Dear Sports Fan,
What’s a franchise tag?
Thanks,
Aaron
Dear Aaron,
A franchise tag is a contractual technicality National Football League (NFL) teams can use in negotiating with one of their players who is going to become an unrestricted free agent. Of all the major American sports leagues, the NFL is the one where the power is most unevenly shifted towards the teams and against the players. The franchise tag, although it does have some benefit for a player who receives one, is an expression of the power teams have, even over star players.
Players in the NFL can sign contracts with teams for one or more than one year. The best players often sign longer contracts than their coworkers. Three or four years is fairly ordinary for these players. At the end of every contract, a player becomes either a restricted or an unrestricted free agent based on the small print in their original contract and league rules. A restricted free agent is allowed to negotiate with other teams, but if they receive an offer from another team, their current team is allowed to match it. If the first team matches the offer of the second, the player stays on his current team. It’s not up to him. If the team chooses not to match the other team’s offer, the player will go play for the new team but his original team receives some compensation for his loss from his new team – usually in the form of a draft pick in an upcoming draft. Unrestricted free agents don’t need to deal with any of this complication. They are free to negotiate with all the NFL teams on the open market. If another team offers them a higher salary or is more attractive for some other reason, they can go play for that team. The choice is 100% the player’s and their original team gets nothing in return.
The easiest way of thinking about the franchise tag is that it’s something each NFL team can do place restrictions on one of their unrestricted free agents each year. This seems unfair, doesn’t it? Well, I suppose it’s not because these rules were collectively bargained for in negotiations between the NFL and the Players Association, but I’m sure it still feels unfair to a player whose free agency is taken away from him in this way. When a player receives a franchise tag (or “is franchised”) he receives a set salary based on the position he plays and the type of franchise tag his team placed on him.
There are three types of franchise tags:
- Exclusive – This is the most restrictive form of a franchise tag. When a team uses an exclusive franchise tag on a player, they have effectively resigned him for one year at quite a high salary. An exclusive franchise player gets either the average salary of the top five players at his position or a 20% raise over his salary last season, whichever is bigger.
- Non-Exclusive – This is the most common form of franchise tag. A non-exclusive franchise tag restricts a player very much like being a restricted free agent. He is free to sign an offer sheet from another team but if his team does not match the offer, it gets two first round draft picks from the other team. That’s a high price to pay for even a great player. If the player stays on his original team, he gets the same deal as described above in the exclusive section.
- Transition – This type of franchising is not really used anymore. It was once a way of restricting a player’s movement without even guaranteeing him a salary but that unfairness has been rectified. It’s still a little cheaper for a team to use a transition tag but if another team signs the player, the first team receives no compensation.
Teams don’t need to use a franchise tag every year. In fact, only a handful of teams use one each year. They are, after all, pretty expensive since the team is then responsible for paying one of their players at a rate commensurate with the top players at his position. Teams can tag a player as a franchise player for a second or even third year but it gets more and more expensive each year. Not only do those 20% raises add up but after the second time, the team is required to provide a 44% raise instead of a 20% one! The one counter-intuitive loophole to this is when a team has the best player at a relatively cheap position, like kicker. In this case, the best player may be able to get a significantly higher salary on the open market than the other top players at his positions. Paying that player the average of his and the next four players at his position might be a lot cheaper than just paying him what he’s worth.
Why do teams use franchise tags? Aside from the rare case when it’s cheaper, primarily, it’s a negotiating tool with a player the team would like to hold on to. If the two sides are having trouble negotiating a long-term deal, the team can use the franchise tag as a way of forcing the player’s hand (see, you’re not going anywhere, now let’s figure out how to make a long-term deal.) That’s the best case scenario. In the most cynical view, it could be used by a team as a way of holding on to an important player without committing to him in the long-term. The risk for a player is that if he gets hurt during a year when he’s on a one-year franchised player deal, he may not be able to command as high a salary in as long-term of a deal as he once was. In a worst-case scenario, a franchised player could suffer a career ending injury and never have a chance to sign the long-term deal they thought they would be able to get.
Thanks for your question,
Ezra Fischer