This article is something I wrote for Jaguars Blog last year, but with the site having been removed from the internet, the text of the article is gone forever. Until now! I have been asked to re-post the content of this article so you can get an idea of what a sunk cost means and why Blaine Gabbert is a sunk cost.
This is the unedited text of the article, so if some of it reeks of 2011, that's why. The content, however, is still relevant if you substitute 2013 with all instances of 2012. Do with it what you will.
------------------------------------------------------------------------------
With four games remaining in the season and Blaine Gabbert struggling at a level Jaguars fans have yet to observe firsthand, there has been talk about moving on from Blaine Gabbert and drafting another quarterback in the first round. Some advocate trying to trade Gabbert. Some people are against the entire idea and want to see what the team has in Gabbert before moving on. They're all valid viewpoints.
One viewpoint that is NOT valid, however, is the idea that the reason the Jaguars shouldn't decide Blaine Gabbert is not the answer is because the team spent a first and second-round pick and $12 million guaranteed on him. That simply doesn't fly. If you're not familiar with the concept of a sunk cost, here's the definition courtesy of BusinessDictionary.com:
"Money already spent and permanently lost. Sunk costs are past opportunity costs that are partially (as salvage, if any) or totally irretrievable and, therefore, should be considered irrelevant to future decision making."
Sports franchises deal with sunk costs all the time. They're everywhere. Spent money, used draft picks, or traded players are sunk costs; they cannot be recovered. In the case of the Jaguars, the majority of Blaine Gabbert's value is already spent as sunk costs.
According to Alfie, Blaine Gabbert was paid $7.228 million of his guaranteed $12 million over four years in the form of a signing bonus. What that means is that out of the $12 million the Jaguars have guaranteed to pay Gabbert, he's already received over half of it. What remains is $4.772 million. If that money is spread evenly over the four years, that would make Gabbert's base salary for this season $1.193 million, meaning he would have been paid a total of $8.421 million for the 2011 season. That $8.421 million is a sunk cost; it's never coming back.
The concept of a sunk cost, as stated in the definition, is that the $8.421 million that Gabbert has already been paid should be considered irrelevant to future decision-making. When evaluating whether or not the Jaguars should draft another quarterback, the fact that they have paid Gabbert that $8.421 million should have no effect on the decision.
To obtain the tenth pick in the 2011 NFL Draft to take Blaine Gabbert, the Jaguars had to trade their first-round pick, 16th overall, and their second-round pick, 49th overall to the Washington Redskins. Those picks became defensive end/linebacker Ryan Kerrigan and offensive tackle Ben Ijalana (after the second-round pick was traded to Indianapolis). The players obtained with those picks are completely irrelevant. The Jaguars made the trade; they can't un-make it. Those two picks are a sunk cost.
In addition to the players being irrelevant, the fact that the Jaguars traded two picks to get Gabbert should also be irrelevant to the decision whether or not to draft a quarterback in 2012. Those two picks aren't ever coming back. If the Jaguars' evaluation of the quarterback prospects in this draft is that one or more of those prospects will be a better NFL quarterback than Blaine Gabbert, they should absolutely take that player. Saying "but they traded two picks to get Gabbert!" has no place in that discussion; it is a sunk cost. Keeping Gabbert as the clear-cut starter doesn't make the two picks that were spent more valuable; in fact, if Gabbert doesn't end up panning out, the team could compound their mistake by passing on better prospects.
Gene Smith seems to understand the concept of a sunk cost. Supposedly, back in 2004 he wanted to draft Ben Roethlisberger even though the team had just taken Byron Leftwich at the quarterback position the year before. If that's true, Smith understood that just because you've seemingly "fixed" the position doesn't mean there isn't a better fix out there. It's a general manager's job to improve the roster, and upgrading the quarterback is a sure-fire way to improve a team's roster.
If Gene was willing to upgrade the quarterback position by drafting Roethlisberger a year after the team had drafted Leftwich, drafting a first-round quarterback in 2012 isn't out of the question. What I'm saying here is not that the Jaguars should, at all costs, replace Blaine Gabbert as the future franchise quarterback. I am not saying they should absolutely draft a quarterback in the first round. What I'm saying is that what was given up for Gabbert and the money he's been paid has no place in the discussion.
If Gene Smith believes one of the quarterbacks on the board at the Jaguars' pick is both the best player available and an upgrade on Gabbert long-term, he should absolutely pick that quarterback. If not, he should not pick that quarterback.
Blaine Gabbert's sunk costs are a first and second-round pick in the 2011 NFL Draft and approximately $8.421 million (I could easily be off on this number, but it's at least $7.228 million, the amount of his signing bonus). The remaining costs are something between $3.579 million and $4.772 million. That $3.579 million to $4.772 million and Blaine Gabbert's performance on the field are the only things that should matter to Gene Smith when he makes the decision as to whether a first-round quarterback is the right call.
In the case of Roethlisberger and Leftwich, Big Ben would've been the right call. Will that be the case next year? We'll see, but in the meantime let's try to evaluate Gabbert's play on the field instead of the sunk costs associated with obtaining him; they're simply not relevant.