Al Davis, Raiders Playing a Hedge on Free Agency

Many critics panned the Oakland Raiders for Al Davis's spending spree this spring, saying it is too expensive and claim it caused Davis to second guess himself.

Meanwhile, Raider fans are concerned with the future free agency situation in Oakland, but the fact is that the Raiders' moves this off-season not only added talent to the roster, but from a business point of view were a hedge against free-agency uncertainty in the near future.

The key is that under the rules governing the expiring collective bargaining agreement (CBA), the looming uncapped years will actually limit free agency.

Not unlike smart airlines like Southwest and Northwest, who are benefiting from hedges they made against rising fuel prices years ago, the Raiders are controlling the cost of acquiring and keeping talent in the face of free agency uncertainty following 2009.

Let’s look at the moves the Raiders made this spring and their long term effects.

NFL&id=2978" title="Tommy Kelly's contract">Tommy Kelly's contract shocked many inside the NFL. The Raiders felt that Kelly is an elite DL, comparable to Vince Wilfork, Albert Haynesworth and Corey Williams. Many critics argue against that and say the Raiders way over paid.

But viewed through the prism of the new rules that Free Agents have to qualify with six years instead of four in 2010, the Kelly deal makes sense as all of these tackles will be the youngest free agents available if they aren't under contract at that time.

The Kelly deal does three things for the Raiders, it keeps him on the roster now, it sets the price for future free agents at his position, and it keeps him on the roster through the uncapped years at a fixed price.

The Gibril Wilson deal also drew a lot fire as being too expensive.  But Wilson, like Kelly, also would be eligible for free agency in 2010.  The Raiders believe paying Wilson now is cheaper than competing for him or an equally talented player in 2010, if he were available.

The DeAngelo Hall deal also makes more sense in light of the future free agency and Nnamdi Asomugha’s situation. Effectively the two-time Pro Bowl corner back, DeAngelo Hall was the Raiders' second round pick in this year’s draft. Like Kelly, Hall’s contract gets him and keeps him playing through 2011.

But Hall’s contract is also a hedge against losing Asomugha to free agency in 2010.

This week, the Raiders and their franchised free agent corner back, Nnamdi Asomugha failed to extend his contract.  Asomugha is expected to sign his franchise tender sometime after training camp starts.

Raiders beat writers anticipated Asomugha’s situation, as it makes business sense especially in the current environment.

Since Asomugha can expect just under $10 million this year for his franchise tender and $12 million next year, any contract talks would have to start with a $22 million bonus.

However, by making Asomugha sign franchise tenders the Raiders reduce their risk if Asomugha gets hurt and keep him for less than he could expect to make in this year's market.

But Asomugha’s deal is also heavily influenced by the NFL’s expiring CBA. 

In 2010 the Raiders will have three players eligible for free agency under the new rules, Nnamdi Asomugha, Derrick Burgess and Justin Griffith, whose current contracts expire at that time.

If the Raiders are a playoff team in 2010, their ability to sign new free agents will slide with the number of free agents they lose under the new rules.

Otherwise the Raiders will have three tags, one franchise and two transitional, to assign to free agents (although I haven’t found out if the old rules regarding Asomugha’s prior two tags would apply).

The Raiders have other players whose contracts expire in 2010 too, notably: Kirk Morrison, Stanford Routt, Thomas Howard, Paul McQuistan, and Oren O’neal.

However under the new rules, Morrison and Routt won’t be eligible for FA until 2011, Howard and McQuistan won’t be eligible for FA until 2012, and O’neal won’t be eligible for FA until 2013.

All of this means that from here on out the free agency pool will be shallow but rich for those players who started playing in 2004 or before.  Everybody else will have to wait longer for the big pay day.  At least until a new collective bargain agreement is put in place. 

The Raiders were aggressive this spring while talent was available and have locked up that talent for years to come.  That aggressiveness has closed the talent gap between the Raiders and their more passive rivals.  I doubt Al Davis is losing any sleep over that.