Explaining how the NFL works, Part 16: The franchise tag

Whether it’s when the NFL is in the full swing of its regular season or if it’s during the downtime of the early summer, there still is constant news and happenings with the league that has made itself relevant 365 days a year. When various things are discussed, sometimes there are terminologies and procedures where fans might have a general understanding of things. Even the most die-hard fans may have certain areas they don’t understand exactly what various things mean and wish to have a better understanding.

Over the next few weeks, I will take some time to do my best in thoroughly explaining some of the various inner workings of things in the NFL. These are not on-field items but more from an administrative standpoint. Whether it be understanding the waiver wire, the Reserve/Injured List, or the breakdown of the practice squad, we’ll take a look at some of the various terms that are thrown around and utilized in descriptions of things in the NFL but may not be fully understood.

Next up is looking at the different types of franchise tags.

How/when it is done

The purpose of the franchise tag is to give teams the opportunity to keep some of their best players rather than lose them as an unrestricted free agent (UFA). Each team is allowed to use one of the types of tags each season unless there is a special provision in the final year of the Collective Bargaining Agreement (CBA). Teams must choose to use the franchise tag within a certain window which is from 22 days before the beginning of the league year up until eight days before the beginning of the league year. For 2023, this window was from February 21 through March 7.

The franchise tag becomes fully guaranteed whenever the player signs the contract. If the franchise tag is withdrawn by the team, which can be done at any time before the player signs, the player then becomes an unrestricted free agent. Additionally, if a team wishes to trade a player where they used the franchise tag, the player must first sign the contract in order to be traded.

Just because the player was given a franchise tag does not mean they cannot work out a different contract. The player and team have until July 15 each year in order to work out a different deal. Since July 15 is a Saturday this year, the deadline is moved to July 17. If no deal is made by that time, the only options the player has for the season is to play under the franchise tag or to not sign the tag and sit out the season. The player has until 4 PM on Tuesday following Week 10 in order to sign their tender or they are ineligible to play for that season.

Non-exclusive franchise tag

This is the most typically used of the franchise tag designations. The non-exclusive franchise tag allows a player to go out and seek a contract with another team. If they do sign a deal, the original team has the right of first refusal. This means that the team could match the offer the player received from another franchise. The team has five days to make the decision, and if they do not match the offer they are compensated with two first-round draft picks from the team where the player signed.

Exclusive franchise tag

With the exclusive franchise tag, the player is not entitled to negotiate with other teams and can only sign a deal with the team who issued the tag.

Transition tag

The transition tag is a less expensive option to the franchise tag. Though the pay is lower, the team who issues the transition tag only has the right of first refusal if another team offers the player a contract but would not receive any draft compensation. The deadline to work out a long-term deal for a player with the transition tag is one week later tha the franchise tag on July 22.

Pay

There are multiple options for the pay in which a player receives under the franchise tag and it will always be the higher of the values. To understand part of the calculation, it is based off the players prior year salary (PYS) which is made up of the players base salary, roster or workout bonuses, prorated signing bonus, and any other payments from the previous year except for performance bonuses.

The pay for a non-exclusive franchise tag is described as follows from NFL.com:

The player receives a one-year deal with a salary set at the greater of (a) the cap percentage average for his position (an amount equal to the sum of the franchise-tag figures at a player’s position over the previous five seasons divided by the sum of the salary caps over the previous five seasons multiplied by the current year’s salary cap) OR (b) 120 percent of his PYS (the player’s cap number from the previous season, minus any performance incentives).

To get an understanding of these amounts, here are the values from 2023:

QB: $32.416 million
RB: $10.091 million
WR: $19.743 million
TE: $11.345 million
OL: $18.244 million
DE: $19.727 million
DT: $18.937 million
LB: $20.926 million
CB: $18.140 million
S: $14.460 million
K/P: $5.393 million

As for the exclusive franchise tag, their pay is determined in this manner as described from NFL.com:

The player receives a one-year deal for the greater of (a) the average of the five-largest PYS at his position at the conclusion of the restricted free agent signing period of the current league year (April 21 in 2023) or (b) the amount of the non-exclusive franchise tag. No player received the exclusive franchise tag in 2022.

Finally, here is the description of the transition tag payment from NFL.com:

The player receives a one-year deal for the greater of (a) the cap percentage average (calculation as shown above) of the top 10 greatest PYS at the player’s position or (b) 120 percent of his own PYS. Should such a player sign an offer sheet with a new team, his former team has five days to match the offer sheet. The transition tag is a cheaper alternative to the franchise tag (i.e., the franchise tag for QBs in 2023 is worth $32.416 million, while the transition tag is $29.504 million).

It should be noted that no players received the exclusive franchise tag or the transition tag in 2023.

Using multiple tags

Teams may use the franchise tag on a player up to three times. The expense involved in using the franchise tag increases significantly each year with the third year even having the option of a pair being paid at the quarterback level which is significantly higher than all other tags as seen in the list above.

The payment for when a player has received a second or third franchise tag is listed as follows from NFL.com:

When a player receives the franchise tag for a second time, he will receive a 120 percent increase of his previous franchise-tag salary (or the tag number for the current season, if higher). If a team places the franchise tag on a player for a third time, the player will receive the greater of (a) the quarterback tag, (b) 120 percent of the average of the top five PYS at his position or (c) 144 percent of his second franchise-tag salary.

In case you missed other parts of the series, they can be seen here: