtonboy….look down the schedule a bit….not only do the Leafs have a road trip out west….the nhl tacked 2 more games onto the trip…back to washington, then detroit…HERE IS THE KICKER…after the Leafs are finished that horrendous road trip they play THE NEXT DAY vs Tbay at home????? R U KIDDING!!  The habs played out west without the 2 games tacked on after AND have 3 days off before they play at home????  Tell me thats fair?????

  • Great Dane

    Cameron19 CanuckUKinTorontopeterbleafsMaxwellHowe The really problems and the main course of the cap space problem in the summer was that Nonis/management team and Carlyle was not on the same page on how this team should play.
    And I still believe that is the case. The roster moves we seen this year have been odd most of them and some even insane.

  • Great Dane

    Jon5200 We hope so – we hope so.  Preds should just keep 1.3 million in cap hit. Weber at 6.5 million in cap hit would be fantastic.

    Phaneuf – Gunnar
    Rielly – Weber
    Gardiner – Granberg
    Ranger.

  • mcloki

    Morning Gents. This time change is brutal. And it’s not going to be helped with a late night West coast trip.

    The NJ fiasco is just more NHL Bush league bullshit. And I’ll go one further. After you see this type of blatant “corruption” for the lack of a better word. DO you guys for one second believe that the NHL is going to put a second team into Toronto and compensate Toronto for it at all. The NHL will just change it’s rules whenever they want to suit their wishes. And they’re douchbaggy enough to just do it out in the open.

  • http://i.imgur.com/MyKj5C3.gif ingy56

    Interesting clip, didn’t know that Sakic was drafted with the Capital’s draft pick. Look for the late Walt Podubbny too:https://twitter.com/adater https://twitter.com/adater/status/442921517186170881
    Clip of Joe Sakic as rookie – awesome http://t.co/29vJYlpA8a

  • happy_gilmour

    Cameron19 Burtonboy  Anything to maximize Leafs fans everywhere… that gets in the way of actual fair and consistent scheduling!

  • http://i.imgur.com/MyKj5C3.gif ingy56

    mcloki  I bet if Luongo retires early they will change the rules yet again.

  • TheCanucksnaphook

    Nice Post…..and yes, its BULLSHIT.   I hate the Devils and their influence over this league. It is rivalled by that jackass Jacobs in Boston.

    Good morning all !!

  • FRyan

    Hope you guys can keep your breakfast down but its rumored that George Stroumboulopoulos is the next host for hockey night in canada
    http://www.thespec.com/sports-story/4404793-strombo-good-fit-for-stuffy-hockey-night-in-canada-dimanno/

  • FRyan

    Hope you guys can keep your breakfast down but its rumored that George Stroumboulopoulos is the next host for hockey night in canada
    http://www.thespec.com/sports-story/4404793-strombo-good-fit-for-stuffy-hockey-night-in-canada-dimanno/

  • http://i.imgur.com/MyKj5C3.gif ingy56

    FRyan  Disgraceful, but hardly surprising they would choose a Scab fan as the face of the hockey broadcast.

  • http://i.imgur.com/MyKj5C3.gif ingy56

    CC: Randy Carlyle:https://twitter.com/bruce_arthur https://twitter.com/bruce_arthur/status/443016260155371520
    In the last two paragraphs here, Darryl Sutter explains the whole notion of puck possession in hockey: http://t.co/URx6JxyBSO

  • wendelsway1

    Good Game Day Morning Gents…..thanks for the article, Elliot…interesting read.  No sense worrying about the schedule, nothing we can do about it……..just gonna have to do it the hard way…….GO LEAFS GO!!!!