NFL Usage
The term also has a separate contractual definition within the National Football League. Any NFL team can designate a single player as its franchise player and therefore restrict the player from entering a free agency. In return, the team must pay the player a premium salary. The NFL requires that a franchise player be paid at least the average of the top 5 players in the league at his position, or 120% of his previous year's salary, whichever is greater. The franchise player status lasts for only 1 year and can be renewed, but if not renewed the player is granted unrestricted free agency.
In practice, many teams do not utilize the franchise tag; in 2008, only 12 of 32 NFL teams had a tagged franchise player. The tag, or the threat of using the tag, can be used as a negotiating tactic by the team to convince a player to sign a long-term deal with the same team. The player's alternative is to take a single highly-paid year and then free agency. The player's next contract as a free agent will depend on how the player performs in the single year, and some players may decide to take the more certain long-term deal up front.
Read more about this topic: Franchise Player
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