What is franchise tag in NFL? How does it work?

With several players being rumored to land an NFL franchise tag this off-season, it brings up some interesting questions. What is a franchise tag and how does it work? Are there different types of franchise tags?

Let's take a deeper dive into the NFL franchise tag, how it works, and if there are different types of franchise tags.

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What is an NFL franchise tag?

The NFL franchise tag helps teams limit the mobility of a player who is expected to hit free agency. NFL teams have the opportunity to use the franchise tag on both, restricted and unrestricted free agents. According to the new NFL Collective Bargaining Agreement (CBA) between the league and the National Football League Players' Association (NFLPA), teams can only use one franchise tag each off-season.

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How does franchise tag work?

One thing that comes into play with the franchise tag is the player's salary from the year before. This is called the Prior Year Salary (PYS), which consists of base salary, roster and reporting bonuses, prorated signing bonuses and other payments to players for playing in the NFL from the year before.

The only factor that's not considered is the performance bonus, which is not a part of the roster and reporting bonus.

If a player wants to be traded to another team, they must sign their franchise tag. If a player is franchise tagged they can still sign extensions with their current team until July 15th. If this falls on a weekend it will carry until the following Monday. Once the July 15th deadline passes and no extension is agreed upon, the team and player can then only agree to a one-year deal for that season.

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Can a team rescind the franchise tag?

Once a team franchise tags a player, the team in question can take the offer off the table until it's signed. While this hasn't happened very often, teams still retain the choice of doing so.

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How many times can a player be franchise-tagged?

In theory, an NFL player can be franchise-tagged a total of three times in his career.

No player has been franchise-tagged three times yet for one key reason: it's too expensive. With a second franchise tag, the player is due a 120% increase on his previous year's salary or the average of the top-five salaries at that position that year, whichever is greater.

With a third tag, that number escalates to 144% of the second franchise tag salary.

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What are the different types of franchise tags?

When it comes to NFL franchise tags there are three different options for NFL teams and players. There is a non-exclusive, exclusive, and a transition tag. All three types of franchise tags can be pulled off the table at any time before it is signed by a player.

Let's take a detailed look at the different types of franchise tags and how they work.

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1] Non-exclusive franchise tag

When an NFL player receives a non-exclusive franchise tag, they are free to negotiate with any NFL franchise. The non-exclusive franchise tag is broken down into two separate options. An NFL player will receive a one-year deal with a salary greater than these two options:

Option 1: The percentage of the average cap for his position. This figure is calculated by dividing the amount equal to the sum of the franchise tag figures at a player's position over the last five seasons by the sum of the salary caps from the last five seasons. Finally, that figure is multiplied by the current year's salary cap.

Option 2: 120% of his PYS minus performance incentives.

NFL teams that use the non-exclusive franchise tag do have the right to refuse. If the player that has a non-exclusive franchise tag agrees to an offer from another team, then their current team has five days to match that offer. If the original team decides not to match the offer then they will receive a compensation draft package that is equivalent to two first-round picks.

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2] Exclusive franchise tag

When an NFL player receives an exclusive franchise tag, they cannot negotiate with other teams. This player will receive a one-year deal for the greater of these two options.

Option 1: The average of the five-largest PYS at his position. This must be after the restricted free agent signing period of the current league year.

Option 2: The amount of the non-exclusive franchise tag.

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3] Transition Tag:

The transition tag is similar to the non-exclusive franchise tag. Players who receive the transition tag can negotiate contracts with other teams. The player will receive a one-year deal that is greater than these two options:

Option 1: The cap percentage of the top ten highest PYS at their position.

Option 2: The amount will be 120% of their PYS.

If a player agrees to a deal with another NFL team, their current team has five days to match the offer. The kicker to the transition tag is that if the original team refuses to match the other team's offer, no draft compensation comes their way.

If the player receiving the transition tag does not sign with a team by July 22nd then he can only resign with his current team.

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4] Multiple franchise tags

When a player receives a franchise tag in back-to-back seasons, he is automatically owed a 120% increase to his previous franchise tag salary. This generally does not happen but if a player receives a franchise tag for a third straight year they will receive the greater of these three options:

Option 1: The quarterback tag, which is the salary that a franchise-tagged quarterback will earn that season.

Option 2: 120% of the average of the top five PYS at his position.

Option 3: 144% of his second franchise tag salary.

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