The most important function of franchise tagging is keeping a league’s teams balanced, preventing teams from perennial bottom-dwelling. In order to keep the league balanced, the NBA’s draft grants the earliest picks to the league’s worst teams.
The balancing effected through the draft is seriously undermined when high draft picks leave the teams that drafted and developed them just as they arrive at their playing prime. While sign-and-trades (or extend-and-trades) are possible, teams losing high draft picks to free agency often receive minimal value in return, possibly as little as a trade exception (which often expires unused).
So, when budding or bona fide superstars leave the teams that draft them for bigger and better markets, the league’s balancing suffers dramatically. Obvious recent examples include Cleveland and Toronto, who lost their superstars for trade exceptions and picks.
In the NFL’s system, teams are guaranteed to be able to hold onto their franchise players for up to three years after their rookie contracts expire by virtue of the exclusive franchise tag.
Alternatively, through the NFL’s non-exclusive franchise tag, teams unwilling or unable to match high-priced contracts for franchise players receive two first-round draft picks as compensation. Though the team may lose the face of its franchise, it gains two legitimate chances to replace that franchise player with another one.
While the NFL’s system prevents teams from having their franchise players pilfered, it does so at the expense of restricting the movement and free choice of some of the league’s most valuable players. The NFL’s franchise tag overly emphasizes keeping a particular player in a particular city. Ensuring that players have free agency and that teams have rights to receive something in exchange for pilfered franchise players should be equally important objectives.
Rather than reproducing the NFL system of franchise tagging, the NBA should implement a system that combines economic coercion (the carrot, not the stick) with compensation (awarding players/picks to teams losing stars to free agency) in order to prevent franchise players from both leaving their teams and leaving their teams completely in the lurch.
Under such a system, the team could designate one player as its “franchise player.” By tagging the player, the team would have a right to offer the player a substantially higher salary than any other team. Currently in the NBA, the team possessing a player’s Bird Rights can offer its free agents 2.5 percent more per year than any other team.
A system in which the original team could offer its franchise player much larger salary bumps annually than its competitors would actually allow such teams to compete with the marketing opportunities that a larger market might offer.
So, while teams seeking to sign away another team’s “franchise player” would be eligible to offer a max salary with contract increases of 8 percent per year (based on 8 percent of the first year’s salary), the team that drafted the player could offer him increases of, say, 18 percent per year.
Such an offer, of course, would be contingent on the player’s salary abiding by the league’s salary cap rules. The chart below shows the difference between what the tagging team could offer versus the team seeking to acquire the tagged player, assuming a first year salary of $15 million:
* Example disregards the possibility of a six-year deal, which current CBA allows for teams holding a player’s Bird Rights.
So, under this system, over the course of a five-year deal, the tagging team (a.k.a. the team possessing the player’s Bird Rights) is allowed to offer an additional $15 million, or an average of $3 million more annually. Under the current CBA, the team holding the player’s Bird Rights is only able to offer $3.75 million more over five years, or $750,000 more on average per year.
Because marketing opportunities for a superstar in New York or Los Angeles can represent millions of dollars of added income beyond what the same players would receive in smaller markets, the $750,000 incentive to stay is not nearly enough.
One could argue that, if anything, smaller markets should be able to offer players more than the amount representing the difference in endorsement opportunities between markets because big markets have a significant added allure to NBA players beyond the marketing opportunities (i.e. bigger parties, more celebrities with whom to cavort, better restaurants, more business opportunities, etcetera).
Notably, the franchise holding a player’s Bird Rights would be entitled to offer the higher salary bumps, but they would not be required to do so. If the team officially did give a franchise tag to its superstar, it would need to offer the full bumps in order to avail itself of the compensation provisions that follow.
If, despite a maximum offer with full bumps, a player exercised his right to take less money and play elsewhere, the tagging team could be entitled to the following:
1. (a) Any one player from the team who signed the franchise player (the signing team could place one player off limits in addition to the franchise player) and (b) a top-15 pick or two top-30 picks; OR
2. (b) Any two players from the team who signed the franchise player (the team could put one player off limits in addition to the newly-signed max contract/franchise player); OR
3. (c) two top-15 picks and one 2nd round pick.
The team signing the franchise player would have a given number of years in which to provide the franchise player’s old team with the draft picks, and at least one pick would need to be surrendered in the upcoming draft. If the promised picks could not be acquired, then stiff penalties could follow.
This system would be preferable to the NBA’s present system because small market teams would never receive nothing for their superstar who they were committed to offering a maximum deal. And it would be better than the NFL’s system because a player would never be forced to stay beyond his rookie contract against his will.
Under this system, large market teams will continue to have access to stellar free agents, franchise players will be better able to decide where they play after their rookie contracts, and the NBA will have fewer hopeless and downtrodden teams at any given time.
This is not a perfect system, as issues could arise in obtaining future draft picks. Also, this system could prove less necessary as teams more proactively look to ship off franchise players unwilling to sign extensions. Denver and Utah, learning from the mistakes of Cleveland and Toronto, have recently gained nice value in trading Carmelo Anthony and Deron Williams, respectively.
The proposed system may allow small market teams like Utah to actually keep their franchise players, saving them from jumping the gun to deal a superstar for fear of a) losing him for nothing later, or b) suffering a disrupted season as the Nuggets faced in 2010-11.
This system would at least prevent the issues that Cleveland and Toronto now face due to the uncompensated loss of their superstars.
Matt Tolnick is an agent at Kauffman Sports. The opinions expressed in this article are not to be construed as the opinions of Steve Kauffman or KSMG as an entity. Continue following the blog series at kauffmansports.com or on Twitter @KauffmanSports.