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Here’s an Explanation of the Franchise Tag Even Though the Jets Aren’t Likely to Use It

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New York Jets v San Francisco 49ers Photo by Ezra Shaw/Getty Images

NFL teams have until March 1 to apply the franchise tag to potential free agents. The tag is a one year contract offer that limits a player’s ability to hit the open market and sign with other teams.

Each team can tag one player each year. There are three options.

Exclusive Franchise Tag: This is a one year contract offer to a player. The salary is either the average of the top five salaries at that player’s position from the previous year or 120% of that player’s salary from the previous year, whichever is higher. A player who receives the exclusive franchise tag cannot negotiate with other teams.

Non-Exclusive Franchise Tag: This is a one year contract offer to a player. The salary is either the average of the top five top five salaries at that player’s position over the previous five years or 120% of that player’s salary from the previous year, whichever is higher. A player who receives the non-exclusive franchise tag may negotiate with other teams, but there are major hurdles to changing teams. If he signs an offer sheet with a new team, his original team has the right to match the offer to retain the player. If the original team chooses not to match an offer, the new team must give the original team two first round picks as compensation. Since a new team has to give up this exorbitant price of two first rounders, it is exceptionally unlikely a player who receives the non-exclusive tag would sign with a new team. Since the average salaries over the last five years is usually lower than the average salary of just the last year, this is why you see teams frequently use the non-exclusive tag. It saves a little money, which still virtually guaranteeing a team can keep a player.

Transition Tag: This is a one year contract offer to a player. The salary is the average of the top ten salaries at that player’s position from the previous year. Players are free to negotiate with new teams. The original team has the right to match any offer to retain the player but receives no compensation if it loses the player by choosing not to match. Every now and then a team will use the transition tag since it costs less than the franchise tag, but these instances are rare because it offers the team less assurances it can retain the player.

These rules apply the first two times a player is tagged. The third time a non-quarterback receives a tag, his one year contract is at the amount a tag would cost for a quarterback. The third time a quarterback is tagged, his one year contract is at a 44% raise. If he is tagged a fourth time, he gets an addition 44% raise, another the next time he is tagged, and again and again.

Players technically are not under contract until they actually sign the offer so they cannot be punished for skipping offseason activities or training camp. The team can pull a tag at any point before the player signs the tag, making the player an unrestricted free agent as the Panthers did with Josh Norman on the franchise tag and the Dolphins did with Olivier Vernon on the transition tag last year.

The franchise tag is frequently just a placeholder as the team and player typically want to work out a long-term deal. The franchise tag is a situation nobody really likes. While the player does get a one year contract with a large salary, he frequently could get double the guaranteed money or more with a long-term deal. He must play out the season risking an injury or drop in production could lower his market value and career earnings. The team gets to prevent a player from hitting the open market, but it comes at a large cap hit. With a long-term deal, the team can frequently lower the player’s immediate cap hit, offering more immediate flexibility to build a roster. It also has the peace of mind knowing a player will be part of the team’s long-term plans.

The deadline to reach a long-term deal with a franchised player is July 15. It is July 22 for a transition tag player. Frequently you hear a lot of posturing on both sides about how they are far apart and a deal seems hopeless then suddenly one is struck right before the deadline. We saw this formula a year ago with Muhammad Wilkerson. That is because it is in everybody’s interest to get a long-term deal done.

A year ago, the Jets used the tag on Muhammad Wilkerson. The tag prevented Wilkerson from hitting the open market, offering the Jets more time where they exclusively could work out a long-term deal. This is a frequent use of the tag. The fact teams have the tag at their disposal is why you so rarely see genuine superstars hit free agency. If a team cannot re-sign a superstar, they use the tag rather than lose the player. It also contributes to some of the absurd spending in free agency. With so few superstars available, desperate teams with lots of cap space are left to superstar money on non-superstars to upgrade their rosters. When supply is low, prices go up.

The Jets have a very weak crop of players hitting free agency. There might not be a quality starter in their current free agent class. Forget about seeing somebody worth a top five salary. To say it is unlikely the Jets will use the tag is probably an understatement.

As other teams approach free agency, however, you can expect them to use the tag. Many of the players you dream of the Jets signing will never be available because of the franchise tag.