Oakland Raiders' Spending Dilemma Could Define Reggie McKenzie Era

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Oakland Raiders' Spending Dilemma Could Define Reggie McKenzie Era
Marcio Jose Sanchez/Associated Press

The Oakland Raiders are entering the third year of their rebuild with general manager Reggie McKenzie calling the shots. The first two years have been rocky, making this a pivotal year of the entire process.

With over $60 million in salary-cap space in 2014, according to Spotrac.com, the Raiders are now in a great position. The Raiders not only have the most salary-cap space in 2014, but also the most since the salary cap came into existence 20 years ago. McKenzie effectively hit the reset button—the Raiders have neither a lot of talent nor many long-term commitments to players.

What you may not know is that it’s pivotal for more than the obvious reason, and it could come to define the McKenzie era in Oakland. Not only do the Raiders need an immediate talent infusion, but they also need to make progress to reach the NFL’s minimum spending threshold of 89 percent of the cap in cash from 2013 to 2016.

With a team lacking top-end talent, many fans expect McKenzie to go on a shopping spree, but that goes against the style he learned while working with the Green Bay Packers for nearly 20 years. McKenzie even stated in a Jan. 16 meeting with Raiders beat reporters that he wouldn’t spend frivolously.

“The philosophy is not to dump every dollar and cent into one or possibly two players,” McKenzie told reporters. “That’s not my philosophy.”

“We’re going to figure out how we can best get as many good players as we can," he said. "If that, by chance, leaves enough money or cap space to get that one player, then we’ll do that, too.”

McKenzie has to spend; he’s just going to try to do it without making a big mistake. He’s not just going to spend on left tackle Jared Veldheer and defensive end Lamarr Houston, but other free agents as well. It may not happen all this year, but the Raiders need to spend a lot of money before the end of the 2016 season.

 

The Background

In the last collective bargaining agreement between the NFL and the NFL Players Association, the teams agreed to spend at least 89 percent of the salary cap in cash over a four-year period from 2013 to 2016. That process will repeat from 2017 to 2020.

The penalty for not meeting the minimum is taking the difference and distributing a prorated amount to each player based on how long they played for the team from 2013 to 2016. It’s a logistical nightmare, and a bunch of bad players would get an unexpected bonus. More than anything, it would be money the Raiders could have spent to improve their roster and didn’t.

Oakland Raiders Cash Spending 2013-2016
Year Salary Cap Cash Spent Cash % Cap Space
2013 $123.0M $93.1M 75.7% $2.6M
2014 $126.3M $47.1M TBD $63.6M
2015 $130.1M (projected) - - -
2016 $134.0M (projected) - - -
Target $513.4M $456.9M 89% -

CBSSports.com

The idea from the players' perspective is that every team, not just teams like the Dallas Cowboys, would have to spend real cash dollars on players. Players don’t care about cap dollars; they care about how much is actually going into their pockets.

At the time, the belief was that this would be an easy thing for every franchise to do. Spending less in cash in the first couple of years would simply necessitate a spending spree in the final years.

The teams that currently lag behind the 89 percent will be giving big signing bonuses to their best players in 2015 and 2016. Other teams are ahead of schedule because they had to give large bonuses to a franchise quarterback. Others just spend cash as if they have license to print it (because the NFL is so popular, they pretty much do).

The Raiders have a special circumstance. While McKenzie has done a very brave thing tearing down the roster, the pressure is on to spend enough money to get to the NFL minimum by the end of 2016.

 

The Dilemma

It was supposed to be easy for every team to get to the minimum, but the Raiders are the rare team that could struggle. One of the reasons is because the new CBA also made it so draft picks can’t renegotiate their contracts for three years, and the Raiders don’t have any other great players coming up for a contract extension.

Justin Edmonds/Getty Images
D.J. Hayden will be eligible for an extension in 2016, but the Raiders have no reason to give it to him even if he turns into an All-Pro.

The only rookie class that would be able to get a big signing bonus from the Raiders in 2016 is the 2013 class that featured cornerback D.J. Hayden, offensive tackle Menelik Watson and outside linebacker Sio Moore. McKenzie’s desire to build through the draft will not help him reach the NFL’s spending minimum.

Even if Hayden were worth a big contract extension, the Raiders wouldn’t want to give it to him at the end of his third year. One of the secret savings the Raiders received by moving down from No. 3 to No. 12 to get Hayden was the ability to pay him the average of the top 25 at his position in his fifth year instead of the top 10 at his position.

There is absolutely no reason to give out a long-term contract extension to Hayden after three years just to reach the spending minimum. Spending just to reach the minimum is barely better than falling short and giving former and current players the difference.

Outside of Veldheer and Houston, the Raiders also don’t have many veterans that will deserve a huge payday by 2016. If anything, the veterans the Raiders have will be getting older and will need to be replaced by younger players.

 

The Situation

According to former agent Joel Corry of CBSSports.com, the Raiders had a league-low payroll of $93.1 million last season, which was just 75.7 percent of the salary cap. That means the Raiders will need to make up $16.4 million in spending over the next three seasons.

Kirby Lee-USA TODAY Sports
Left tackle Jared Veldheer hardly makes a dent in the amount of cash the Raiders need to spend.

That might seem easy, but the Raiders also have to get to a combined 89 percent of the salary cap in 2014, 2015 and 2016. In 2014, 89 percent of the projected $126.3 million salary cap is $109.5 million, with the Raiders currently having just $47.2 million in cash-spending liabilities, according to OvertheCap.com.

Just to increase cash spending to 89 percent in 2014, McKenzie would have to dole out more than $60 million in bonus money and base salaries to players not currently on the roster. That’s not equal to cap dollars, which will be less because signing bonuses are prorated for a maximum of five years of the contract.

For comparison, we can look at No. 5 overall pick Ezekiel Ansah, left tackle William Beatty and defensive end Carlos Dunlap. Ansah would be a comparison for the contract the Raiders will need to give the 2014 No. 5 overall pick, Beatty for Veldheer and Dunlap for Houston.

Using data from OvertheCap.com, to sign those three would cost the Raiders about $40 million in cash, including a 3 percent increase. That still leaves a difference of over $20 million for McKenzie to spend. The top free agents, the ones that McKenzie is likely to avoid, would cost between $10 million to $12 million in cash.

Contract Cash Spending Comparison in Year 1
Player Comparison for 2013 Cash Number
Ezekiel Ansah No. 5 Overall Pick $12.3M
Carlos Dunlap Lamarr Houston $13.0M
William Beatty Jared Veldheer $13.6M
Total - $38.9M
Total with 3% increase - $40.1M

OvertheCap.com

If the salary cap rises by roughly 3 percent annually over the next few seasons, the Raiders will need to spend $456.9 million in cash from 2013 to 2016 to hit the 89 percent minimum, or $363.8 million from 2014 to 2016 after removing 2013.

That’s $121.3 million in average cash spending over the next three years.

There will be a little residual cash-spending impact from re-signing Veldheer, Houston and whatever other free agents the Raiders sign to multiyear deals during the offseason. The problem is, the Raiders still need to continue to find ways to spend money.

 

The Strategy

The problem isn’t necessarily getting to the minimum spending threshold; it’s finding the right talent to pay. The only current players who may deserve an extension before 2016 are center Stefen Wisniewski, wide receivers Denarius Moore and Rod Streater, and safety Tyvon Branch.

A center, a safety and two No. 2 wide receivers don’t exactly eat into the funds the Raiders need to spend. McKenzie really has no choice but to turn to free agency to fill the gaps on the roster and to reach the minimum salary threshold.

Given that the Raiders have to spend eventually, agents would be crazy not to at least check with them before letting their clients sign with another team—especially agents with young free agents. When they do come calling, the Raiders may be able to offer what many other teams won’t: another opportunity for a big payday at or before they turn 30. 

 

Select Free Agents 27 and Under
Position Target 1 (age) Target 2 (age) Target 3 (age)
LT Jared Veldheer (26) Eugene Monroe (26) Rodger Saffold (25)
OG Jon Asamoah (25) - -
DE Lamarr Houston (26) Greg Hardy (25)* Michael Johnson (27)
DT Linval Joseph (25) Vance Walker (26) Henry Melton (27)
LB Donald Butler (25) - -
S Jairus Byrd (27) T.J. Ward (27)* -
CB Alterraun Verner (25) Vontae Davis (25) -
WR Jeremy Maclin (25) Hakeem Nicks (26) -

NFL.com (*Franchise tag likely)

If the Raiders decide to sign free agents to three-year deals, or contracts that void after three years, those contracts would expire at the end of the 2016 season. A player who is 26 or younger would be able to hit free agency again at age 29 if the Raiders didn’t give him an extension or the franchise tag.

Using this strategy, the Raiders can get better quickly without committing any money to players over 30. It also gives McKenzie time to draft more talent. The Raiders don’t incur any dead money from a player they cut who is no longer productive, unless they add voidable years to prorate the signing bonus for cap flexibility.

McKenzie may indeed stay out of the initial wave of free agency, but don’t expect his light action of the last few years to fool you. Over the next couple of years, McKenzie has to find at least a handful of players to aid a woeful roster who are also worth paying top dollar.

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