ARBITRAGE: ar·bi·trage - noun - the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.
Once the season is over in the National Football League, teams have the opportunity to sign free agents. Unfortunately, the salary cap limits their ability to do so, which makes large contracts a large risk. On the other hand, the NFL Draft, especially in the rookie wage scale era, provides talent for a cheaper price. While Eli Manning cost the New York Giants nearly $20 million this season in cap space, Russell Wilson cost the Seattle Seahawks a shade under $700,000. That's the benefit of the rookie wage scale, and it's what allows teams like the Seahawks to cram as much talent under the hood as is possible. While veterans offer experience, rookies offer cap savings.
That's where arbitrage comes into play. Currently, the New York Jets have just $10.75 million in cap space dedicated to Santonio Holmes next season. John Idzik can "sell" Holmes by cutting him and "buy" a cheaper draft pick that provides a similar player. It is very early on the Idzik Era, but it seems to me so far that he has a bit of arbitrageur in him, judging from his tendency to sign previously injured talent at a cheaper cost while getting relatively similar talent levels to the "healthy" players. In the end, the risk, and cost, is limited, and the upside is similar to the initial option.
Two arbitrage options I like this year are Dri Archer/Dexter McCluster and Jeremy Gallon/Golden Tate, as I've said a few times. Similar play for a much cheaper price. What arbitrage plays do you see out there this year?