The Oakland Raiders are in salary cap purgatory.
A roster full of overpaid and under-performing players has left general manager Reggie McKenzie with a lot of tough decisions to make. McKenzie had started his tenure by purging the roster of the worst contracts, while restructuring the others.
In Year 2 of the rebuilding process, McKenzie has more tough decisions to make. Players will be released, but he’ll also have to do more restructuring.
One of the biggest decisions McKenzie has to make comes at the quarterback position.
Carson Palmer will make $13 million in base salary alone in 2013, with $2.3 million more in prorated bonus, according to spotrac.com. That puts Palmer’s cap number at about $15.3 million, which is up there with the highest-paid quarterbacks in the league.
McKenzie will try to restructure Palmer’s contract, according ESPN’s Adam Schefter. In reality, the Raiders will have to ask Palmer to take a pay cut.
In return, the Raiders will probably convert his base salary into a guarantee. The contract will obviously have to benefit both Palmer and the Raiders to come to fruition.
Palmer actually restructured his deal last offseason to give the Raiders cap relief, agreeing to convert $11.675 million of his base salary into a roster bonus that prorates like a signing bonus, according to ESPN. If Palmer is released, four years of his prorated signing bonus would hit the cap.
This acceleration of his signing bonus would result in $9.34 million in dead money against the salary cap.
It’s pretty obvious why the Raiders would want to restructure his deal, but coming to an agreement on a new deal is going to be a challenge. If the Raiders used the same tactic as last season, they would be on the hook for too much money.
Using the same tactic of lowering his base salary to $825,000 and prorating the rest is not an option, because there would be even more dead money if Palmer was released next season.
How much is Carson Palmer worth per season?
The only thing that makes sense for the Raiders is for Palmer to take a pay cut. In return, Palmer gets more in the way of guarantees in 2013, which he doesn't have right now. Palmer might accept this option, unless he feels he can get more on the open market—which he probably isn't.
The Raiders would save about $6 million against the cap by releasing Palmer, so that’s a good starting place. Palmer could agree to reduce his base salary by $6 million in return for the Raiders guaranteeing the remaining $7 million of his base salary.
This type of restructured deal would bring Palmer’s cap hit from over $15 million to around $9 million in 2013.
In this type of restructuring, Palmer’s dead money in future years would also be reduced. If Palmer was released after the 2013 season, he’d count as just about $7 million against the cap. The Raiders could also spread out that cap hit over two years at that time.
Palmer would get $7 million in 2013 guaranteed, which is probably about what he could get on the open market. If you consider the $12.5 million Palmer made in 2012, Palmer would net about $20 million over a two-year span.
Schefter’s original tweet reporting that the Raiders would try to restructure Palmer’s deal suggested he could take a "Vick-like hit." When Michael Vick agreed to restructure his contract earlier this month, he received $7 million guaranteed and negotiated playing-time incentives.
Vick’s cap hit was nearly identical to Palmer’s before the deal at $15.5 million, and his deal is now worth up to $10 million (with a cap hit of $12.2 million), according to the USA Today.
Giving Palmer $7 million in guarantees with an avenue to make a couple million more makes sense for him and the Raiders. If the Raiders aren’t going to draft Geno Smith in the first round, keeping Palmer for another year is ideal.
If the Raiders were to restructure Palmer’s deal before the draft, it would be a clear sign that they aren’t going to draft a quarterback in the first round. The Raiders might be reluctant to restructure Palmer until after the draft, because they would lose leverage to trade down or the freedom to select Geno Smith if he’s available.
If teams know they don’t have to worry about the Raiders or Eagles selecting a quarterback, they can target the Lions as a trade partner instead. The Raiders already took a hit in their ability to trade down when Vick restructured his deal, and they can use the threat of taking a quarterback to get a team to move up.
Waiting to restructure Palmer also has its disadvantages. The Raiders would have to carry Palmer’s cap hit when the new league year starts in March, which means that money to spend on free agents would not be available to them until after the draft. It also means that the Raiders may have to do other work to get under the salary cap.
There is an avenue for Palmer to stay with the Raiders, which McKenzie is reportedly exploring. The timing of such a move will tell us all we need to know about the possibility of Geno Smith landing in Oakland.
Outside of Palmer getting released, there will be no better indicator of Oakland’s offseason plan at the quarterback position.