League sanctions put a major cramp in Coyotes’ rebuilding plans

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During a Zoom call with reporters in June to announce the hiring of president/CEO Xavier Gutierrez, Coyotes majority owner Alex Meruelo was asked about the impending sanctions against the team for fitness testing draft-eligible players before the 2019 scouting combine.

"We are cooperating with (commissioner) Gary Bettman and the NHL,” Meruelo said. “I don’t believe (the penalty) is going to be substantial.”

The league did not agree. The Coyotes will forfeit their second-round pick in the 2020 NHL Draft, and their first-round pick in the 2021 NHL Draft, the league announced in a final ruling on the matter that does not allow for appeal. The Coyotes will not face any fines and no club personnel will be punished for the offenses.

The sanctions were announced by Bettman in a news release.

Per the release, “Bettman convened a hearing on Aug. 6 that included testimony from Coyotes representatives and the NHL. At the outset of the hearing, the Coyotes acknowledged violations of the policy by conducting physical testing on 2020 draft-eligible players prior to the combine.

“In reaching his decision, Bettman outlined key reasons for the policy’s prohibition on physical testing prior to the Combine: to ensure competitive fairness among clubs with respect to evaluating and drafting prospects and to avoid subjecting prospects to repeated and duplicative testing procedures.

“The sanctions were imposed under Article 6.3 of the NHL Constitution, which authorizes the commissioner to impose discipline ‘if he determines . . . that any person . . . has either violated the Constitution, the By-Laws, or any other governing rule or regulation of the League, or has been or is guilty of conduct . . . detrimental to the League or the game of hockey.’

“Further, Article 6.3 empowers the commissioner to deprive the offending Club of draft choices ‘if the conduct in question affects the competitive aspects of the game.’”

“While the Combine Testing Policy Memoranda reference a fine of no less than $250,000 for each violation of the policy, I exercise my discretion to impose the aforementioned discipline — which I consider to be more appropriate given the specific circumstances of this case,” Bettman said in the release.

“While I conclude that certain club personnel acted in a grossly negligent manner at best, which was conceded by the club, I ultimately conclude that the record does not establish — to a standard with which I am comfortable — that those individuals engaged in intentional wrongdoing, as opposed to grossly negligent behavior.”

When reached on Wednesday, Bettman and deputy commissioner Bill Daly both declined to provide details of the violations, or say how many occurred. The league will not comment further on the ruling, both said.

The Coyotes issued a statement following the ruling.

"We were advised today of the NHL's ruling regarding the allegations of physical fitness testing of draft prospects and respect the League's ruling. Under new leadership, we have added thorough internal controls and compliance measures to prevent this type of occurrence from happening again in the future. We will have no further comment."

So where does this leave the Coyotes? To put it mildly, in a bad spot. Of all the criticisms of former GM John Chayka that surfaced after his messy split with the team, this one is the most damning. The Coyotes are in desperate need of an influx of young talent to bolster a young core of players that is coming of age, but does not have key roster pieces to complete it. As it stands now, the Coyotes have one pick in the first three rounds of the next two drafts, a 2021 second-round pick.

They traded their 2020 first-round pick in the package that brought forward Taylor Hall to Arizona in December. Their 2020 second-round pick was a victim of these sanctions and they traded their 2020 third-round pick to acquire forward Carl Söderberg last summer. Their 2021 first-round pick was part of these sanctions and they will either lose their 2021 second- or third-round pick, depending on Hall’s fate. If he re-signs with Arizona, New Jersey will get the Coyotes’ 2021 second-round pick. If he does not, New Jersey will get the Coyotes’ 2021 third-round pick.

This is not to suggest that the Coyotes’ actions didn’t warrant punishment. The league clearly felt there were grounds for these sanctions and so did executives and coaches across the league, who were howling for blood. That said, Bettman has talked often about the importance of helping the Coyotes franchise succeed. His actions have consistently backed that commitment, but today’s ruling made it a lot harder on the franchise in the short term. Wouldn’t substantial fines have sufficed while allowing the club to pursue viability under an owner who finally has the financial chops to do so? The loss of key draft picks will hinder this franchise for years to come.

It’s quite a pickle for the next GM of the team. If the Coyotes are serious about rebuilding over the next couple years as they try to secure their arena solution, they will likely have to consider moving several veterans off the roster, and perhaps consider moving a young player or two.

Forwards Derek Stepan, Michael Grabner, defensemen Niklas Hjalmarsson, Alex Goligoski, Jason Demers, Jordan Oesterle and goalie Antti Raanta all have one year left on their deals. Hjalmarsson, Goligoski and Raanta are likely the most marketable players whom the Coyotes could trade for assets this summer, and they might be able to trade some of the other players such as Stepan or Grabner at the trade deadline.

If Oliver Ekman-Larsson does want a change of scenery and would be willing to waive his no-move clause, should the Coyotes consider trading him for high-end assets. Would a team be willing to take on the final seven years of his contract at an average annual value $8.25 million?

Should they try to move some of the younger pieces of the core like Christian Dvorak, Jakob Chychrun or Nick Schmaltz, who carries a hefty $5.85 million AAV for the next six seasons.

And if this truly is a rebuild and they’re going to do it right, should they consider trading the Coyotes’ greatest asset, goaltender Darcy Kuemper, who may not be at the height of his game when this rebuild takes shape?

When the season ended, I asked if you were ready for another rebuild. The next GM may not be able to find another way forward.

Follow Craig Morgan on Twitter: @CraigSMorgan