By: Alex Dourian
When Evander Kane signed a seven-year, $49 million contract with the San Jose Sharks in May 2018, he had good reason to expect he would receive the full value of his contract as NHL contracts are mostly guaranteed.[1] In the time since Kane signed that contract, he has found himself at the center of multiple controversies, both on and off the ice.[2] In January 2022, the Sharks terminated Kane’s contract, resulting in him forfeiting the $22.8 million remaining on his contract.[3] The Sharks contended that Kane had breached both his contract with the Sharks and the American Hockey League’s (“AHL”) COVID-19 protocols; Kane had been playing for the Sharks’ AHL affiliate for much of the season.[4] In the salary cap-strapped world of today’s NHL, the Sharks will benefit from the removal of Kane’s salary cap hit from their roster—the termination will free up $7 million in cap space annually over the next three seasons.[5] In light of the Collective Bargaining Agreement’s (“CBA”) provisions regarding the difficulty in modifying or terminating contracts, how were the Sharks able to escape Kane’s cap hit?[6] Considering the flat-cap environment where salary cap space is the most valuable asset teams can have, was the move warranted, or does it simply amount to a form of salary cap circumvention?[7]
The CBA stipulates that all clubs must use the Standard Player Contract (“SPC”) when negotiating with players.[8] In the SPC, there are provisions that govern player conduct—these provisions permit teams, in certain circumstances, to terminate a player’s contract for failing to comply with the team’s rules “governing training and conduct of [p]layers.”[9] Additionally, paragraph 18 of the SPC mandates that players are bound by “League Rules that affect any terms or conditions of employment.”[10] As Kane and the NHL Players Association (“NHLPA) have filed a grievance regarding his termination, the Sharks will have to articulate just exactly how Kane breached his contract.[11] They would likely argue that he breached the provisions of paragraphs 14 and 18 by failing to adhere to team and league rules governing conduct of players with respect to COVID protocols. The team could argue that by traveling to Vancouver while COVID positive, Kane violated the League’s COVID protocol, which strictly mandates a quarantine period if a player tests positive. Such rules, the team might contend, fall under the umbrella of league rules that affect terms and/or conditions of employment.[12]
The NHLPA will likely argue that even though Kane violated COVID protocols twice in the same season, the two violations are different because one occurred at the NHL level, while the other occurred at the AHL level when he was playing with San Jose’s minor league affiliate.[13] Therefore, the NHLPA might argue, the Sharks should not have the ability to terminate based on breach of contract for only one COVID violation at the NHL level.[14] Even if Kane’s termination is held valid, the NHLPA could argue that such a termination would open the floodgates for teams looking to create salary cap space without having to buy-out the player’s contract or go through the trade process.[15] In effect, any COVID protocol violation could serve as a “license” to terminate that player’s contract, especially if the player “does not fit in.”[16]
As mentioned, salary cap flexibility is the most important asset teams have in today’s NHL landscape.[17] Currently, there are ten teams in the NHL with less than $2.8 million in cap space.[18] With so many teams struggling to maintain cap flexibility, the NHLPA would certainly have a valid point in arguing that a dangerous precedent is being set by allowing contract terminations for one or two COVID violations, even if such a termination is valid in the instant case. It could give teams the idea that they have free license to sign players to problematic contracts with the silver lining that those contracts can be terminated for a single COVID violation. Such acts could arguably be classified as salary cap circumvention—with the Sharks, for example, they now have cleared enough cap room to make a strong contract offer to their star player, Tomas Hertl, who is due to become a free agent after the 2021-22 season.[19] Prior to Kane’s termination, such a possibility was slim due to the Sharks’ lack of cap flexibility.[20]
Moving forward, the NHLPA and the NHL will need to engage in substantive discussions regarding the terms by which teams can terminate player contracts for COVID violations, whether it be based on a specific number of violations, the severity of any one violation, or a combination of both.
[1] See Collective Bargaining Agreement Between the National Hockey League and National Hockey League Players Association Arts. 11.10, 11.13 (Feb. 15, 2013), https://www.nhlpa.com/the-pa/cb [hereinafter CBA] (stipulating that except in very limited circumstances, NHL clubs cannot renegotiate existing contracts, nor can they add option clauses or voidable years to contracts being negotiated). But see CBA Ex. 1 ¶ 13 (noting circumstances in which a club may “buy-out” the remaining years left on a player’s contract).
[2] See Erica Commisso, 5 times the NHL’s Evander Kane made headlines for controversial antics, Sportsnaut (Jan. 14, 2021), https://sportsnaut.com/evander-kane-nhl-career-history/; Greg Wyshynski, San Jose Sharks’ forward Evander Kane suspended 21 games for ‘established violation’ of COVID-19 protocol, ESPN (Oct. 18, 2021), https://www.espn.com/nhl/story/_/id/32425827/san-jose-sharks-evander-kane-suspended-21-games-nhl-established-violation-covid-19-protocol.
[3] Emily Kaplan, NHLPA files grievance after San Jose Sharks terminate Evander Kane’s contract, ESPN (Jan. 10, 2022), https://www.espn.com/nhl/story/_/id/33034735/nhlpa-file-grievance-san-jose-sharks-terminate-evander-kane-contract.
[4] Id. (discussing how Kane’s termination likely comes from him violating the AHL COVID protocols when he traveled to Vancouver while COVID positive, as well as the allegation that he was away from the team and returned a week later than he was directed to).
[5] James O’Brien, Sharks waive Evander Kane to terminate contract; grievance likely, Pro Hockey Talk (Jan. 8, 2022), https://nhl.nbcsports.com/2022/01/08/sharks-waive-evander-kane-to-terminate-contract-grievance-likely/.
[6] See CBA Arts. 11.10, 11.13.
[7] If the Sharks had not terminated Kane for cause, the only alternative options would have been to trade him to another club or buy-out the remaining years of his contract. See CBA Ex. 1 ¶ 13.
[8] Id. Art. 11.1(a).
[9] Id. Ex. 1 ¶ 14(a).
[10] Id. ¶ 18.
[11] See Corey Masisak, Sharks, Evander Kane prepare for contract showdown: Sifting through some of the situation’s key questions, The Athletic (Jan. 11, 2022), https://theathletic.com/3063798/2022/01/11/sharks-evander-kane-prepare-for-contract-showdown-sifting-through-some-of-the-situations-key-questions/ (discussing next steps now that the NHLPA has filed a grievance on behalf of Kane).
[12] See generally CBA Ex. 1 ¶ 18.
[13] See Elliotte Friedman & Jeff Marek, 32 Thoughts: The Podcast, Sportsnet, at 03:30 (Jan. 10, 2020) [hereinafter 32 Thoughts] (accessed using Spotify). But see 32 Thoughts at 03:05 (mentioning that even if the violations occurred at different levels, the fact that there would be two would bolster the Sharks’ argument).
[14] Id.
[15] Id. at 04:00.
[16] Id.
[17] See Ben Pope, NHL set to begin offseason that will redefine the value of cap space, Chicago Sun Times (Jul. 20, 2021), https://chicago.suntimes.com/blackhawks/2021/7/20/22585660/nhl-offseason-2021-preview-expansion-draft-entry-draft-free-agency-salary-cap-space (attributing the “chaotic confluence of league expansion” and “salary-cap stagnation” to the redefinition of how teams are constructed and how “assets are valued”).
[18] See NHL Salary Cap by Team, Puckpedia, https://puckpedia.com/teams (last visited Feb. 4., 2022).
[19] See Josh Frojelin, Evander Kane Contract Termination Gives Sharks Financial Boost, The Hockey Writers (Jan. 9, 2022), https://thehockeywriters.com/evander-kane-contract-termination-gives-sharks-financial-boost/ (noting how Kane’s termination is a “best-case scenario” for the Sharks and that they should easily be able to extend Hertl come the offseason).
[20] Id.
