In 2010, the Devils acquired Ilya Kovalchuk in a trade with Atlanta, and in that off-season, the team signed the winger to a long-term contract. In the three seasons since, he received $23 million in salary. But in a shocking move yesterday, the Devils announced that Kovalchuk was retiring from the NHL, and that his contract had been terminated -- with twelve years and $77 million remaining on it.
Not that you should feel sorry for Kovalchuk: He's going to continue his career in Russia, and there's speculation he could earn upwards of $20 million a season in the KHL. But his departure will have a big impact on the Devils, who lose their most dangerous scorer just three years after signing a huge (and controversial) contract. And that contract is why Ilya Kovalchuk cost the Devils a lot more than $23 million over these past three years.
You'll recall that the contract Kovalchuk originally signed with New Jersey was even bigger than the one that he'd been playing under. That original deal was seventeen years in length, and in excess of $100 million -- meaning Kovalchuk would have been 44 years old when the contract expired. The NHL, believing that the Devils were trying to circumvent the league's salary cap by tacking relatively low-salaried years onto the end of the deal in order to lower its average annual value, rejected the contract. An arbitrator sided with the league, officially voiding the original contract and leading to the re-worked pact that was terminated upon Kovalchuk's retirement this week.
But the NHL also penalized the Devils for Lou Lamoriello's salary-cap shenanigans (even if the year-to-year salaries on the original deal did technically meet the requirements of the CBA at the time). The league fined the Devils $3 million, and they had to forfeit a third round-pick in the 2011 draft, as well as a first-round pick in one of the next four drafts. (The Devils have chosen to lose the pick in next year's draft.) Before Kovalchuk had even played his first game under the new contract, he'd cost the Devils an awful lot.
His contract affected the team in other ways: Without his contract on the books, it's possible they could have been more aggressive in keeping Zach Parise when he became a free agent last summer. It may not have mattered, considering that Parise eventually went home to play in Minnesota alongside Ryan Suter, similar to how David Clarkson signed this year with the Maple Leafs, the team he'd rooted for as a kid. But the Devils' offense was clearly being build around Kovalchuk, and now he leaves the team scrambling.
With Kovalchuk retiring a week into free agency, it won't be easy for Lamoriello to replace his production. Long-term, it frees up cap space, if the Devils choose to spend it. But right now, the Devils are a worse team than they were just a few days ago.
And because of the Cap Benefit Recapture Formula built into the new CBA -- which applies to players with contracts seven years or longer, and is designed to prevent front-loaded deals -- the Devils will be forced to pay a penalty of $250,000 per year for the next twelve seasons because of Kovalchuk's early retirement. (It could have been worse, though; had he waited a year to retire, that penalty would shoot up to almost $700,000 per year for eleven years. By 2019, it would have shot up to more than $4 million a year for six years.)
And so for the three years of Kovalchuk's services, the Devils ended up paying millions of dollars (in fines and penalties) on top of his salary, plus a couple draft picks. In that time, the Devils missed the playoffs twice, but made a surprise run to the Stanley Cup Final in 2012, before losing to the Kings in six games. Many will ask in the coming days if Kovalchuk was worth it.
But it's impossible to assess Kovalchuk's time in New Jersey -- and his surprising departure -- without acknowledging the impact it will have on the team from a business point of view. The Devils' finances are reportedly a mess these days, and as Elliotte Friedman (and others) suggested recently, without Kovalchuk's contract on the books, it could be easier to either sell the team or get a cash infusion.
Kovalchuk was reluctant to leave his KHL team after the NHL lockout ended, and going back and reading some of Kovalchuk's quotes from over the winter, it almost makes sense that he'd figure out a way to leave the NHL and return to his home country. But this is hardly how the Devils expected the Kovalchuk era to play out. Perhaps it'll be good for the franchise's business side in the long run (particularly if Lamoriello can assemble competitive teams in the coming years without spending big money). But for just three years of play under his now-terminated contract, Ilya Kovalchuk cost the Devils plenty.