Kovalev's contract and cap future

Saturday, April 10, 2010 ·

With another year left on his contract at 5 million dollars, Alex Kovalev has suffered a serious knee injury which will require surgery. At 37 years of age the question of what's next has to be asked. Should Kovalev's injury be too much for him to overcome at this stage of his career the Sens won't be on the hook for the 5 million dollars, their insurer will. This is a piece from September 2008 on SportsBusinessDaily.com that explains the process:

NHL Insurance Plan Covers Player Contracts For Seven Years

The NHL's insurance plan insures player contracts for seven years, and "beyond that, if the player gets hurt, the team is on the hook for the full amount of his contract," according to Luke DeCock of the Raleigh NEWS & OBSERVER. As part of the plan, which the NHL purchases through New York-based insurance broker BWD Group, NHL teams are "required to insure a handful of players through a 'temporary total disability' program administered by the league." Each team "pays a premium based on the salaries of its five highest-paid players, but is free to allocate that coverage how it wishes." NHL Deputy Commissioner Bill Daly said that "typically, a team will extend coverage to as many as seven players." Insurance coverage "kicks in when a player misses at least 30 games," and insuring a player under the league program "costs about 5[%] of his salary." But Hurricanes GM Jim Rutherford said, "When you get to a certain dollar amount, the premiums keep skyrocketing. I wish it was easier to get each (player) insured, but we can't do that." DeCock noted individual teams "are free to pursue additional coverage, but the heavy premiums make it a losing proposition." Rutherford said that "seeking private insurance to cover a longer deal is prohibitively expensive." The Hurricanes this season "will pay almost $1[M] for $19[M] of coverage through the league program, but even that process isn't simple," as insurers "may balk at something as specific as an individual body part." Rutherford said that the Hurricanes "were able to insure [RW] Justin Williams last season despite a previous injury to his right knee." Williams missed more than three months with a knee injury and the team received insurance payments, but they "wouldn't be able to insure that knee again this season"


Since Kovalev only signed a 2 year deal and he is the third highest paid player on the club, one would assume the Sens put contract under their umbrella when they allocated insurance coverage. So with that covered off the next issue is the salary cap.

In lay terms, the CBA states that any multi year contract given to a player when he is over the age of 35(as of June 30 of the League Year in which the SPC is to be effective) cannot come off the books. It doesn't matter if the player is injured, retired, or sent to the minors(To be fair, if the player is in the minors then the club saves $100,000. Still not the kind of discount that will really help matters).

So in other words, the club is screwed......unless....you are granted a long term injury exemption by the NHL. Something that infuriated other G-M's in September of 2006 when the Devils G-M Lou Lamoriello was granted the exemption to get out from under Alexander Mogilny's contract.

http://v1.theglobeandmail.com/servlet/story/RTGAM.20061003.wdevils3/BNStory/Sports

The precedent is there.

Now all of this is based on the "what if" scenario that at 37 years of age Kovalev can't return from this knee injury. It's a big what if. If things do get to that stage though, G-M Bryan Murray does have the tools within the CBA to get out from under Kovalev's contract in real dollars and in the cap world. Food for thought.

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Welcome to my Healthy Scratches blog. You can hear Jason York and myself weekdays from 3-6 on Team 1200. I use this blog to expand upon some of the things we talk about on the show, and anything else that really pops into my ample head.
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