What is the Franchise Tag?

Between February 20^th and March 6^th NFL teams can designate one player as a franchise player by placing one of three “tags” on them. These tags are called franchise tags and you may have heard of them. They are a mechanism teams have for retaining one player each season who would otherwise become a free agent. The process can get somewhat confusing however, as the three tags are generally referenced under one name even though they are each unique.

When a player is designated a team’s franchise player, the tag generally given is the Non-Exclusive Franchise Tag. This means that the player can negotiate with other teams, as the tag is “non-exclusive”. Should a player sign an offer sheet with another team, the sheet is sent to the original team who has the first right of refusal. They have 7 days to either match or decline the sheet. If they match, the player signs a contract with the exact terms of the offer sheet with the original team. If the original team declines, they receive two first round picks as compensation from the team that the player signed the sheet with, and the sheet becomes a contract. Should a player not sign an offer sheet, they are paid the higher of 120% of their previous salary or the average of the top 5 salaries at their position over the past 5 years.

What happens when given a Non-Exclusive Franchise Tag, graphic made by me

A team does, however, have the option to retain exclusive rights to a player via the Exclusive Franchise Tag. Like the Non-Exclusive Franchise Tag, a player’s salary is the higher of two calculations: either 120% of their previous salary or the average of the Top-5 salaries at their position. Since the latter amount has to do with current salaries only, the Exclusive Franchise Tag is more expensive, but can be worth it for a team as they retain exclusive rights to a player.

The third type of Franchise Tag is the Transition Tag. If applied, a player can negotiate with other teams and sign an offer sheet, and the team that tagged him has the same first right of refusal, just like the Non-Exclusive Franchise Tag. What makes them differ is that if the team declines to match the offer sheet, they do not receive any compensation. A player who is given a Transition Tag is paid the average of the Top-10 salaries at his position, making it less expensive then the alternative tags, but riskier with no compensation if the player leaves.

With more and more cap space and long-term contracts preferable, the usage of this mechanism to keep players for an additional year has been going down, even though the three types of tags give teams a unique set of options.