The NHL has come down hard on the New Jersey Devils for deliberately circumventing the league's salary cap in their original attempt to sign forward Ilya Kovalchuk.
The league announced in a press release Monday that they have fined the Devils $3 million and that the club will forfeit their third-round draft choice in the 2011 NHL Entry Draft as well as a first-round draft choice in one of the next four NHL Entry Drafts.
It will be the Devils' decision which year they will forfeit the first round choice. They must advise the NHL of their decision by the day following the conclusion of the Stanley Cup Final in the calendar year in which the pick will be forfeited.
The $3 million that the Devils were fined will go to the league's primary charity, the NHL Foundation.
According to the statement there will be no corresponding reduction in the club's cap space for the fine. The League now considers the matter closed and according to the statement will have no further comment on the situation.
The punishment was implemented after an independent arbitrator, Richard Bloch, ruled that the 17-year, $102 million contract that Kovalchuk and the Devils agreed to in July attempted to circumvent the NHL's salary cap. The deal was heavily front-loaded with Kovalchuk earning $95 million over the first 10 years of the deal, but only $7 million over the final seven seasons, reducing the cost against the salary cap to $6 million per year. Should the deal have been allowed, Kovalchuk would be 44-years old when the contract expired.
The NHL eventually approved a second 15-year, $100 million contract but not before the NHLPA made several major concessions on lengthy deals such as the one signed by Kovalchuk.
They Devils do have the right to appeal the punishment to the NHL's board of governors, who meet Tuesday in New York but it is not yet known if the they will challenge the penalties. Devils CEO, President and General Manager Lou Lamoriello responded to the League's statement with one of his own later on Monday.
"We were today advised of the ruling by the commissioner with respect to the Kovalchuk matter. We disagree with the decision. We acted in good faith and did nothing wrong. We will have no further comment."
While the Devils are undoubtedly happy to finally put an end to the saga, the price that they had to pay to originally acquire, then re-sign the Russian sniper was incredibly high.
New Jersey originally obtained Kovalchuk along with Anssi Salmela and a 2nd-round draft pick in 2010 prior to the NHL's Trade Deadline in exchange for forward Niclas Bergfors, defenceman Johnny Oduya, prospect Patrice Cormier as well as a first-round and second-round draft pick in 2010. They then re-signed the former Rocket Richard Trophy winner to a 15-year contract worth $100 million. Along with the contract, the fine and the draft picks lost, the Devils will also likely be forced to shed an additional veteran player in an effort to get under the League's mandated salary cap.