Strombabble: The Kovy Klause, and is a Luongo Trade with Toronto all but Done?

Photo Credit: Jeff Vinnick/Getty Images

NHL teams can’t trade players during the NHL lockout. But Roberto Luongo trade speculation lives on kind of like cockroaches crawling out from under a rock immediately following a nuclear blast.

This week Sportsnet analyst John Shannon said in a televised discussion with Nick Kypreos, that the Canucks and the Maple Leafs have a deal in place that would send Luongo to Toronto, pending the end of the NHL lockout and the re-opening of business. Via Brad Zeimer:

John Shannon isn’t SamJam, but he’s also not exactly a slam-dunk source. While this isn’t a report from Bob McKenzie or Darren Dreger, it should still be taken somewhat more seriously – I think – than mere Twitter speculation. 

Jason Botchford apparently agrees, and asked Mike Gillis about the report specifically on a Team1040 interview Thursday morning. Here’s Mike Gillis’ answer (emphasis ours): 

"The definition of "close" is something that is different for everybody. I’m not sure why John would say that because that’s certainly not the case; but everyone is entitled to speculate on whatever they’d like to speculate on. We’ve moved very slowly on any discussion Roberto Luongo, we’ll trade him when we get what we want for him or we won’t trade him – either way that’s fine with me."

Somehow Mike Gillis managed to explicitly repudiate Shannon’s report, while leaving most listeners believing that he’d given an inconclusive answer. That, my friends, is a slick example of lawyer speak.

Botch also pushed Mike Gillis about whether or not the team has a timeline for trading Luongo, a notion which Mike Gillis rejected. "We’re facing all sorts of uncertainty about scheduling," among other issues, Mike Gillis told Team 1040 listeners, "I don’t think it’s fair to our team or our fans to do something while we don’t understand the lay of the land."

One possible complication for the Canucks on any Luongo trade, could be the "back-diving contract clause" (or the so called "Kovy Klause") in the NHL’s latest offer to the NHLPA. Here’s the language from the NHL’s publicly disclosed proposal (stick-tap to Greg Wyshynski, read his take here):

All years of existing SPCs with terms in excess of five (5) years will be accounted for and charged against a team’s Cap (at full AAV) regardless of whether or where the Player is playing. In the event any such contract is traded during its term, the related Cap charge will travel with the Player, but only for the year(s) in which the Player remains active and is being paid under his NHL SPC. If, at some subsequent point in time the Player retires or ceases to play and/or receive pay under his NHL SPC, the Cap charge will automatically revert (at full AAV) to the Club that initially entered into the contract for the balance of its term.

As you can see, the "Kovy Klause" is designed to "punish" teams – like the Canucks – who have signed players to life-time deals where the player’s salary drops significantly in the final year or two of the contract, in order to bring down that player’s annual cap-hit. So were Luongo to retire early before his contract expires, even if he’s traded, the Canucks would have to deal with his cap-hit remaining on their ledger for the duration of his deal.

Botchford also asked Gillis about this provision, and the Canucks’ GM played the "gag-order" card saying, "I can’t comment. When the deal [between the NHL and NHLPA] is completed, I’ll be able to comment on those things, but I can’t at this point in time."

It’s important to remember, of course, that this clause is taken from the NHL’s latest collective bargaining agreement (CBA) proposal. By the time you’re reading this, that proposal has likely already been rejected in part (or completely) by the NHLPA, and it’s still possible that the "Kovy Klause" won’t pertain to the Canucks or the Luongo contract in whatever CBA the two sides eventually agree to. Or the clause could be repealed during the hypothetical 2018 NHL lockout, before Luongo retires. 

I tend to believe, however, that this is an important issue from the league’s perspective and that this provision (or a slightly modified version thereof) will make it into the next CBA in some form. 

Assuming that the clause is included in the next CBA, it hardly changes the arithmetic of a Luongo trade from the Canucks’ point of view. Even if the Canucks aren’t able to get rid of Luongo’s contract permenantly, in the medium-term it still doesn’t make much sense to spend 9+ million in cap-space on two players who can never share the ice (though it might make sense in the short-term).

Even if Luongo’s contract is back on the Canucks’ books by, say, the 2019-2020 season – the team would still benefit from cap-relief for eight seasons and I’m still convinced that that’s important. I’m equally convinced that given eight seasons to figure out how to duck the salary cap ramifications of this clause, Laurence Gilman will be up to the task.

  • Pinch

    Great stuff.

    I’m still trying to understand how the Kovy clause was put into the proposal in the first place. 15 teams have 8+ yr long contracts on the books, most of those are for 39+ yr old players. Most of those teams are the ‘big dogs’ with $$. The contract maximum clause will prevent any of these type of contracts in the future. The Kovy clause is purely a punishment mechanism, the league doesn’t benefit. It makes no sense other than Burke had his hand in the cookie jar.

    The Province had a good read about the Luongo situation today. Pretty much said that 2 new teams (Edm and unknown) have entered into the mix. I can’t see a world in which Gillis trades Luongo to Burke when there are other possibilities. I’d love for Gillis to screw Burke by leading him along, then trade him elsewhere….. lol……. oh good times would be had in Vancouver.