The July 16, 2012, deadline for NFL teams to sign long-term contracts with players designated as franchise players came and went.  That deadline marked the date on which the terms of the franchise tag are automatically instituted.

What does the franchise tag mean for players and organizations?  Where did it come from?  Why don’t players like it?  This primer tells you what you need to know.

Basics

Each team is allowed to designate one free agent as their franchise player.  Once designated, the player is prohibited from negotiating with other teams.  The player’s current team has a limited time to exclusively negotiate and enter into a long-term contract with the player.  If no agreement is reached during the period, the player is then required to enter into a one-year NFL contract with his current team for a pre-determined salary equal to the higher of 120% of the player’s previous year’s salary or a formula based primarily on the top five salaries at the player’s position.  The new collective bargaining agreement adjusted the formula for determining the salary rate by averaging, for the first time, salaries over the previous five years, and considering franchise tags handed out over the past five years.  This effectively lowered the franchise salary rate.  Here are this year’s and last year’s rates by position, in millions:

Position 2012 Rates 2011 Rates
Quarterback $14.4 $16.1
Running back $7.7 $9.6
Wide Receiver $9.4 $11.4
Tight End $5.4 $7.3
Offensive Lineman (average) $9.4 $10.1
Defensive End $10.6 $13
Defensive Tackle $7.9 $12.5
Linebacker $8.8 $10.1
Cornerback $10.6 $13.5
Safety $6.2 $8.8

History and Controversy

The franchise tag was created to help teams in smaller markets keep their star players.  It was believed that teams would use the franchise tag, and then negotiate in good faith with franchised players to reach long-term contracts.  Unfortunately, it’s not clear that that is how it has been used, with one NFL executive saying, “[u]sally, the tag isn’t for your ‘franchise player,’ it is for your best-available free agent.”  Teams use the franchise tag to put pressure on players to sign contracts at lower values, by preventing them from testing the free-agent market.  Perhaps because of this, more than half of franchised players don’t sign a long-term contract and end up playing out the one-year contract.  Players generally don’t like this, because they risk being injured or underperforming during the one-year contract, which can reduce their free-agent market value from where it might have been the year before.  One agent, who represents multiple players who have been tagged, said, “[t]hey should call it a prison tab.  It locks the player in, keeps him in jail contractually, doesn’t allow him to test what his true market is, or seek what his compensation should be.  It’s take it or leave it.”

Recent Results of the Franchise Tag

Some players, like New Orleans Saints quarterback Drew Brees (5 year; $100 million) and Baltimore Ravens running back Ray Rice (5 years; $40 million) signed deals just in time.  Others, including New England Patriots wide receiver Wes Welker, accepted their fate and agreed to sign their franchise tender offers.  Still others, like Kansas City Chiefs wide receiver Dwayne Bowe, refused to sign and have continued to seek a better deal by refusing to show up to training camp.

Does the franchise system lead to unconscionable results?  Does it give teams an unfair advantage when it comes to bargaining with players?  Players subject to the franchise tag undoubtedly think so.  Nevertheless, because it was agreed to in the new collective bargaining agreement, the franchise system is here to stay for at least the foreseeable future.

Mike Ritter

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One Response to The Franchise Tag

  1. Jeremy Gove says:

    Even though this was created to help small market teams, it appears to be a stopgap measure. It allows small teams to hold on to their players for a year but then when the player becomes a free agent the small market team is at the same disadvantage as it always was. We have also recently seen that it may be counterintuitive, because in a sport with such short careers, the player is bitter about the one year contract and leaves for the larger market team. However, at the end of the day the players will always hold all the cards in this situation. They can choose not to show up and the small market team is in an even worse situation because they have negative publicity swirling and a talented player staying at home.