Monday, April 16, 2012

Drew Brees, Ray Rice, Matt Forte and the Franchise Tag

One simple question this week.  Why do NFL players hate the franchise tag?  Before we jump in to that, what is the franchise tag?  According to Wikipedia:

"In the National Football League, the franchise tag is a designation a team may apply to a player scheduled to become an unrestricted free agent. The tag binds the player to the team for one year if certain conditions are met. Each team has access each year to only one franchise tag. As a result, each team may only designate one player each year as that team's franchise player. It has been designed to reduce player movement (often to bigger markets) which is often evidenced in other major pro sports leagues.

Usually reserved for players of great skill or of high importance to the team, a franchise tag allows a team's general manager the privilege of strategically retaining valuable free-agent players while seeking talent through the NFL draft or other acquisitions without exceeding the League's salary cap."

The salary for a player designated with the franchise tag is the average of the salaries of the top 5 players at that position. NFL players hate the franchise tag for one of two reasons:
  • Due to the high risk of injury in the NFL, players want a long term deal as a sense of security, while the franchise tag is a one year deal with no guarantees.
  • A player who is among the top two at his position does not want to take the average pay of the top 5 players.
Elite players usually get a long term contract, so usually when it comes to the franchise tag we're talking about good to great players, but not elite players.  And as a result, those good to great players are usually okay with the salary and upset with the fact their not getting a long term contract.

During this off-season, Matt Forte (Chicago Bears running back), Drew Brees (New Orleans Saints quarterback), and Ray Rice (Baltimore Ravens running back) have been designated with the franchise tag.  The most interesting franchise tag is Drew Brees.  Drew Brees is an elite quarterback and is demanding more than average of the top 5 quarterbacks, but the lack of long term deal is probably what bothers him the most.  In all likelihood Brees will probably reach a long term deal with the Saints due to his value.

On the other hand, Matt Forte and Ray Rice are great, but not elite, running backs who would like a long term deal.  There are two problems that will make their negotiations difficult.  First, the running back position is losing value in the NFL because you can essentially get the same, or more, productivity with two average to good running backs as you could with one great running back.  In addition, neither Forte or Rice are considered elite running backs.  And finally, the running back position has a high likelihood of injury, so having two is better than having one.

In business, if a manager/executive made a habit of signing high risk employees to long term contracts, when they could either get their productivity from two cheaper options and there was good chance that the player would be unavailable due to an injury, that manager/executive wouldn't last too long.  In this blog, I often highlight the competitive nature of the NFL, which leads to great organizational alignment.  With that being said, unfortunately the league still under-utilizes the franchise tag as a strategic tool.  Although NFL players are governed by a Collective Bargaining Agreement that helps and restrains owners in many ways, players expect owners to bypass a useful tool in terms of their best interest.  I wonder if those same players would accept less money when the running back market was over-valued or a team was in a financially difficult situation. 

In my opinion, owners should take advantage of a tool that's available at their leisure.  Owners bargain in good faith for a Collective Bargaining Agreement, so why give up rights that weren't bargained away by players in the first place?  Owners should always utilize the franchise tag, because players will always utilize free agency to drive up their value via ticket sales, jersey sales and market value.

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