happy ovi

Editor’s note: Peter here. We’ve posted two translations in the last week about Alex Ovechkin possibly being wooed back to Dynamo Moscow while still under contract with the Washington Capitals. This idea seems outlandish, but given Ilya Kovalchuk’s recent defection and the vagaries of international hockey regulations, I wanted to get a better handle on the issue. Below is a conversation I had with Fedor Fedin that was educational for me and I hope will be for you as well.

PETER HASSETT: Fedor, we recently heard the general director of Dynamo Moscow, Andrei Safronov, speak optimistically about the possibility of Alex Ovechkin leaving the Capitals and returning to Russia to play in the KHL one day. Presuming this would happen before Ovechkin’s contract expires, are there any regulations or agreements between the NHL and KHL that would apply to a situation like this one?

(Readers: Feel free to skip this one if you don’t care about the legal specifics.)

FEDOR FEDIN: First of all, there’s a KHL/NHL Memorandum of Understanding. According to it:

The KHL and NHL respect each other’s contracts. Both parties recognize and support the main principle: players under contract with a club from one league cannot fulfill any obligation to a club from another league during the term of the player’s contract. In the event of any conflict or disagreement arising, both parties shall appoint their official representatives to hold negotiations.

Second, there’s the IIHF International Transfer Regulations. In Part I, Chapter 6, “Transfers with Non-Member Organizations” (NHL is a member organization, while KHL, assigned to conduct Russian national tournaments by the Russian Hockey Federation, isn’t), it states:

[A]ny player who wishes to transfer from a non-member organization to an IIHF member national association will be subject to the IIHF Statutes & Bylaws and Regulations upon signature of the ITC Card. Thus, these regulations including any sanctions will apply to the transfer of such players.

Skip to Part II, Chapter 3, “Breach of Contracts”:

A one season ban on international transfers shall be imposed by the IIHF General Secretary on any club found to be inducing a breach of contract. It shall be presumed, unless established to the contrary, that any club signing a player who has breached his contract has induced that player to commit a breach.

However, according to the same chapter, individual (or “sporting”) sanctions would not be imposed in this hypothetical case involving Ovechkin:

Sporting sanctions shall be imposed on players found to be in breach of contract (a) during the first three years of a contract for players aged up to and including 28 years of age, and (b) during the first two years of a contract for players aged 29 and over.

Also, according to Part II, Chapter 4:

The IIHF General Secretary will approve the ITC, should he ascertain that the player has not committed a breach of contract.

It seems the summary of these regulations means that IIHF would not approve such a transaction, but the player would not be subject to sanctions. His new club (e.g. Dynamo), however, might be.

PETER HASSETT: Earlier this Summer, Ilya Kovalchuk ostensibly retired from the NHL in the middle of his contract and immediately signed with SKA St. Petersburg. What happened there with respect to those same regulations? Are there parallels between that situation and Ovi (if he were to choose to go back to the KHL)?

FEDOR FEDIN: Kovalchuk, as you said, retired from the NHL. Therefore, he was free from any obligations with the Devils, just as they were from any contractual obligations to him. However, as reported by Nick Cotsonika, the NHL could’ve fought it if Devils chose to. They would most likely argue that Kovalchuk found a loophole to circumvent NHL/KHL agreement. That would probably end up a subject for interleague negotiations.

PETER HASSETT: So the Devils chose not to take action, perhaps because it was advantageous for them to be rid of Kovalchuk’s contract. If they had taken action, or if the Capitals take action in the hypothetical circumstance we’re talking about, what would happen? Could there be financial consequences to the KHL and its teams? Could contracts be invalidated?

FEDOR FEDIN: The NHL could (and probably would) force the matter in two ways.

First would be by way of NHL/KHL negotiations. The two sides would have to find some compromise, though it’s difficult to see what would satisfy both sides in this situation. Maybe the KHL would stop hunting for Ovi and other Russian stars under contract in exchange for the NHL giving some ground on the transfer-agreement negotiations that have been pointless so far. Who knows.

Second, the NHL could probably seek sanctions through the IIHF against the club that signed the player and request to invalidate the transaction, assuming the IIHF would approve it in the first place.

The KHL, though, thinks the legal basis is in their favor. Commissioner Alexander Medvedev said on Monday:

NHL regulations provide a certain path for those who want for some reason to retire from the professional career in the American league. And when Kovalchuk returned, everything was done in accordance to those regulations. So if we assume that Ovechkin or someone else would want to continue his career not in the NHL, but in the KHL or some other league, there are legal options for that. It depends on player’s desire to use that possibility. I want to note that in the Kovalchuk case the club nor the NHL put obstacles to prevent such a decision. You’ve got to give credit to the NHL regulations: What is written with a pen can’t be cut with an axe [Ed note: a Russian idiom] there. No one had made such a step before Kovalchuk. But the precedent is there.

PETER HASSETT: Has anything like that ever happened in the past? Or has it happened in the opposite direction– with an active KHL player signing with an NHL team?

FEDOR FEDIN: Aside from Kovalchuk, there was the Radulov case. In 2008, Alexander Radulov signed with Salavat Yulaev Ufa while under an entry-level contract with the Nashville Predators. IIHF investigated the case and here’s their decision:

A group of international lawyers hired by the IIHF concluded that Radulov was under a binding and valid contract with the NHL’s Nashville Predators at the time when he signed a contract with Salavat Yulayev Ufa of the KHL.

The IIHF does not support the breach of valid and binding agreements. However, the current IIHF statutes and bylaws – as well the absence of an agreement regarding respect of valid contracts between the IIHF and NHL – does not give the IIHF legal base to sanction the player from professional domestic hockey.

In 2012, Radulov played out the rest of his contract with the Preds, coming to North America after Salavat Yulaev was eliminated from the KHL playoffs. He returned to Russia that summer.

It seems like the necessary updates were made to IIHF documents to avoid a repeat of such a situation, but there’s still no transfer agreement between the NHL and KHL/Russian Hockey Federation.

The most recent conflict situation is the case of Russian prospect Nikolai Prokhorkin. After getting drafted by the Los Angeles Kings last year, Prokhorkin signed an ELC with the club while still under contract with CSKA Moscow in the KHL. CSKA decided to pursue their rights, and the interleague negotiating committee returned Prokhorkin to CSKA, rendering his deal with the Kings invalid.

PETER HASSETT: So do you think it’s fair to say that we don’t yet know exactly what would happen if an NHL player under contract defected to the KHL while his NHL team still wanted him?

FEDOR FEDIN: Yes, especially if he calls that a ‘retirement.’ The NHL would look to prove it was an attempt to circumvent his deal, but no one knows what the decision would be. It would set a huge precedent though, going a long way in the hockey landscape — long-term contracts would mean no guarantees for the club.

Another interesting option for the NHL is to preventatively agree on tweaking the CBA with the NHLPA to somehow discourage players from ‘retiring’ and signing in the KHL. But whether the players would agree to it or not, and how the NHL would try to police another league– those are difficult to imagine.

PETER HASSETT: Okay, final question: Assuming that, right now, Alex Ovechkin would not want to vacate a great contract with a good team in the world’s best league, and that the Washington Capitals would not want to lose the best player in franchise history and the single biggest factor in their success this last decade, under what circumstances could you foresee Alex Ovechkin leaving the Capitals for Dynamo— and Washington letting him go?

FEDOR FEDIN: I could see it happening if Ovechkin’s game completely falls apart, making his contract unbearable for the club. But even that is unlikely considering that the salary cap is expected to grow wildly in the next few years, limiting the potential damage from Ovechkin’s $9.5M cap hit. Even if the Caps eventually decide to go to into rebuild mode, keeping an attractive player like Ovi on their roster would help attendance in the lean years.

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  • standarsh

    This is really interesting… what reasons would Ovie have for leaving for the KHL? I feel like he’d want at least ONE stanley cup before anything like this would happen (even if maria wants him back in russia, which I have no idea if that’s the case).

  • Catherine__M

    Beside cultural and family considerations (which effect each individual differently–you can’t know where and how he and his family want to live, how comfortable they are living apart for part of the year etc), I understand that there is a flat 13% income tax in Russia, and a regressive social services tax system in which the highest income earners pay only 2%. Here, they’re in the 35% bracket here and once you add in the state taxes (different in every state in which they play games and who knows what happens when they play games in Canada), they part with around 50% of their income. (Note: I have a long-ago background in the US tax system, and my understanding of the Russian one is limited to what’s on Wikipedia. I am very open to correction in either case).

    So if the KHL is willing to pay as much as the NHL is (which they appear to be for the superstars), the starts keep a LOT more money. Heck, they keep more money even if they earn significantly less. Add in the fact that some KHL clubs are may pay the taxes for some athletes and you’ve got a very solid financial incentive to play in the KHL if you’re a superstar.

  • yv

    I can say that each time when media sharks in NA will ask Ovi here about he leaving to KHL (and one can be assured now that it will happen every single time) he would be enticed to say the popular Russian censored B-word, that can be often heard, for instances, in Bond’s “Goldeneye”, probably directed both to reporter and to Dynamo’s Safronov, who put him in this situation.

  • http://www.russianmachineneverbreaks.com/ Peter Hassett

    Ovi makes $9-10M from the Capitals. That we know.

    But he also makes undisclosed grotesquely large amounts of cash for being spokesperson for sodas, candy bars, sports equipment, telecom, credit cards, etc. Those companies would not use him as a sponsor if he were just the big fish in the very very small pond of the KHL.

    So it’s not as simple as NHL salary-tax < KHL salary-tax.

  • Catherine__M

    I hadn’t thought about the endorsement income, which you’re right would easily make up for the US taxes and then some. So maybe for him…not such a strong motivation (though I’m sure he’d get not-as-big endorsement deals in Russia, too…if he’s not already). So maybe it makes the most sense to leave if you’re a top-tier player who’s not quite a *super*star with endorsement deals?

    FWIW, I don’t think he’s going anywhere soon, if ever. But the lockout sure didn’t help me feel comfortable in that opinion.

  • http://www.russianmachineneverbreaks.com/ Peter Hassett

    Yeah, I think Greg Wyshynski at Puck Daddy made a similar point yesterday http://sports.yahoo.com/blogs/nhl-puck-daddy/enough-alex-ovechkin-envy-khl-144317149–nhl.html

    The KHL is a good fit for a guy like Kovalchuk, who isn’t a superstar, loves money, and doesn’t like teh gays.

  • bskillet

    Haven’t heard anything from Ovi on this issue, I would think the bottom line would come down to that. Where does he want to play? After seeing the players reaction last yr. when the lockout ended it seemed like most couldn’t get back here fast enough. I would like to see the 2014 Stanley Cup champion square off against their top team at the end of the year, just to see.

  • johnnymorte

    10 reasons why this isn’t happening: 1. Verizon Center: 18500. Luzhniki Minor: 8,700. That doesn’t even get filled.
    2. NB19 plays in Washington.
    3. Ovi can’t jump at the glass in Russia because his head breaks it.
    4. He explicitly said in an interview when asked about Kovy’s departure during the modeling of the Russia jersey: “Everyone has their own path.”
    5. Ted Leonsis.
    6. Moscow Dynamo is not Putin’s favorite team, SKA St. Petersburg is.
    7. Pipes don’t break in a Marriott.
    8. Orly and Grabovski are coming to town, and hopefully Kuzya.
    9. He’s got endorsements up the wazoo in North America.
    10. He already has a Gagarin.