I wanted to share some thoughts today on the franchise tag and the use of the tag around the NFL. There are a number of reasons for a team to use a franchise tag on a player that are beneficial but at the same time it’s not always all bad for the player. Teams can get caught up in various contract metrics just as easily as agents and sometimes lose sight of the big picture and what things can cost in the long term when deals are not made.
As a one year contract the tag is clearly beneficial to the team and detrimental to the player. The tag itself maintains the burden of risk on the player. The player, generally 26 or 27 years of age, has to maintain his health and his production in order to have a good chance to potentially reach free agency one year later, not to mention to keep his nose clean of any off field issues. Historically there are a number of players who have lost with the franchise tag. Greg Hardy and Henry Melton are probably the two most recent players who never came close to realizing their financial potential in part because of the tag.
The tag also shortchanges the star player and is a method to artificially lower prices. For example Dez Bryant, had he played one year on the tag would have earned just $12.8 million compared to the $23 million payout he received by signing a long term , $13 million per year contract instead of taking the risk of playing on the tag. Now things worked out for the best for Bryant who struggled with injuries in 2015 and was ineffective, but had no tag existed Bryant arguably may have earned a contract worth $17 million a season. So the team is clearly a in a better position because they are using the leverage of the tag and the burden it puts on the player to negotiate favorable terms on long term contracts. In turn these stars knock prices down across the board for one or two additional years giving an added benefit to the league.
But when you are in the position of general manager you have to have an end game in sight when you use the tag. I Of the 18 players that were designated a franchise player between 2014 and 2016, nearly 80% ended up sticking with the team for at least one more year (this assumes that Trumaine Johnson and Kirk Cousins will not be traded). So the goal clearly seems to be to keep the players for the long haul with few exceptions. If the player is someone that you are prepared to sign long term the tag should be a negotiating tool and you have to consider the possible scenarios that exist if they refuse to call your bluff and are prepared to play the year on the tag.
In most cases once we move into the category of having to apply a second franchise tag the player has won. It might not always reflect itself in the APY of a new contract, but cash is king and the cash aspect tells a different story.
For example 1 I’ll use Kirk Cousins. In Cousins case this was a perfectly acceptable use of a franchise tag in 2016. With Cousins as a potential one season wonder you have to be very conservative especially given the prices at the position, but Cousins went out and played well two years in a row. I get it that you don’t think Cousins is worth $24 million a year like Andrew Luck, but what functional difference are the Redskins making with a second tag?
Cousins two year payment now stands at $43.897 million. If the Redskins have to tag him again that number balloons to $78.5 million, or Luck money (Luck earns almost $80 million over three years). If they let him play the year out and he craps out how far can he really fall? The low level salary for quarterbacks these days is a $20 million payment. So in that case the Redskins “win” by signing him to a $19M a year contract and end up paying him nearly $64 million to do so over three years to do so? That’s almost Cam Newton money. Or they pat themselves on the back for not signing him this year and spending $44 million to say “I told you so”? And what if he does great? Well you paid him $44 million to just pay him like Andrew Luck anyway while pinching your salary cap every step of the way. Just get it out of the way now and get the deal done or trade the guy rather than costing yourself in the long run.
Example 2 is Trumaine Johnson of the Rams. Unlike Cousins there was really no need for this tag. Johnson was what he was and the market was set. The Rams are now committed to paying him $32 million over two years. That’s more than Janoris Jenkins and just a few million under the high enders of Richard Sherman, Patrick Peterson, and Joe Haden. His salary this year is higher than any other cornerback received in the first year of their contract with the exception of Josh Norman who earned $20 million, so any extension he signs is going to have a massive first year salary relative to the position.
What leverage has the tag given the Rams? What benefit is a 4 win team really gaining from this scenario? If Johnson gets extended his paper money from 2016 through 2018 will likely rank 2nd among all corners. Johnson won in this case.
Prices are also always rising in the NFL and a team runs that risk as well by using the tag for a full year. This was a player reportedly seeking around $11 million a year in 2016 which the Chiefs would not agree to. A few months later the Cardinals do an excessive contract for Tyrann Mathieu and next thing you know the Chiefs feel backed into a corner and sign Berry to a $13 million a year extension this season when faced with the prospect of tagging him again.
Assuming the reports of a $20 million signing bonus are correct it means the Chiefs are now going to pay Berry around $31.8 million for two years. Last year probably $24 million over two years gets the deal done. That’s a big cost for the Chiefs.
A lot of people got on the Panthers last season for the Josh Norman situation, but that was the proper way to handle it. Norman was designated a franchise player by the Panthers and the Panthers eventually rescinded the tag when they realized that he was going to call the bluff of the tag and not sign a contract which the Panthers deemed reasonable. Rather than throw away a bunch of money for one year the way the Rams and Chiefs did the Panthers walked away.
The Panthers were killed for the move because short term they had left themselves with no viable corners on the roster, but ask yourself what made more sense: being the Bears and spending $14.6 million on Alshon Jeffery to go 3-13 or the Panthers who saved $14 million to go 6-10? These players are important to have but only in rare circumstances is one player the difference between 5 wins and 10 wins. The Bears wisely walked away from Jeffery this year rather than sinking more money into a lost cause.
So the tag is certainly good to a point but there are times when it is not the right move. Once you use the tag only in the most extreme of circumstances should it not lead to a new contract by July 15. If no contract is reached there is some kind of failure that needs to be corrected in the future. Sometimes the best interest of the team is not going to be measured by annual contract values and sometimes the best interest of the team is just letting the player walk away.
When you look at the group of players tagged this season for the first time ask yourself what is gained by the team for keeping the player at this number for one year. Melvin Ingram and Chandler Jones are scheduled to earn $14.5 million this year. If they play out this contract they would be a lock to earn at least $17M and most likely over $20M in 2018. $34.5 million over two years is already close to Justin Houston money. If they play well this year expect a 2018 salary on along term deal of close to $30M, which puts their 2 year salary above everyone except Von Miller. Is it worth haggling over a few dollars if you can keep the real cost to the team lower? The same applied to JPP except he is earning even more this year than the other two.
For Kawann Short and Le’Veon Bell I think you can make a strong case to potentially play on the tag, depending on contract demands. If Short is looking to be paid like a Fletcher Cox the Panthers are better off with the tag game. If he wants to earn a little more than Malik Jackson, do the deal. Bell kind of falls into a gray area because of the position and he may be a player that is not necessarily a long term option. Two years on the tag would be slightly above the Adrian Peterson and Marshawn Lynch range, which might make doing a deal similar to the final Lynch deal in Seattle a fair compromise. If they are looking to go less than that they need to be working off LeSean McCoy’s deal with the Bills, up the APY to $10M a year and realize they are better off doing that than fighting over keeping an APY under $10M only to turn around and tag twice or extend after paying him $12 million for the year.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.