Raiders Wallet

Why the Raiders over-paid Saffold, Howard

The Raiders looked to be sitting pretty riding into free agency. They had a large amount of cap space and the will, it appeared, to re-sign their own to-be free agents plus a few others.

A day after free agency, the Raiders have signed three players, only one of which was in Oakland last season. Arguably the team’s best three players (and certainly the team’s best three free agents), OT Jared Veldheer, DE Lamarr Houston and RB Rashad Jennings, were allowed to sign with other teams.

Instead, the Raiders paid large sums of money for both LT Rodger Saffold and RT Austin Howard and a small amount of money to re-sign Darren McFadden who was not considered likely to be a priority free agent.

What happened on the first day of Free Agency for the Raiders? Why did they pay so much for both Saffold and Howard? It comes down to three reasons: the salary floor, the spending cap increase, and the “loser’s premium.”

First, the Raiders had a lot of money that, as we discussed earlier this week, they have to spend. While the salary floor isn’t a hard floor every year – the Raiders aren’t required by rules to spend 89% of the salary cap this year, for example – it has basically become an every year exercise for the Raiders because they didn’t spend much money last year.

Because we have already addressed this issue, we will not discuss the details of the salary floor further in this article. Click on this link to see Part 1 and this link to see Part 2 of TFDS’ article on the Raiders and the Salary Floor, so you can learn more about this if you are interested

 

Second, and quickly, the Raiders have to contend with being perennial losers. The team hasn’t had a winning record in 10 years. If the contract terms being offered by the Raiders are similar to the terms being offered by Seattle, Denver, Indianapolis, San Francisco, New England, etc., players will choose to go where they have the best chance to win.

In order to get the premium free agents to come to the team, the Raiders may have to put a little extra on top – this is the so-called “Loser’s Premium.”

 

Finally – and most importantly, to my mind – the Raiders had to contend with the salary cap increase this year. The salary cap jumped up over 8 percent in one season, well higher than it had in any of the recent seasons. The salary cap increase could not have come at a worse time for the Raiders.

The NFL is a big, complicated business. And, like any business, it falls under the law of Supply and Demand.

You remember your old economics class in High School, right? For those of you that don’t, supply and demand are ways of looking at what causes prices to rise. If your supply stays the same and demand rises, prices will rise because more people want the same supply. If your supply stays the same and your demand falls, prices fall because not as many people want the same supply and they have to lower prices to get sales.

On the other side, if demand stays the same and supply increases, prices fall because there isn’t any additional demand but a lot larger supply of the commodity. If demand stays the same and supply falls, prices rise because people still want the commodity but there is less of it to get.

The price of any given commodity is based on the supply of and the demand for the commodity.

Every year, free agency shows where there is demand and where there is supply. This season, there was a low supply of starting caliber left tackles and there was a high demand. There were more teams that were interested in signing a left tackle than there were experienced starting left tackles to sign.

Because of this, all teams had to pay a premium for their left tackles. It’s the nature of the beast when supply is low and demand is high.

Why was demand high? In large part, demand is high across the board this year because the salary cap increased by $10 million this year. That meant that teams that previously were at or over the cap suddenly had a lot of money to work with. They could choose their favorite free agent and focus on selling that player to come to their team.

The Raiders’ large cash advantage suddenly was decreased, at least when it comes to the top free agents. Those free agents will have anywhere from 5 to 15 teams seeking their services and can use that interest to bid up their value. Again, supply and demand.

 

Here’s the good news – for the team, at least. At some point, this leverage will swing. Once the initial wave passes and the 1st and 2nd tier free agents are signed by teams that didn’t have much cap space even after the cap increase, suddenly there will be hundreds of players who want to play and only a few teams that have the space to sign them.

At this time, the Raiders should have plenty of cap space and will be able to be very selective and deliberate about who they choose and how much they spend. Again, supply and demand.

 

For news and thoughts on all the Raiders free agent moves, follow me on Twitter @AsherMathews

About Asher Mathews

Head writer for TFDS Sports, covering the Oakland Raiders and NFL at large. Proud Purdue alum. Follow me on Twitter!

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