When LeBron James bolted from Cleveland this summer, the move not only devastated Cavs fans, it diminished the value of Dan Gilbert’s franchise by $200 million.
The Nuggets have been in a high-stakes chess match this year with their own star, Carmelo Anthony. Although he already has a strong supporting cast and an owner willing to pay the luxury tax in Denver, Melo has refused to sign a contract extension with the team, instead pushing for the Nuggets to trade him to the team of his choice, the New York Knicks.
Owners in Orlando, Utah and New Orleans are also growing increasingly anxious about their star players doing the same thing in the summer of 2012. Dwight Howard, Deron Williams and Chris Paul might also decide to leave good, playoff-bound teams for bigger markets and to hook up with other stars like the Miami Heat's new Big Three did.
With the owners entrenched in tough negotiations with the NBA Players Association over a new collective bargaining agreement, there’s been a growing movement among owners to add a new weapon to their arsenals -- a franchise player tag.
The franchise player tag isn’t a new concept (the NFL has employed it since 1993), and the model is simple: To avoid losing a team's best player in free agency, owners can tag one unrestricted free agent as a “franchise player” each free-agent period.
There are two types of tags. An “exclusive” tag means the team must offer a player a one-year contract that’s worth the average of the top-five salaries at that player’s position. A “non-exclusive” tag works a bit like restricted free agency. The team must make the player a tender offer equivalent, again, to the top-five salaries at the player’s position, but the player is free to negotiate with other teams. If the player gets an offer from another team, the original team has the right to match that offer.
By NFL rules, the franchise contracts last just one year, teams can only use one tag per year, and they may use the tag on the same player up to three consecutive years. In the second year of a franchise tag, a team must offer the player a 20 percent raise. In the third year, it must offer the player an average of the top-five contracts in the league -- not just at the position the player plays.
Teams don’t use the tag every year. Only five NFL players were tagged in 2010. In 2009, 15 NFL teams used it, and in 2008, 12 players got the designation. But the tag plays a much bigger role than it might appear on paper -- much like a good shot-blocker. If a shot-blocker averages three blocks per game, it can be reasoned that he alters a handful more and he discourages teams from driving to the basket. The number is misleading. The same holds true for the NFL.
NFL owners use the threat of the franchise tag to get their players to agree to longer-term contracts. No one likes the uncertainty of having one year guaranteed, so many players agree to sign contracts because of the threat of the tag being applied.
Needless to say, NFL players aren’t big fans, routinely referring to the franchise tag as the “F-bomb.”
"It’s limited free-agent movement in the NFL,” ESPN NFL analyst John Clayton told me. “In any given year, there may be 40 to 50 good free agents in the NFL. The franchise tag takes 13 to 15 of the best off the market.”
Clayton said the effect on the NBA would be much greater. Why? The NFL has 53 roster positions per team. The NBA has 15 -- with only five or six of them really being meaningful. If NBA teams structured their contracts right, they could prevent multiple players on their team from leaving.
Said one NBA GM: “It would be a huge coup for the owners if we can get this done. Not only would it give some modicum of control back to teams, but it would also help us to reduce costs by ending the bidding wars that have been taking place on the higher-end players.”
As you may surmise, NBA owners are not unanimously in agreement on this one. The charge is being led by smaller-market teams that are becoming increasingly fearful that the teams in huge markets such as New York, Chicago, Los Angeles, Miami and Dallas are creating dynasties that are impossible to keep up with. Owners such as Jerry Buss aren’t fans of a franchise player tag because it would limit teams such as the Lakers from luring top free agents in the summer. But a number of GMs that I spoke with believe that a majority of the owners are on board and willing to fight for it. While the details of what the tag would look like are still up for negotiation (it may or may not follow the NFL model), the desire is there to get something done.
“There’s always been a competitive imbalance between small-market and large-market teams,” one GM said. “I think this is one way, along with revenue sharing, that levels the playing field a bit. For some markets, the only way to get superstars is to draft them. If they’re just going to leave after we develop them -- that’s a big problem. The last CBA helped us a little by structuring rookie contracts in a way that gave a big incentive to young players to re-sign. But once that rookie extension is over, the trend seems to be that the best players leave.”
The franchise tag addresses another problem that, for some GMs, is even more important: It limits the power of NBA player agents to socially engineer teams.
“The last CBA, we fought hard to limit the influence of agents through a rookie salary scale and through max-salary caps,” another GM said. “But agents have proven to be clever. They’ve adapted. And the new way they are asserting power is by trying to aggregate their star players on the same team. Agents don’t have the best interest of the league. I’m not even sure they have the best interest of their own players. It’s about power and money.”
The players won’t be giving in without a fight.
“The franchise player tag has been devastating for NFL players,” according to one NBA agent. “It has penalized players for being great by limiting their right to change teams when their contract expires. Why should 90 percent of the players in the league be free to move, while the best players aren’t afforded the same right? And the very threat of using the tag has served to stifle negotiations with a much larger group of players. In the NBA, with smaller teams, the impact would be paralyzing. You can pretty much kiss free agency goodbye. There’s no way the players will agree to it. If the NBA owners push for it, there won’t be a season next year.”