Explaining the NFL’s Franchise Tag and Identifying Candidates
The following is a contribution from Anthony Holzman-Escareno. Holzman-Escareno is a second-year MBA student at the University of Oregon’s Warsaw Sports Marketing Center and plans to enter the athlete representation field and has interned at multiple sports agencies, such as Athletes First, 360 Sports, LLC and Summit Sports Group. His free time is spent studying the NFL’s collective bargaining agreement and NFL contracts. He’s focused his business school studies on the branding and marketing of professional athletes and entertainers. His undergraduate degree is in English with a minor in Philosophy. He grew up impoverished and homeless. He dropped out of high school in 9th-Grade, so he could help provide for his family. Growing up, athletes were some of the few positive influences on Anthony, and he realizes that many professional athletes come from similar, humble beginnings. He stood outside of bar windows to watch games and viewed the game as an escape from the struggle. Anthony cares about athletes, especially those from similar backgrounds as his. He understands the dreams they are protecting because he is protecting the same dream. He is looking to improve the lives of athletes before, during and after their careers. This is why he has chosen to pursue a career in athlete representation.
The rose that grows from concrete never fails to reach the sun. Remind yourself. Nobody built like you. You design yourself.
Monday was the first day each NFL team could utilize the Exclusive Franchise Tender, the Nonexclusive Franchise Tender or the Transition Tender on one of its upcoming free agents. This period spans two weeks, from the 22nd day (February 22 in 2016) until the eighth day before the start of the new League Year. These tenders are tool used by teams to restrict the player mobility and allow teams to retain their core players.
Each of the tenders is a one-year contract with compensation based on a player’s position or Prior Year Salary. Salary, both the franchise and transition tender, is a combination of Paragraph 5 salary, prorated signing bonus, roster bonuses, reporting bonuses and any other payments for playing professional football in the NFL. The formula ends up being, essentially, a player’s cap number minus any incentives. The tenders are separated into eleven different positional groups: quarterback, running back, wide receiver, tight end, offensive line, interior defensive line, defensive end, linebacker, cornerback, safety and kicker/punter.
FRANCHISE AND TRANSITION TENDERS
Nonexclusive Franchise Tender
Nonexclusive franchise players are free to negotiate and sign offer sheets with any team. The player’s original team then holds the right of first refusal—the ability to match any offer the player signs and retain his services. If the team chooses not to match, they are entitled to receive two first-round draft choices. The last time this actually happened was in 2000 when the Dallas Cowboys signed wide receiver Joey Galloway to a six-year, $42-million contract and was forced to compensate the Seattle Seahawks with their next two first round picks.
Compensation for the nonexclusive tender is the greater of a calculation* of the average cap percentage of the five highest PYS for players at the same position or 120% of the player’s PYS (Sec. 2 (a)(i)). The 120% increase is very rare, although it is one reason that former Detroit Lions’ defensive tackle Ndamukong Suh hit the open market. Due to his large rookie contract, which was signed prior to the rookie compensation pool, his franchise tender figure would have been $26.9 million. Detroit had little choice but to let Suh walk. He eventually signed a six-year, $114-million contract with the Dolphins last offseason.
Exclusive Franchise Tender
Exclusive franchise players are barred from negotiating with teams other than their own. Compensation is the greater of a calculation of the average of the top five largest Salaries at the conclusion of the Restricted Free Agent Signing Period or the Nonexclusive Tender (Sec. 2, (a)(ii)). The Chicago Bears used the Exclusive Franchise Tender on defensive tackle Henry Melton in 2013, Melton tore his ACL during the season.
The transition tender carries many of the same rules as its franchise cousin. However, there are a few differences in its compensation terms for both players and teams. Rather than an average of the top five Prior Year Salaries, this tender uses the top ten salaries (or 120% of the player’s PYS) to calculate compensation (Art. 10, Sec. 11). Players are allowed to negotiate with other teams under the transition tender, and it does not afford the former team any form of compensation. The player’s original team only has the right of first refusal to match any agreed upon offer sheet. Tight end Charles Clay received the transition tag from the Dolphins last season. He eventually signed a five-year, $38-million offer sheet with the Bills that Miami choose not to match.
Implications of Signing Tender
When a player signs his tender, it becomes fully guaranteed for skill, cap and injury. Outside of a failure to maintain “excellent physical condition,” the player will receive the full amount designated for his position. He is required to attend all mandatory offseason activities and training camp and is subject to daily fines if he decides to hold out after signing. Teams also have the right to trade the player at this point. The long-term risk of injury falls completely on the player under the tag, as one serious injury could hinder a player’s ability to ever receive his market value. This is what happened to Melton in 2013.
Withholding his signature gives the player the slightest amount of leverage, as he can hold out of all team activities without the potential of penalty. If not signed, the team can rescind the tender at any time, and the player would immediately become an unrestricted free agent. Any franchise player and his representatives would be salivating to learn that a team decided to remove its offer.
Franchise Tag Deadlines
The parties have until July 15 to come to terms on a long-term extension. After this date, any contract can only be for one season, and it can’t be renegotiated until after the team’s final regular season game (Art. 10, Sec. 5(k)). Last season, five players were hit with the franchise tag: Justin Houston, Dez Bryant, DeMaryius Thomas, Stephen Gostowski and Jason Pierre-Paul. Four of these players reached long-term extensions before the start of the season. The latter’s Fourth-of-July fireworks accident may have prevented a similar outcome between himself and the New York Giants.
The last day a franchised player can sign his tender is the Tuesday following the tenth week of the regular season. If he does not accept the tag by this date, he will not be eligible to play in the NFL until the following league year. This would be extremely detrimental to a player because he would not accrue a season towards free agent and would be eligible to receive the tag again as if it was his first time.
Multiple Franchise Tags
An individual player can be franchised up to three times in his career. A second tag will cost the team 120% of the first one, while a third tag becomes extremely cost-prohibitive for any position outside of quarterback. The third tag is the greatest of the position with the highest tag number (always quarterbacks), 120% of the top-five YPS’ at his position or 144% of his own PYS. This rule now applies to a player’s career, rather than his stint with a particular team. Previously, a player could be tagged three times by each team he played for, but Saints’ quarterback Drew Brees won a grievance to have that rule changed to the current policy.
2016 Franchise Tag Candidates
The Super Bowl champion Broncos know one thing for sure: Miller is the team’s best player, and there is no way that he is hitting the open market any time soon, let alone this offseason. He’ll be looking to become one of the highest paid defenders in the NFL, and if the Broncos can’t meet his needs, he’ll see the franchise tender quicker than he gets off the football.
Carolina’s “Batman” has proven to be one of the top cover men in the game today. He contributed four interceptions, three forced fumbles and 18 passes defensed to Carolina’s run to the Super Bowl last season. If the team can’t secure him to a long-term deal, the franchise tag is inevitable.
Wilkerson finally made his first Pro Bowl in 2015 after being overlooked year after year in the first four seasons of his career. Last season, he posted a career-high 12 sacks. Although the team drafted defensive end Leonard Williams sixth-overall in the 2015 draft, the team would be wise not to let Wilkerson get away. If he does reach the open market, expect a bidding war between multiple teams to drive his price up tremendously.
When Jeffery was healthy last season, he was a dominant presence and by far Chicago’s best receiving threat. With a weak free agent wide receiver market this fall, there’s no reason why Jeffery can’t garner a top of the market deal at the position. However, there’s a good chance the Bears won’t let quarterback Jay Cutler’s biggest threat have the opportunity to do so.
Berry’s story is so inspiring that it would seem easy to fall into the hoopla. However, make no mistake about it, Berry is one of the league’s best at his position and a player the Chiefs need on their defense. Although cornerback Sean Smith will also be a free agent, Berry, the 2015 NFL Comeback Player of the Year, is probably the team’s top priority.
It’s been reported that contract talks between Washington and Cousins have come to an impasse. Cousins’ 70.1 total QBR ranked sixth in the NFL last season, and he led the team to an NFC East division title. Although the quarterback number may be a high for the former Michigan State Spartan, it’s fathomable, even likely, that the team uses its tender on the signal caller who is supposed to be the franchise’s future.
Glenn is an athletic left tackle, who the Bills need to keep around. It would be rather irresponsible of the team to allow a player of this caliber leave town without using the franchise tag it has at its disposal. Good left tackles are very, very hard to find in the NFL.
Transition Tender Candidates
Although there have been murmurs this offseason that the now Los Angeles Rams are considering franchising cornerback Trumaine Johnson, Rams’ beat writer Jim Thomas believes that the team will use the transition tag on the corner and save about $2 million in the process. Johnson, who had seven interceptions and 17 passes defended last season, will become a free agent this March unless the Rams decide to tender him.
*Calculation (an example chart is in Appendix E of the CBA):
(1) Adding the amounts of five previous years Franchise Tenders for player’s at the same position
(2) Dividing this number by the sum of the salary cap for those years
(3) Multiplying the resulting percentage by the salary cap for the upcoming League Year
Anthony Holzman-Escareno contact information: LinkedIn: https://www.linkedin.com/in/anthonyholzmanescareno; Twitter: @TheUSADream