As the NFL offseason gets underway, one of the tools teams have at their disposal is the franchise tag. But what exactly is the franchise tag, and how does it affect both the team using it and the player receiving the tag?
What is the Franchise Tag?
The franchise tag is a designation NFL teams can use once per year to prevent an impending unrestricted free agent from hitting the open market. By applying the franchise tag, the team has exclusive negotiating rights with that player for one year.
There are two types of franchise tags: the exclusive tag and the non-exclusive tag. The exclusive tag is a one-year contract offer that prevents the player from negotiating with any other team. The non-exclusive tag allows other teams to negotiate with the player, but if the player signs an offer sheet elsewhere, the original team has a chance to match it. If they decline, they receive two first-round draft picks from the new team as compensation. The deadline in 2024 for teams to use their franchise tag is March 5 – see the list of players tagged in 2024.
How the Franchise Tag Impacts the Player
For players, the franchise tag can be a double-edged sword. On one hand, it guarantees them a lucrative one-year salary, as the tag value is determined by taking the average of the top five cap hits at their position from the previous season. However, it prevents players from truly testing free agency to secure a long-term contract that could be even more valuable.
Additionally, the franchise tag salary does not include a signing bonus, which is typically a large portion of an NFL free agent’s contract money, with a portion being paid out immediately. The lack of a signing bonus can create short-term cash flow issues for tagged players. To address this, companies like Sure Sports offer athlete contract loans and other financial solutions to provide upfront cash to players until their larger game checks begin arriving. Sure Sports can provide an athlete contract loan of 20 – 30% of the franchise tag value. This provides the player with significant up front capital to not only offset the missed signing bonus, but to potentially put that money to work through strategic investments and business opportunities.
Impact on the Team
From a team’s perspective, the franchise tag allows them to retain an important player for at least one more season as they work on negotiating a long-term deal. However, the tag counts fully against a team’s salary cap for that season, which can hamper their ability to build out the rest of their roster, especially if a player receives the tag in multiple seasons.
Applying the tag can also impact a team’s salary cap flexibility for future seasons, as the player’s cap number may be larger than anticipated if negotiations on a long-term deal stall. And if a team franchises the same player for a third consecutive season, they must pay them a 44% raise over the previous year’s tag number.
The tag also has ripple effects on other players at the same position. If a top player receives the lucrative one-year tag, it increases the perceived market value for other upcoming free agents at that position, driving up costs for teams around the league.
Weighing the Pros & Cons of the Franchise Tag
Ultimately, while the franchise tag gives teams a useful mechanism for retaining talent, it is a double-edged sword that can create financial challenges and future salary cap constraints if not utilized judiciously. For players, it can provide them with a big one-year payday but delays their ability to secure a long-term deal – though outside income sources like contract loans can help bridge any timing gaps in cash flow.
The franchise tag certainly is a major strategic consideration for teams looking to keep their rosters intact. But both sides will have to carefully weigh the pros and cons as they negotiate through this unique contract situation. Ultimately, players can retain cash flow flexibility when franchise tagged, simply by contacting Sure Sports and securing a contract loan.
