With the NHLPA officially filing a grievance today against the NHL on behalf of Ilya Kovalchuk, the league and players’ union will now battle out whether the 17-year, $102 million dollar contract is legitimate. If the NHLPA wins, the Devils get their player. But if the arbitrator rules in favor of the NHL, the Devils could face harsh penalties.

After reading several reports about what exactly comes next, I wanted to outline the following steps. Big credit to Tom Gulitti of the Bergen Record for the information.

With the NHLPA filing their grievance, both sides will look to find a “systems” arbitrator. The neutral arbitrator will conduct a full hearing with witnesses, oral arguments and written briefs presented to the arbitrator. Both sides, however, can choose not to have the formal hearing.

The arbitrator can call anyone involved in the process as a witness. Kovalchuk, his agent Jay Grossman, Devils owner Jeff Vanderbeek and general manager Lou Lamoriello can all be called on for the case. The Los Angeles Kings, who Grossman and Kovalchuk negotiated with, can also be called in. The site of the hearing would be up to the NHLPA and NHL to decide. After the hearing, the arbitrator will have 48 hours to issue a ruling.

If the Arbitrator Rules In Favor of the Contract…

If the arbitrator rules that the NHL was wrong to reject the offer, the NHL will have to immediately approve and register the contract. It’s that simple.

If the Arbitrator Rules In Favor of the NHL…

If the arbitrator upholds the NHL’s rejection of the contract, then the deal would be dead and Kovalchuk would become an unrestricted free agent. Kovalchuk could then re-negotiate a deal with the Devils or sign with another team. But it’s not that simple.

The arbitrator also decides whether or not the Devils attempted to circumvent the cap. If the arbitrator believes the team attempted circumvention, commissioner Gary Bettman can then impose hefty fines against the club.

According to Article 26.13 of the collective bargaining agreement:

if the system arbitrator finds that a circumvention has been committed by the club, the commissioner has the power to impose of fine of up to $5 million in cases of circumvention of the salary cap. It also says “if such a fine is assessed against a club, that club’s payroll room shall also be reduced by such amount for the following league year.”

The Devils, who would have $3.5 million this season in cap space, would then have to shed salary to accommodate the fine. Bettman can also take draft picks of any position and any year away from the team.

Kovalchuk could also face penalties. Bettman can fine him between $250,000 and $1 million for circumvention, and the arbitrator can recommend suspension of Kovalchuk if it’s found that he tried to circumvent the cap.

I don’t think the NHL will take a hard-line stance, but the Devils, who are bystanders in the process, can potentially lose out on more than Kovalchuk if the arbitrator rules in favor of the NHL.