The Raiders already have a stud defensive end in Derrick Burgess, a solid player in Tommy Kelly and an up-and-coming talent in Kevin Huntley. They also drafted Quentin Moses in the third round of last April's draft, giving them depth at the position.
In addition, were Oakland to offer Rice a contract it would be akin to a slap in the face at Burgess. Burgess holds the franchise record for sacks in a single season and has 27 QB takedowns over the last two years. He's been seeking to renegotiate his deal but hasn't found much success.
To give money to Rice while essentially giving Burgess the quiet treatment would cause major ripples in the locker room and cause far more problems than it would be worth.