He played last year for the New Jersey Devils, and they did not want to lose him. They therefore offered him this lucrative, long term deal, and he accepted.
By spreading the $102 million over 17 years, however, the Devils essentially found a way to make sure they would be under the salary cap. It's a good deal for Kovalchuk because the money is front-loaded (he'd make only $550,000 in the last 5 years of the deal). This means he gets the majority of the money right away, and since it's extremely unlikely that he will still be playing 17 years from now (he would be 44), he won't really lose if he retires before the contract is fully paid out.
I...have nothing to say
The NHL, as poorly-run and stupid of an organization as it often seems to be (that's a rant for another day), could still figure out that Kovalchuk and the Devils were trying to pull the wool over their eyes.
1) The NHL's rejection of the deal will be challenged by both the Devils and the Player's Association, so this story could drag on for awhile.
2) In the meantime, the NHL has essentially put Kovalchuk back on the market. It remains to be seen if the Devils can come up with a new deal that will satisfy both the superstar and the league, or if Kovalchuk will take his talents to another team.
3) If the NHL decision stands, it will no doubt have an impact on future contract negotiations around the league. If it doesn't, we will surely see a lot more of these mammoth, super long-term deals in the future.