Tuesday, August 10, 2010

"Activist" arbitrator overturns Kovalchuk deal; GTOG elated

By Finesse

Last night an arbitrator voided the 17-year, $102 million deal that Kovalchuk signed with the New Jersey Devils on the grounds that it was a "retirement" deal and circumvented the collective bargaining agreement.  The deal would have paid Kovalchuk $95 million over the first 10 years and then $550,000/year for the remainder of the term.  The contract wouldn't have expired until Kovalchuk was 44 years old.  The arbitrator found that the rarity of players playing until they are 44 years old coupled with the huge discrepancy in yearly salaries was enough to void the deal.  Lots of links to reaction and breakdown by Burnside and Puck Daddy.

This is a huge victory for the NHL.  Yes, they should never have allowed the loopholes of these extra long contracts in the CBA, but they did take a stand when it got out of hand.  We applaud the arbitrator's ruling and hope it puts an end to the smugness of the many GM's who thought they were so smart to sign deals like this.

As for Kovalchuk, the guess here is that he re-signs a short deal with New Jersey.  The other rumor is Los Angeles, but Kings brought in Ponikarovsky, who while not even 20% the player Kovalchuk is, does eat up $3 million of their cap.  And if Kovalchuk ends up back in Russia, so be it.  Maybe that's his ultimate destiny anyway.


1 comment:

  1. Let's break this down Step Up 3D style...

    You are concerned that Paterno isn't working as much as he has in the past as if you want him to punch a clock and be paid hourly. That isn't how it works for people in his position. His "brand" is just as important at this point, if not more important, than the amount of hours he puts in reviewing game tape. And if that brand and image that he has crafted is responsible for getting recruits and selling 110,000 tickets every week, then he deserves to be compensated for it even if he coaches the game from his house while listening on the radio.

    Joe Paterno brings in an incredible amount of money for the school and, more importantly to you, for the state as a whole. 110,000 people attend these games every week in the fall and they spend an incredible amount of money in State College which goes right back into the state coffers in the form of taxes. Could PSU sell as many seats and generate as much revenue for the state without Paterno? Maybe...but maybe not. If you're looking at it from a purely financial standpoint, it would be an enormous risk to let Paterno go.

    Let's say that he makes $3 million a year (which is probably higher than what he actually makes, but let's use it anyway). According to you, PSU should cut this salary because he doesn't work enough hours. OK, let's say PSU decides to pay him $1.5 million. That saves the state of Pennsylvania $1.5 million dollars but risks upsetting the coach to the point that maybe he does step down...and then what? You bring in a new coach and pay that person $1.5 million but what if the team suffers? What if 90,000 people come to a November game against Indiana as opposed to the customary 110,000. To save 50% of Paterno's salary (a measly $1.5 million, if that), you are risking sacrificing 20,000 in game attendance which generates way more than $1.5 million in revenue (hotels, meals, tickets, etc...)

    You might ask, what if the coach comes in and the team does even better? Well, that would be great. But from the financial perspective you are so concerned about, could the program really make that much MORE money? Sure, it is possible that a new coach could get the team to a BCS title game and get the school that extra revenue. But we've already established that it is a huge risk. And, let's be fair, PSU has gotten pretty close in the past 5 years to playing in multiple BCS games (I was at the Orange Bowl in Miami after the 2005 season).

    You point to the "system around him" as a factor for his success. Of course it is, but that "system" is attributable to him as much as it is to objective factors like location, donors, etc. The University of Arizona is a similar size school with similar resources and is even more attractive to recruits in many ways than PSU. And they suck. And the reason Paterno never coached at North West Christian College of Oregon is that he is a better coach than that. That's like saying Mark Zuckerberg wouldn't have been as successful if he had to create Facebook using a computer with only 1GB of memory.

    Paterno may not be logging huge hours at the practice facility. But no matter what work he is or isn't "doing," he is the most important figure at the University and deserves to be compensated for it.