Franchise/Transition Tags

Yesterday marked the first day that teams can apply the franchise tag to free-agents-to-be for 2014. While no clubs have designated franchise players yet, there will likely at least a handful of players receiving the tag before the March 3 deadline, so it’s worth taking an in-depth look at what exactly it means to be designated as a franchise player.

Essentially, the franchise tag is a tool that a team can use to keep one of its free agents from freely negotiating with rival suitors on the open market. Designating a franchise player means tendering that player a one-year contract offer. The amount of that offer varies from year to year and from position to position, and also differs slightly depending on what sort of specific tag the team employs. Here’s a breakdown of the three types of franchise/transition tags:

Exclusive franchise tag:

• The amount of the one-year offer is either the average of the top five highest-paid players at the player’s position in the current league year or 120% of the player’s previous salary, whichever is greater. The top five highest-paid players at the position are determined once the free agent signing period ends in May, so the exact amount isn’t known until then.
• The player isn’t allowed to negotiate with other teams.
• The player and his team have until July 15 (or the first business day thereafter) to work out a multiyear agreement. After that date, the player can only sign a one-year contract.
• The exclusive tag is generally only used for extremely valuable free agents, such as franchise quarterbacks.

Non-exclusive franchise tag:

• The amount of the one-year offer is determined by a formula that includes the salary cap figures and the non-exclusive franchise salaries at the player’s position for the previous five years. Alternately, the amount of the one-year offer can be 120% of the player’s previous salary, if that amount is greater.
• The player is free to negotiate with other teams. If he signs an offer sheet with another team, his current team has five days to match the offer.
• If the offer is not matched, the player’s previous team will receive two first-round draft picks as compensation from the signing team.
• As is the case with the exclusive franchise tag, July 15 (or the first business day thereafter) represents the deadline for a multiyear agreement.
• Due to the attached compensatory picks, the non-exclusive franchise tag is generally sufficient for free agents — few rival suitors are willing to give up multiple first-rounders in order to sign a free agent to a lucrative deal, so there’s not much risk for a team to give up exclusive negotiating rights.

Transition tag:

• The amount of the one-year offer is either the average of the top 10 highest-paid players at the player’s position in the previous league year or 120% of the player’s previous salary, whichever is greater.
• The player is free to negotiate with other teams. If he signs an offer sheet with another team, his current team has five days to match the offer.
• If the offer is not matched, the player’s previous team does not receive any compensatory draft picks.
• Because it does not include any draft compensation or exclusive negotiation rights, and is only slightly more affordable, the transition tag is rarely used.

The exact amounts of these tags won’t be known until the salary cap number for 2014 is announced, and even then, the exclusive franchise tag amount won’t be established immediately. However, Joel Corry of CBSSports.com has a breakdown of the projected non-exclusive figures, ranging from around $3.4MM for a punter or kicker all the way up to $16MM+ for a quarterback. No quarterbacks will be franchised in 2014 now that Jay Cutler has signed a long-term contract, but plenty of those other projections will be relevant — Jimmy Graham (TE/WR, Saints), Greg Hardy (DE, Panthers), T.J. Ward (S, Browns), Brian Orakpo (OLB, Redskins) are among the candidates to receive the franchise tag.

As we’ve discussed several times on PFR, positions for players like Graham and Dennis Pitta figure to be a point of contention this offseason. Both players lined up as receivers more frequently than they played at tight end in 2013, and the CBA clearly states that the franchise salary shall be determined by the position at which the player “participated in the most plays during the prior league year.” The difference between the tight end and wide receiver franchise salaries is expected to be between $4-5MM, so it’s an important distinction for players like Graham and Pitta.

Here are a few other relevant details on franchise tags:

• Each year, the period for teams to designate franchise players runs from the 22nd day before the new league year begins, right up until the eighth day before that new year. In 2014, that means February 17 to March 3, with the 2014 league year set to start on March 11.
• A team can withdraw a franchise or transition tag at any time once when the free agent period begins, but it would immediately make the player an unrestricted free agent, allowing him to sign with any team.
• If a player is designated a franchise player for a third time, the amount of his one-year offer is equal to the exclusive franchise salary for the highest-paid position (QB), 120% of the five largest prior-year salaries at his position, or 144% of his previous salary. That’s why, for instance, the 49ers won’t franchise Phil Dawson this offseason — it would be his third franchise tag, so he’d be eligible for the QB franchise salary.
• Teams are allowed to designated one franchise player and one transition player per offseason. A team can also designate two transition players if it doesn’t designate a franchise player, but can’t designate two franchise players.
• Restricted free agents can be designated as franchise players.
• If a player chooses to sign the one-year franchise tender, his salary is essentially guaranteed. The CBA notes that if a team releases the player due to a failure “to establish or maintain his excellent physical condition,” the team may recoup his salary. However, a franchise player released due to poor performance, injury, or cap maneuvering will receive his full salary.

Note: This is a PFR Glossary entry. Our glossary posts will explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Information from Joel Corry and OverTheCap.com was used in the creation of this post.