The franchise tag is a one-year contract a team can apply to one pending free agent, keeping him off the open market. It is fully guaranteed once signed.
The Three Types
| Tag | What it does |
|---|---|
| Non-exclusive | Player can negotiate with other teams. His original club can match any offer, or decline and receive two first-round picks. |
| Exclusive | Player cannot negotiate elsewhere at all. Costs more. |
| Transition | Cheaper. The team can match an outside offer but receives no compensation if it declines. |
What It Costs
The non-exclusive tag is calculated from the average of the top five salaries at the player’s position over recent years, or 120 percent of his previous salary, whichever is greater. The exclusive tag uses the top five salaries at that position in the current year, which typically makes it more expensive.
The entire amount counts against the cap for that season, and it is guaranteed once the tender is signed.
Why Teams Use It
It buys a year. A team that cannot agree to a long-term deal before free agency can tag the player, keep him, and continue negotiating. There is a deadline in mid-July after which a tagged player cannot sign a multi-year contract until the season ends.
Why Players Dislike It
A tag is one year of guaranteed money with no long-term security, and it removes the leverage of an open market. Players in that position sometimes skip offseason work or delay signing the tender, since they are not under contract until they do.
A team can tag the same player in consecutive years, but the cost escalates sharply, which usually forces a resolution.
Related
What the salary cap is · How the cap works · Dead cap explained
The Bottom Line
A one-year guaranteed tender on one pending free agent, priced off the top salaries at his position. Exclusive blocks negotiation entirely; non-exclusive allows it with first-round compensation attached.