The first part of this two-part blog post explained the NFL’s Franchise Tag and the limitations it places on players to maximize their earnings over the course of their career. The second part will explain how uniquely situated players may be able to use the Franchise Tag to their advantage.
Uniquely situated players may use the Franchise Tag to their advantage by refusing to agree to any long-term contract valued at less than the amount he would earn by being tagged three years in a row. The strategy is best demonstrated through an example. In the 2012 NFL Draft, the Indianapolis Colts selected Andrew Luck with the first overall pick. Luck signed a four-year deal for $22,107,998. Since the Colts exercised the fifth year option on Luck’s contract, he is set to earn $16,155,000 in his fifth year (the 2016 season).1
Currently Aaron Rodgers has the highest average salary per year for quarterbacks at $22,000,000 per year.2 Rodgers signed this current contract in 2013 when the salary cap was $123,000,000.3 Thus, Rodgers’s salary at the time of signing was 17.9% of his club’s salary cap. Since 1994, the NFL salary cap has increased each year on average by 8.26%.4 At that growth rate, the salary cap in 2016 will be approximately $154,742,400.
Therefore, if and when the Colts and Luck look to negotiate a long-term deal going into his fifth year, Luck could argue that he is the next Aaron Rodgers and should make $27,698,890 per year (17.9% of $154,742,400). If Luck and the Colts are unable to agree on a long-term deal, the Colts could still keep Luck by tagging him each year for the next three years.
Such a strategy could still result in Luck earning at least $25,382,736 on average over those three years. Based on the historical data of franchise tags and cap growth, the Non-Exclusive Franchise Tag for a quarterback in 2017 is likely to be approximately $21,000,000. While the actual amount could vary, if Luck were to be tagged in 2017 he would receive at least $19,386,000 (120% of his prior year salary).5 Tagging Luck again in 2018 would cost the Colts at least $23,263,200 (120% of his prior year salary).6 Tagging Luck a third time in 2019 would cost the Colts at least $33,499,008 (144% of his prior year salary).7 Luck being tagged three straight years would thus result in him earning at least $76,148,208 ($25,382,736 per year). Averaging $25,382,736 per year would make Luck the highest paid quarterback and he would then enter free agency in 2020 at age 30, seemingly still very much in his prime, with many clubs ready to sign him to a lucrative long-term deal.
Such a strategy is not without limitations. The most glaring is the risk of injury. Players prefer long term deals seemingly because they are often accompanied with guaranteed money beyond the first year of the deal. Franchise Tags are fully guaranteed, but since the tag is only for a single season, the player could suffer a career ending injury and thus only make the money from that year.8 Continuing the example above, Rodgers’s current contract included $54 million guaranteed. (Aaron Rodgers Current Contract, http://www.spotrac.com/nfl/green-bay-packers/aaron-rodgers/ (last visited Oct. 28, 2015).)) If Luck were to suffer a career ending injury in his first year under the tag, he could earn only $19,386,000. Luck may be able to safeguard his future finances by taking out an insurance policy, but the intricacies and availability of such a policy is a matter for another discussion.
Finally, it should be noted that Luck’s bargaining power is a result of his unique situation as a tremendous talent at a position in high demand. Prior to the 2012 NFL Draft, ESPN analyst Mel Kiper, Jr. called Luck the best quarterback prospect since 1983.9 In addition, many people would agree that quarterback is the most important position on a football team.10 Furthermore, the NFL’s Top 100 Players of 2015 included twelve quarterbacks.11 Thus, in a league with thirty-two teams, over sixty percent of them currently have the most important position filled by a non-top one hundred player. Luck’s skill and demand allow him tremendous bargaining power. Most NFL players are not as uniquely situated and thus, likely won’t be able to use the Franchise Tag to their advantage under the proposed strategy.
Andrew Luck Current Contract, http://www.spotrac.com/nfl/indianapolis-colts/andrew-luck/ (last visited Oct. 28, 2015). ↩
Aaron Rodgers Current Contract, http://www.spotrac.com/nfl/green-bay-packers/aaron-rodgers/ (last visited Oct. 28, 2015). ↩
Chris Wesseling, NFL sets 2013 salary cap at $123M, up from $120.5M, Around the NFL (Feb. 28, 2013, 6:31 PM), http://www.nfl.com/news/story/0ap1000000146046/article/nfl-sets-2013-salary-cap-at-123m-up-from-1206m. ↩
NFL, https://nflcommunications.com/2010/02/24/year-by-year-salary-cap/ (last visited June 1, 2015). ↩
2011 Nat’l Football League Collective Bargaining Agreement art. 10 (Aug. 4, 2011). ↩
Mel Kiper, The Top 10 QB Draft Grades, ESPN (March 22, 2012), http://insider.espn.go.com/nfl/insider/story/_/id/7329933/the-top-10-quarterbacks-mel-kiper-ever-evaluated. ↩
Bucky Brooks, Ranking each position’s importance, from quarterback to returner, NFL (July 27, 2015, 10:34 p.m.), http://www.nfl.com/news/story/0ap3000000503855/article/ranking-each-positions-importance-from-quarterback-to-returner. ↩
Charles Lilly III
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