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Carson Palmer and a Rational Response to Depreciating Assets in the NFL

The Oakland Raiders released defensive tackle Tommy Kelly today, which is only newsworthy because Kelly is not quarterback Carson Palmer.  Palmer is due a base salary of $13 million in 2013, which is a number that comes from the contract that he signed back in December 2005 with the Bengals.  He did sign a restructured deal with the Raiders at this time last season, but the base salary numbers for 2013 and 2014, the last two years of the deal, have been grandfathered in from a deal signed when Palmer was 26.

That means, although Palmer is expensive, he’s not as expensive as he would have been given current market conditions at the quarterback position.  Palmer has overall played pretty well for the Raiders since being acquired for two high draft picks from the Bengals in October 2011, but over the course of the 2012 season his accuracy dropped and Palmer ended up missing the final week of the season with fractured ribs.

The bigger issue regarding Palmer’s value going forward is that he’s irreparably programmed as an aggressive thrower of the football.  Though he does not have quite the cannon that he had before the elbow injury he suffered in 2008, Palmer’s arm remains well above average, and his lightning quick release does not require a ton of space to throw the football from.  You don’t often see Palmer’s passes batted down at the line of scrimmage, he doesn’t take a ton of sacks, and moves pretty well for his age and level of athleticism.  For someone who cannot seem to shake the reputation that the knee injury he suffered the week after signing his aforementioned extension stopped him from reaching his potential (rather than the 2008 elbow injury), few stand taller in the pocket and deliver every throw with more authority than Palmer does.

But as Palmer continues to drill throws into tight windows, teams are left with a player who is at high risk of turnover every time he drops back to pass.  It’s impossible to get the aggressive Palmer out of situations where aggressive pass rushers and defensive backs who jump routes are making plays on the football, sometimes within the context of the same play.  This risk will only escalate as Palmer ages.  Telling Palmer to scale back the aggressiveness is essentially asking him to accept the role of a backup role player.  What keeps Palmer a starter in this league is the skill set that allows him to make tight window throws from muddied pockets.

It’s not that the Raiders were unwilling to accept that Palmer was a declining asset when they acquired him: by all accounts, Hue Jackson and his staff simply didn’t care.  And judging by the result following the season (Jackson was fired after going 8-8), Jackson may have demonstrated a severe case of moral hazard, but he was very much on point with his reasoning and execution.  It’s not his problem that the Bengals ended up winning the trade (Jackson signed on as an assistant with the Bengals after the season).  It’s the Raiders job now to treat the trade as a sunk cost.

Much of the discussion around Palmer’s current situation has to do with his $13 million salary.  He has declined multiple times this offseason to accept a pay-cut, as the group that brought him to Oakland is no longer there, and he is scheduled to begin work with his third offensive coordinator since joining the Raiders 17 months ago shortly.  It’s probably fair to accuse Palmer’s agent of trying to force general manager Reggie McKenzie’s hand with Palmer’s future, but trust me when I say that the $13 million salary is small potatoes here.

This isn’t a salary cap issue.  The release of Kelly suggests as much.  This is an issue that every NFL team faces with it’s own players every couple of years.  The issue here is that the Raiders’ best player is a depreciating asset.  Just because they can hold onto Palmer doesn’t necessarily mean they should.

To get down to the real issue though, you have to look through the rhetoric.  Palmer has two years left on his contract, though the actual deal has two dead years on the back of it (2015 & 16) purely for salary cap purposes.  The Raiders control Palmer through 2014, which isn’t a very long time.  Carson Palmer is not going to be a valueless player before the contract expires.  He’ll likely be one of the 32 best quarterbacks in the NFL when his contract with the Raiders expires.  The Raiders are completely justified from a pure value perspective to let Palmer play out his deal with no restructure.  Listening to the rhetoric, you’d think the Raiders would have to blow up their whole roster to keep Palmer.

There’s a better way to do it than by taking the advice of blowhards.  Palmer’s performance over the next two years can be projected by taking his moving average performance over the last four seasons and regressing for his age.  Palmer has been an above average player by almost every available metric three out of the last four seasons (3.75% above average by DVOA, +4.075/year by Pro Football Focus, +0.87 wins/season by Advanced NFL Stats, and 7.1 YPA against league average of 7.0).

Without getting into mathematical details (for sake of brevity), the same age regression I use to rank players for my free agency list thinks Palmer’s true talent level will cross over the threshold of “average NFL quarterback” between the 2013 and 2014 seasons, which means my system projects a rebound season for Palmer in 2013.  Let’s say Palmer is the league’s 18th best QB next year, but falls to 26th in 2014 after which, he’s bound to be a fringe starter that profiles better as a backup in his mid-to-late thirties.  That means the Raiders are holding on to his decline years.  If 2012 was a mirage, that’s not that big of a deal.  If it was indicative of true talent, that means the end could come sharply.

But let me also point out that the Raiders cannot do better than the 18th best quarterback next year by moving Palmer.  The argument for the Raiders dumping Palmer is as follows: since Palmer will be relatively valueless at the end of his current contract around the league, the Raiders can beat the decline curve by getting young at the quarterback position, getting improvement instead of decline from the position heading into 2014, and by 2015, they’ll be better off because instead of moving on from a declining Palmer at that point, they’ll already be two years into their new direction.  In other words, there’s a rational argument from dropping a declining asset, even without a better option on the roster.

That might not make a lot of sense to some, but this is where salary comes back into the discussion.  The Raiders are currently scheduled to pay for Palmer’s decline years the same way and at the same level which they payed for his prime years.  Requesting Palmer to take a pay cut means the Raiders are cognizant of the idea that he’s not going to provide a ton of surplus value (and because of last year’s restructure, is going to represent dead money once he’s no longer a Raider).  So because the Raiders cannot get surplus value at quarterback from Palmer and he’s going to be dead money anyway when he’s playing elsewhere, the Raiders can get out of the curve by moving on right now and picking their next quarterback in 2013 instead of 2015.

The challenge for NFL teams is that you have two very opposite, and contradictory, ideas fighting each other in the case study of Carson Palmer.  On one hand, there’s no argument to be made that his salary is out of whack, because open market principles would suggest that the Raiders are getting something of a bargain given how out of control starting quarterback salaries can be.  On the other hand, what Palmer is scheduled to make is a lot closer to the open market value of a quarterback than any of the alternative options the Raiders have at quarterback, including the draft (Geno Smith), the depth on their roster (Terrelle Pryor), the trade market (Matt Flynn), and bargain basement free agency (Vince Young).  But Palmer is also better than the Raiders can do no matter what avenue they use to acquire/promote a replacement.

The bottom line is the expectations must remain realistic here.  In a perfect world, no team would ever hold a declining asset at quarterback on a premium salary.  The Colts moved Peyton Manning out as soon as a chance to improve presented itself (they got the first overall pick). But the Pats are holding onto Tom Brady while the Broncos are holding on Manning for a reason: chances to improve on really good quarterbacks who are declining do not come around very often.  The Colts got lucky.  Really lucky.  The Raiders might be waiting on Geno Smith to fall to them to move on from Palmer.  That would be reasonable.  Or they might be waiting another year.  The point is: while they might only need Carson Palmer for another month (if that), they can have him for another two years at a reasonable price tag for a starter.  Palmer is a declining asset, but he’s also a pretty good quarterback.  And not every team is dumping its best players the second they start to decline.  That’s just not the way it works in pro sports.

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