Devils fined $3 million by NHL, lose 2 draft picks as punishment for Kovalchuk contract

NEWARK, N.J. – The cost of signing Ilya Kovalchuk got even more expensive for the New Jersey Devils.

The NHL fined the Devils $3 million on Monday and took away two high draft picks over the next four years for signing Kovalchuk to a 17-year, $102 million contract in July that circumvented the league's salary cap.

In handing down what might be his harshest penalty for a team salary-cap violation, Commissioner Gary Bettman forced New Jersey to forfeit a first-round pick sometime over the next four years and a third-round pick next year.

Devils president and chief executive Lou Lamoriello insisted the team didn't break the rules.

"We were today advised of the ruling by the commissioner with respect to the Kovalchuk matter," Lamoriello said in a statement. "We disagree with the decision. We acted in good faith and did nothing wrong. We will have no further comment."

It was not immediately clear if the Devils can appeal the ruling.

The NHL had the right to discipline the Devils after arbitrator Richard Bloch ruled on Aug. 9 that Kovalchuk's free-agent contract constituted a circumvention of the NHL/NHLPA collective bargaining agreement. The league's biggest problem with the deal was that the 27-year-old Russian star was to be paid only $550,000 in each of the final six years.

The $3 million fine will not count against the Devils' salary cap, a decision the league and the NHL Players' Association reached earlier this month in working out an amendment on long-term contracts.

That amendment paved the way for the league to approve a 15-year, $100 million contract that the Devils and Kovalchuk reworked after Bloch's arbitration ruling.

The NHL said it now considered the matter closed and will have no further comment, including anything on its disciplinary action.

The Devils have the right to choose what year they will forfeit their first-round pick, but they must tell the league by the day after the Stanley Cup finals in that year.

The Devils originally signed the high-scoring left winger to what would have been a landmark deal in July. It would have kept Kovalchuk under contract until he was 44.

The league immediately rejected the deal, noting that paying the Russian All Star such a low salary in each of the final five years violated the league's salary cap because it drove down New Jersey's annual salary cap hit.

The players' association filed a grievance against the league, but Bloch sided with the league after hearing from both sides.

The Devils and Kovalchuk reworked the contract and settled on the revised 15-year deal earlier this month. The NHL approved it after agreeing with the players' association on the amendment covering long-term contracts.

With 338 goals and 304 assists in 642 career NHL games, Kovalchuk was the biggest prize on the free agent market this season. He had 41 goals and 44 assists in 2009-10, a season he split between Atlanta and the Devils, who acquired him in a multiplayer deal in February.

The new deal will put a $6.67 million annual hit on the Devils' salary cap and put the team roughly $3 million over the league limit ($59.4 million) with only 21 players under contract, two under the league limit.