CBA Suggestion Number 9: Revamping the Franchise Tag System

The NFL is never going to eliminate the franchise (or transition) tag system but it is clear that it needs a major overhaul. The franchise tag is a provision of the CBA that allows a team to retain the rights to a pending free agent based on an average of the five largest salaries over the past five years as a percentage of the salary cap. The player is free to negotiate with another team when the “non-exclusive” tag is used but the cost of signing the player is two first round draft selections, which effectively blocks the player from free agency.

The original intention of the franchise tag was a good one. It was designed to prevent teams from losing top tier players (i.e., star quarterbacks) in free agency while giving the two sides added time to work out an agreement. Basically the concept was in place to prevent a team like the Indianapolis Colts from losing someone like quarterback Peyton Manning to another team and not receive anything in return for the player. But this is really no longer the case as it has simply became a tool used by NFL teams to hamper player’s leverage and the ability to earn top dollar.

The best players in the NFL usually don’t even wind up on the franchise tag anymore. The threat of the tag is so big that most just sign extensions long before the tag is in play. The costs are too significant for many players especially if they are tagged two times. For example, if we flipped the QB formula to use the top cash positions rather than cap positions the tag would jump from $25 million to about $39 million in 2019.  That is one of the prime reasons why the tag number, which on its face seems very large, simply does not represent anything close to what the player is actually giving up in compensation by not accepting an extension. The tag has also been abused by teams who simply use the tag because it’s cost effective for a year or because they want to trade a player.

Here are some changes we would propose:

  1. Change the valuation process for the franchise tag. Using salary cap charges minus workout bonuses is less reflective of value than other methods. The salary cap is an accounting system and you won’t always have the top paid players at the top of the list. One option would be to use the annual value of a player’s contract. Running that for a few positions showed increases for the players over the current system though admittedly we would need to run more of those to see if that held up for the long term. In any event the APY of the deal is a fairer metric that is not going to be compromised by cap manipulations. Still we would not consider the annual value the best method but understand it’s the most widely used number. Since we are talking about franchise players using the top 3, rather than top 5, by APY would do a better job of really putting the franchise value in an elite tier. If that would be unacceptable we would suggest using the three year metric to set the tag levels. The three year is much more reflective of the expected earnings for a player and that three year annual number would do a better job of taking into account what teams are really willing to pay “franchise” talents.
  1. Change the compensation. Two first round picks is simply too steep a price. The Chicago Bears traded two ones for linebacker Khalil Mack and a 2nd round pick. We just saw Antonio Brown get traded for a 3rd and a 5th, Odell Beckham for a 1st and some spare parts while Amari Cooper went for a 1st. The last player that we can think went for two legit firsts in a trade (and there may be someone else we are not thinking of) was quarterback Jay Cutler back in 2010 when Denver Broncos got back two 1st round picks, a 3rd round pick, and a player for Cutler and a 5th round pick. That’s a legit blockbuster, but he was also a QB. The facts are that teams will never pay the price of two first round picks and nothing else in return for any of these players who wind up on the tag. Change the compensation level to one first round pick and at least it creates an opportunity for franchise players to truly experience free agency.
  1. Eliminate the Exclusive Franchise Tag. The exclusive tag is simply based on the most recent cap figures and completely blocks a player from free agency. There is no need for that type of tag.
  1. Eliminate trading of franchise players until at least week four of the regular season. The ability of teams to effectively hold a player hostage for the sole purpose of finding a trade partner needs to stop. Teams had multiple opportunities to trade the player in prior seasons and didn’t do it. Their only recourse to recover a pick should either be the compensatory pick process (which maxes at a 3rd) or declining to match a tag offer and receiving a 1st The tag should not be in place to allow a team to simply hold onto a player to try to gain a 2nd round pick. If the NFL wants to allow that to happen then they need to add in a new tag with a 2nd round price.
  1. Modify the positional groupings- With the way teams play defense there needs to be an “edge” category that helps outside linebackers receive a fair tag number. This would also put non-rush linebackers in the talk for the tag. Likewise adding in a new designation for tackles and interior offensive linemen (i.e., guards) would do a fairer job of representing that part of the NFL population.
  1. Allow extensions to be signed up to the start of the regular season- Right now the league has a firm deadline of July 15th to get a deal finished up. If a deal is not signed by that date then the best the player can do is a one year contract. A player’s leverage should only increase by a team seeing what it may be missing when the player is not in training camp. Moving the date to the start of the regular season should at least give both sides the same potential leverage.
  1. Add an injury guaranteed, mutual option year to the tag process. The way this would work is that the new contract would equal the current tag number plus the 120% raise (or 144% raise when applicable) in the second year. That second year would be guaranteed for injury upon signing the contract. Both sides would then have the ability to opt in or out of the second year by sending written notice by the fifth day after the Super Bowl. If both sides agree to opt in the second contract year becomes fully guaranteed. If one side opts out the franchise process exists as it does now. As an example this would give Falcons defensive tackle Grady Jarrett $18.25 million in injury protection for 2020. That is added leverage to the player side to play on the tag with a minimized threat of injury. Considering he can opt out of the contract (as could the team) there is nothing being given up by the player with this system.