Explaining how the NFL works, Part 17: The 5th-year option

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 exercising the fifth-year option on players selected in the first round of the NFL draft.

How/when it is done

Every player drafted by an NFL team is subject to a four-year contract. With the rookie wage scale implemented in the 2011 Collective Bargaining Agreement (CBA), the selection at which a player was drafted determines most of the rookie contract especially for the first season. But with players drafted in the first round of the draft, teams are able to exercise a fifth-year option to keep them with the franchise for an additional season. Players do not have to wait until after the fifth year, if the option is exercised, in order to sign a long-term deal as they are free to do so before their fourth or fifth season.

Teams must exercise the fifth-year option on the player following their third NFL season, so for the 2023 offseason it is players drafted from the 2020 NFL draft. The window for picking up the option is from the end of the regular season to an appointed time in the beginning of May just after the NFL draft. Once a players fifth-year option is exercised, it is fully guaranteed as is the base salary for the players fourth year of their contract.

Prior to the most recent CBA, it was where a player was selected in the first round which determined their fifth-year option. Under the new CBA the exact selection in the first round is irrelevant.

Pay

The amount of a player’s fifth-year option is based on position, playing time, and Pro Bowl selections. Starting off with players making two or more Pro Bowls, their fifth year option is the same as the franchise tag salary at their position from the previous year. If a player makes one Pro Bowl, their fifth-year option is the same amount as the transition tag. The other designation is for players who are on the field for 75% of the teams offensive or defensive snaps in two of their first three seasons, have 50% of the snaps played in each of the three seasons, or a 75% average over all three seasons. Those players are in the average of the 3rd to 20th highest paid players at that position. For those who do not meet the snap criteria, it is the average of the 3rd to the 25th highest paid players at the position.

A table with all the players who had their fifth-year option exercised ahead of the 2023 season and the projected levels their contracts could have been can be seen HERE courtesy of overthecap.com.

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