The Raiders believe Oakland has become a more attractive destination for veteran free agents.
They have a young foundation in place that includes quarterback Derek Carr and linebacker Khalil Mack. They have a respected head coach in Jack Del Rio. They’re upgrading a lackluster team facility, with improvements to the practice fields and the weight room. They plan to add a steam room and make other improvements in the Alameda complex.
They also have a ton of cap space, so much that it won’t impede competition even for top free agents.
There is one aspect of this process that the Raiders can’t control, and it’s working against them: They operate in the state of California.
The state levies a 13.3-percent income tax on individuals making more than $1 million per year. Per CBS Sports, that is the highest percentage of any state in the union.
Other states, like Texas, Washington and Florida, don’t have a state income tax at all. That means that money offered in those states, or states with lower tax percentages, is worth more than an equal contract from the Raiders. It remains to be seen whether it will impact free agents the Raiders chase, but it could be a strike against them for players focused on maximizing their income. It might force them to overpay some to get their guys in what should be a competitive marketplace.
Taxation of professional athletes is incredibly complicated, and we won't try to break it all down here. With help from sports CPA Robert Raiola, former sports agent Joel Corry illustrated the impact taxes can have on the bottom line in a Dec. 2014 article published by CBS Sports. He used defensive tackle Ndamukong Suh as an example, assuming he got equal six-year, $102 million offers from the Raiders and Jacksonville Jaguars, teams with the highest amount of 2015 cap space. Remember that Florida has no state income tax and California's is the highest.
Corry and Raiola found that money earned from the Raiders would be worth $8 million less than what would be earned from the Jaguars. Corry reports that the Raiders would have to offer $118 million over six years to match the Jaguars' offer after taxes.
The Raiders are linked to several high-profile free agents and are expected to make a run at some of them. Smart signings could help the Raiders get better fast. Getting tied up in bad contracts could hurt them in the long term.