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: